The following is a conversation between Kevin Starr, the CEO of the Mulago Foundation, and Denver Frederick, the Host of The Business of Giving.
Denver: The Mulago Foundation invests in charities and philanthropic opportunities that have the highest impact. They seek organizations that are addressing a priority problem, offer a scalable solution, and have the capacity to deliver. And here to discuss their work, as well as share his perspectives on issues impacting the social sector, it’s a pleasure to have with us, Kevin Starr, the CEO of the Mulago Foundation.
Welcome to The Business of Giving, Kevin!
Kevin: Thanks. It’s really great to be here.
Denver: The foundation was originally created back in 1993; share with us its founding story, and a bit more about your mission.
Kevin: Well, when I was in medical school, I started a project in the Peruvian Andes. And in doing so, I sort of gained a mentor, this guy named Rainer Arnhold who had worked on every humanitarian crisis in the world through the ‘60s and ‘70s. And he took me under his wing and helped plan the project, and then he ended up coming along. And the project became kind of an annual thing at UCSF, in that school.
And in ’93, Rainer got in touch with me and said, “I’d love to come along on another trip.” We would do a big trek through the Andes with community health workers, teaching them and learning ourselves in the process. And then in 1993, we’d moved to Bolivia because of the Peruvian civil war, and Rainer came along. And as we were hiking together, he died suddenly of a massive stroke.
And in the aftermath of that, I met his family, and they’d been in banking for generations, and they wanted to start a foundation to carry on some version of his life’s work. And so they asked me to help because I knew him so well. And I spent a lot of time trying to figure out what Rainer would have wanted.
And there were several things. One, he was a pediatrician. He worked his whole life to make the world a better place for kids. And he’d expressed to me that a lot of his humanitarian work, it felt like nothing had really lasted. And so he really wanted to create lasting change. And I kind of took those two things and ran with them to try to figure out what Mulago would do.
And over time, it became anybody who looks at the health of kids starts to look at poverty. And over time, the real mission of the foundation became to try to meet the basic needs of the poor.
Denver: And eventually, you transitioned from a career in medicine to doing this full time, correct?
Kevin: Yes. I never expected that. It just got more and more interesting.
Denver: We never do.
Kevin: Yes, we never do. And then about seven years ago, I was still doing a few emergency room shifts here and there, and I just realized you don’t do emergency medicine part-time.
Denver: If I’m a patient, I would really, really agree with that.
Well, let’s talk about a couple of the programs of the foundation. One of them is the Fellows program. You started with one; now, you have two. What are each of them directed towards?
Kevin: They’re focused on finding people with what we think is a scalable idea, about meeting the basic needs of the poor. And we look at hundreds, and we don’t have an application process. We find them and reach out to them. We have a really good referral network we’ve built over the years. And so, we end up with hundreds of really promising leaders and try to pick 10. It’s an increasingly agonizing process.
And then, they’re with us for two years. We have sort of a week-long boot camp each of the two years where we teach them design for impact and strategy for scale, and then cover a lot of the things like fundraising and leadership and communications that they’re going to need to build an organization.
Denver: And that in some ways, it becomes an on-ramp to the portfolio of investments that you have. And why don’t you give us an idea of who are some of those folks in that portfolio?
Kevin: Yes, it’s become the on-ramp. Well, we give them $100,000 as part of the fellowship, but they, at the end of two years, we make a decision whether to have them join the portfolio. Some of the people who’ve been prominent fellows have been actually on your podcast, including Matt Forti of One Acre Fund.
I recruited Andrew Youn as a fellow after seeing him in a business plan competition before he had a single employee. It was kind of an idea about smallholder farmers that I’ve been looking for. And so, I listened to him. I talked to him. In about 20 minutes, I said, you should be a fellow. Now, they’ve got 6,000 employees and are reaching a million farming families. So, he’s kind of our poster child for what can happen when you get to know one of these people early enough.
The two things that best characterize our funding are: it’s unrestricted with this notion that if they don’t know how to use it better than we do, we shouldn’t be giving them any money anyway.
Denver: I’ve been over to their offices a couple of times here in New York City, not over in Africa, and they have big posters there that say Farmers First. And I love it because essentially that is at the center of every decision and everything that they do. It’s not the board, and it’s not the donor. And it’s not anything else. It is the farmer, and that becomes their North star.
And the way you go about funding these organizations, Kevin, it seemed to be a little bit ahead of its time in terms of the way a lot of funders are now looking at funding since the pandemic. Talk a little bit about some of the restrictions, or the lack thereof, you have had in terms of supporting these organizations.
Kevin: I think the two things that best characterize our funding are: of course, it’s unrestricted with this notion that if they don’t know how to use it better than we do, we shouldn’t be giving them any money anyway.
Denver: That sounds like common sense to me, but there’s not a lot of that going around sometimes.
Kevin: I think, as you implied there, there is a real groundswell toward it, which is pretty wonderful. And then we keep funding as long as we’re seeing the progress towards scale we’re looking for. And I think that’s another thing we do that’s a little bit different.
Do you know? We’ve been funding One Acre Fund, for example, for I think 12 years. And we need these exemplars. And we need to learn what this process of getting to scale looks like ourselves because it’s not been the norm in the social sector, and there’s a lot to learn about what happens when the curve of the growth of impact gets steep. It’s kind of terra incognita in a lot of ways.
Denver: Tell a little bit more about that, if you would, Kevin, a scalable solution. How can you identify a scalable solution early on? And does it consist of any particular elements?
Kevin: Yes, it does. We have this concept called The Doer and the Payer. And what we want to know very early on is: no single organization can take an idea to its full potential. So we want to know: Who do you envision is really replicating your idea at really big scale? Is it government? Is it other NGOs? If it’s a for-profit idea, is it lots of businesses? And that’s the single most important thing to be looking at when you’re trying to figure out if something is scalable. And then of course, who’s going to pay for this at really big scale? Again, is it governments? Is it big aid funding it directly? Is it customers?
And then once you know that, you can ask three really important questions about it. One – Is it big enough? If you imagine that the need, and you imagine where this idea works, the overlap between those two things gives us a sense of scope. So, is this really big enough to be interesting to us?
And then you can ask – Is it simple enough? So if you imagine government’s going to do it, you look at the complexity of what you’re doing, and you say, “Can I think of anything government does that’s relatively of complexity comparable to this?”
And then you can ask – Is this cheap enough? Because everybody has a price point, whether it’s a mom trying to figure out whether she can buy a clean cookstove, or a finance minister thinking about a community health worker system.
So big enough, simple enough, cheap enough – that really helps us understand whether it’s scalable.
Denver: Not complicated questions. And that’s what I like about it… very straightforward.
You talked about scaling something through government or through business, but also NGOs. And I’d be curious, Kevin, do you often see, or for that matter, do you ever see another NGO picking up a program from another social impact organization and partnering with them to scale it?
Kevin: We do see it. We don’t see it a lot. We got curious about that. We thought – well, if we’re telling people this is about to scale, we’d better figure out if it really is.
And so, we did a little survey where we picked a bunch of people who ran big NGOs or who are other funders and we said, “Can you think of an instance where lots of NGOs have taken up a given solution, and then part of a real groundswell towards scale? Can you give us some examples?” And we just kept coming up empty. It was a little survey, but it’s kind of like– if these people don’t know, what the hell is going on here?
And as we ask further and further and more widely, we just realized this isn’t really happening, especially not in any kind of purposeful, functional way. And everybody had an idea about what isn’t – most of them having to do with big aid and this sort of dysfunctional ecosystem of BINGOs, these big international NGOs, and big aid where the focus is on projects, not solutions.
Denver: Your focus is on poverty – that’s what you want to keep as your focus – but your focus got a little expanded because of what in the world we’re seeing around climate right now and how climate is impacting poverty.
So the question I have for you, give us a little bit about the work that you’re doing there, but how does a relatively small foundation make an impact in such a gargantuan large issue, such as climate change?
Kevin: Yes. We ask ourselves that question a lot. But I think it’s kind of like the story I told about One Acre Fund. It’s like – if you find these people really early, there’s a point at which a hundred grand makes a really big difference. And there is a point at which their strategy is still kind of nascent, and you can make a big difference. And there’s a point at which they’re not communicating their idea very well where you can make a big difference.
So, we’re looking for those. And we know that they’re a long way from going big. But we’re also learning you can accelerate that quite a bit by giving them a little visibility among other things.
Denver: A lot of them get caught up in the amplification. They got the idea. They got the goods, but they can’t get it out there. And that’s what they really need to do. And to be able to give and catapult them forward like that makes a big difference.
Let me get your take on a couple of things bouncing around the sector. One would be root causes and system change. You address the root cause, and you effectuate systems change, and real social impact will result. And this is a pretty ubiquitous notion in the social sector at the moment. You see it absolutely everywhere. What’s your take on that?
Kevin: What we found with this whole doer-at-scale idea is that mostly people who say they’re changing systems are using them. In other words, you persuade a government to take up a really interesting professionalized community health worker idea, for example. Well, they may take it up, and they may deliver far better primary health care to a population. You haven’t fundamentally changed that system. You’ve added something of great value to it.
And I think that systems change is absolutely necessary, but it’s really hard, and it really takes a long time. And there’s a lot of actors. And where we’ve seen it really work is when it’s emerging from a bunch of scalable solutions and the actors behind them coming together and tackling that larger problem, but not in a way of analyzing root causes and orchestrating some large thing. But rather, it emerges because of the clarity that comes from a lot of different people with good solutions working on related problems.
…When you start to see a movement, then you start to see systems change. So the systems change that I’ve found to be most effective emerges like that from very promising, scalable solutions.
Denver: So I guess what you’re saying is a multiplicity of scalable solutions that create a second order once they emerge, that will change the system more in that way than actually just focusing on the systems itself and trying to affect them that way.
Kevin: I’d like to use the example of what we call professionalized community health workers, which was this idea of taking health workers and making them certified professionals, and paying them, supervising them well, supplying them well, and even using these new digital tools to make for performance management and even diagnosis.
And there were a number of organizations… like Last Mile Health and Muso are a couple of the most prominent ones, and Living Goods… they came together in a self-organized way and formed this organization known as CHIC, the Community Health Impact Coalition. And then they created a set of principles that defined good primary health care, and others joined it and signed onto those principles. And then they started taking more action in the policy world, taking more action in the funding world. And pretty soon you’re starting to see a movement. And when you start to see a movement, then you start to see systems change.
So the systems change that I’ve found to be most effective emerges like that from very promising, scalable solutions.
Denver: Quite organic. That’s a great example, Kevin.
You also have some very definite ideas about the impact investing industry. What would some of those be?
Kevin: We know for-profit ideas can only go really big once they are ready for real commercial capital that’s seeking maximum return. We know that. But we also know that from the point of an idea in these places where markets aren’t working that well, and there’s a lot of obstacles to creating a successful business, you’re going to need… we think of it as: There’s real money… what I just described as seeking maximum rate of return. There’s trillions of that. And then cheap money that they need to get to the point where they’re ready for real money, and we’ve been trying to figure out for years how much there is of that. And then, of course, there’s free money.
And so, we think of it like – you have a great idea, and it’s almost like a desert you’ve got to get across to the mountains flowing with real money. And a lot of what Mulago is focused on is helping these good ideas get across that desert. And so, there is a real need for cheap money. And in certain circumstances, you can even move an idea along with free money if you can give grants to help research some important tool or technology. And there’s other opportunities sometimes for grant money, or even we’d like to see people start a nonprofit for a while to figure out some hugely promising idea.
So, you’ve got to get across that desert. And what we found is this sort of cheap money oases are far and few between, and they’re not easy to get into. And as I thought increasingly, we had enough disappointments that I really started thinking about that: You realize that there is this spectrum in the impact investing world of going from barely getting your money back, to looking for risk-adjusted market rates of return. And nobody really knows where all that money is on that spectrum.
And increasingly, everything I have seen convinces me that most of the money is huddled up on that market rate of return end of the spectrum, which kind of makes it clear why there isn’t that much cheap money out there.
The fundamental reason why you should measure impact is because you’re throwing your whole life’s energy and your immense talents into this. You ought to at least know what you’re accomplishing.
Denver: And I think part of the problem probably is that there’s no definition of an impact investment. I could start a fund today and just say, “This is an impact investment,” and that’s pretty much the criteria. I just label it. So, it is difficult to see how so many of these impact investments have been able to get across that desert and get the real money from pension funds and things of that sort. And that is far and few between.
You suggested that many mission statements are–I don’t know–rather useless. How could they be improved?
Kevin: We talked about The Doer and the Payer being really important Mulago concepts. And long ago, we just came up with this funny tool. We call it the “eight-word mission statement” where you’re just focused on a verb, a target population, and an outcome.
And the outcome is the most important one, sort of: Save kids’ lives in Sub-Saharan Africa, or save coral reef in the South Pacific. It’s just super focused, hones right in on exactly what the organization is doing, what the success/ fail statement essentially is for them. And then starts to imply exactly what you would measure.
And when you measure, you can actually iterate and improve, and you can show your impact to donors. You can fundamentally know what you’re accomplishing. And I tell social entrepreneurs all the time – the fundamental reason why you should measure impact is because you’re throwing your whole life’s energy and your immense talents into this. You ought to at least know what you’re accomplishing.
Denver: And it sounds as if you take the “how” and the “why” of what you want to do and do not make that part of the mission statement. Just talk about what you want to achieve. And it’s almost like making a mantra because those short things are memorable. It’s when everybody gets into the full explanation of what they’re trying to achieve and how they’re going to do it, that people’s eyes begin to glaze over.
Kevin: Yes. I want everybody in an organization to be able to come together around that eight-word mission statement. I want to be able to ask the guy who cleans the office, “What’s the mission of the organization you’re working toward?” And I want everything the organization does to map toward that mission and pare away everything that doesn’t.
Your impact is what happened with you minus what would have happened without you. And so, you’ve got to figure out some way to make the case for what would have happened without you, so that you can really know what part of that change you were really responsible for.
Denver: And eight words is good because it reminds you of telephone numbers, which were only seven digits, and seven digits is about all we can remember. So, you can’t get much beyond that seven or eight number, or people would have to look on their phone to see what our mission statement is.
You just spoke about impact before. Speak about impact – how you think about impact in the social sector and how you go about measuring it?
Kevin: We think of it as four things. One, you have to know what you’re setting out to accomplish, and the outcome part of that eight-word mission statement really starts to define that. So, know what you’re setting out to accomplish.
The second thing is: measure the right thing. So think about that income and what metrics were really captured. And then, get good numbers. So, really understand what kind of sample size you would need to show that. What kind of survey methods you would need? What kind of study design you would need?
And then the trickiest thing is what we say as “Show that it was you.” In other words, this notion of attribution. Your impact is what happened with you minus what would have happened without you. And so, you’ve got to figure out some way to make the case for what would have happened without you, so that you can really know what part of that change you were really responsible for.
And that’s this aspirational goal we’re trying to get to with every organization. How close can we get to a high-quality answer for those four things at any given point in time?
Denver: And you’ve also made an analog with the private sector in terms of: impact and profit would it be?
Kevin: It’s funny because my board is sort of world-class bankers. Long ago, when we really came together, initially, it was kind of like, “Kevin, you go find some good charities that would resonate with Rainer.”
And then gradually, at some point, I came to them and said, “Why don’t we use impact as the analog of profit and the cost of that impact as the analog of return on an investment?” And suddenly, we were really starting to work together, and it’s really remarkable the degree to which that analog works.
Denver: That’s a good one. And you know what? Framing is sometimes everything. If you can frame it in something which they’re accustomed to, it really can lubricate the discussion and create some forward momentum.
Another issue I want to get your thoughts on is unconditional cash transfer. Now, that’s been around for a while. But it really came, I think, into the public consciousness with the universal basic income and Andrew Yang during the election. What is your feeling about unconditional cash transfers? Are they living up to their initial promise, or are they falling a bit short?
Kevin: There’s two kinds of unconditional cash transfers that have really been studied. One is this sort of one-time giving people roughly the equivalent of a year’s income. And then there’s more a UBI approach where you’re giving a continual income stream that people can count on.
And I’ve been really mostly focused on the one-time cash transfer part of it because I think that the news isn’t really in on long-term cash transfers. And so, we were really intrigued because any funder should be very interested in this question of: Is it better to just give people money than whatever thing you’re doing?
Denver: Yes. It’s a benchmarking type of exercise.
Kevin: Exactly. And increasingly, it was used as a benchmarking exercise. And so, what I was really intrigued with the studies after one year came out, the year that they’d actually given these two cash transfers.
And the wonderful thing about these studies is they’ve shown absolutely that people, if you give them a bunch of money, they use it well. The poor use it really well. They don’t drink it up. They don’t spend it on trinkets. All the stuff that people stereotypically said they would do, they didn’t do. They bought really good stuff. And one of the things they did was replace thatched roofs with tin roofs, for example. They bought livestock. They, in some cases, sent kids to school. They ate better. So, it’s clear they used the money well.
And what we were very curious about is: Well, where would people be at three years and four years? Did this really accelerate a family’s economic trajectory? And I think the answer is: No, it doesn’t really. People at three years were essentially at the same place their neighbors were. One-time cash transfer doesn’t seem to change a family’s economic trajectory forever. And I’m really betting that the longer term, regular money you can count on is going to make a really big difference.
Denver: Looking at that unconditional cash transfer, was there any difference when everybody in the community received it, as opposed to select families?
Kevin: There are some studies that have come out recently that that really does create a virtuous cycle, and you really do see a multiplier effect. And if you can do that, it looks like it really can…. Again, we don’t know the long-term effects of it, but it looks like you really can jumpstart an economy. It costs a lot.
Denver: It costs a lot but this is very interesting.
Talk about leadership in a crisis – how your leadership maybe has changed or has been informed by everything that’s happened over the past year, and particularly the leadership of the organizations that you fund. Is there a new bar being set? Are we getting the emergence of a different kind of leader that we should be looking towards over the next decade or two?
Kevin: You know, I don’t really think so. What’s really surprised us is how well our portfolio did through the crisis. And that’s in no small part because I think funders stepped up and did well, and because the kind of people who are successful entrepreneurs actually rise to the occasion pretty well.
And so we did a lot, at the beginning, on trying to gather advice from all the wise people we knew and condense it into something that would be useful for people. And all indications were that they did find it useful. But I am so impressed with just generally the resourcefulness.
And we actually set aside about $2.5 million for specific COVID relief. And we divided it into three categories. One we called “Survival” grants where some organization we were worried was going to go out of business if they didn’t get some extra COVID money. Another we called “Maintain” where a little extra money would help them continue the activities that were creating impact. But the third we called “Response,” which was some organizations, especially the ones that were doing work that was already around mobile and digital work, some of them created whole new ways of outreach that actually expanded their impact, especially with regard to COVID education, et cetera.
So we ended up making relatively few Survival grants and some really spectacular Response grants and a fair number of Maintain grants.
Most of our organizations either have or will get back to their mission, and almost all of them will be better at what they’re doing as a result of how they had to rethink things, take on new things, and just generally rise to the occasion.
Denver: I’ve been impressed as well in terms of how organizations… often mission drift has such a bad connotation. But there were a lot of organizations that mission-morphed during this crisis in order to stay relevant. And I was so impressed that they had the ability to do that and just have that ability to be flexible and say, “Hey, we may have to change what we’re doing a little bit because this is what we need to do now.”
And so, mission-morphing has gotten a positive connotation for me, where mission drift… it always had that idea that you’re chasing the money, and you really don’t have any kind of theory of change.
Kevin: Well, yes, but these crises… I remember the big Nepal earthquake, and we were funding a couple of organizations in Nepal. And both — for obvious moral reasons and for credibility reasons — they had to respond to this crisis. And the ones that did it well ended up creating whole new relationships and opening all the doors. And really most of them got back to their original mission, but actually having managed to accelerate it because of the crisis. And I think we’re seeing that all over the place.
Denver: Yes. I think you’re right.
Kevin: Most of our organizations either have, or I think will get back to their mission, and almost all of them will be better at what they’re doing as a result of how they had to rethink things, take on new things, and just generally rise to the occasion.
Denver: I never really appreciated the power of constraints to accelerate innovation because none of us would have ever done any of these things unless we had to. And we changed the way we delivered our programs and the way we communicated with our staff, and constraints can really be a very powerful agent when you want to create innovation.
I had a guy on from Korn Ferry the other day, Kevin, and he says he thinks he’s seen from Fortune 500 companies 5- to 10 years of innovation in a single year. Somebody said it was almost like you woke up in the year 2030. You took a nap, and it’s moved that quickly – telehealth and a whole bunch of other things.
Talk about Big Bang Philanthropy.
Kevin: That’s been a really fun journey. So about–I don’t know how long…God, has it been a decade? There were about five of us who were really interested in real impact at scale. And we realized we were talking to each other all the time, and we were in effect co-funding a lot of different organizations.
So we thought – Can we create a low-hassle structure that can bring others in and just will facilitate co-funding toward this not-that-tightly-defined goal of channeling the most resources to those who are best able to create real impact at scale? And it’s grown to about 20 funders. And it’s really built around personal relationships and probably doesn’t need to get a lot bigger than 20 funders. And in fact, I’d hoped that the kind of low hassle but effective aspect of this model would spawn other big bang-like organizations.
And we started gathering data about three or four years ago to just see – are we actually doing anything? And in fact, the growth in co-funding is defined as two or more big bang funders funding the same organization has grown spectacularly to over 400 of these co-funding relationships. And I think last year, about $53 million in co-funding moved together. And it’s not pooled. Everybody is still making their own decisions in their own way, but we’re keeping track of how it all comes together.
So many of the problems of the social sector would start to evaporate really when there’s this benign competition within the sector for: Who can do the best funding? And who can do the best doing?
Denver: Let me close with: What’s next for the Mulago Foundation? You have been done so many innovative things for this sector and had such an impact on it. What are you thinking, looking ahead?
Kevin: My big sort of meta-level goal is to see what I can do to make funding more accountable for impact, make funders more accountable for impact. And I’m starting with trying to make Mulago more accountable for impact, and hopefully going to publish something soon that I call “making ourselves accountable,” which is: we say that what we’re doing is taking high-impact, scalable solutions toward their full potential. How do we show that we’re really doing it? How do we really track that? How can we estimate at any given point in time what the impact of these organizations are? But in some ways, more importantly, make the case for why we’re still funding them, why we still believe they can get to their full potential, and why we get in, stay in, or get out.
And I’m kind of hoping that can be an example for other funders of how we can do this. And sort of my dream is starting to move toward more of a market for impact where resources do flow most efficiently toward the best organizations. And I just can see that so many of the problems of the social sector would start to evaporate really when there’s this benign competition within the sector for: Who can do the best funding? And who can do the best doing?
Denver: A lot of bad ideas get funded, and if you can do anything to help funders make better decisions, that will certainly be a lasting, lasting contribution.
Tell us about the Mulago Foundation website, Kevin, and some of the information visitors will find if they stop by.
Kevin: Well, we’ve tried to be very… as we usually do, try to make things simple and clear. And what you’ll see is some of the funding philosophy that we’ve talked about in these past few minutes, and then sort of an approach to funding, which is really this unrestricted, low hassle, stay-with-success approach.
And you’ll see our portfolio in a way that illustrates that approach. And you’ll see our fellows – our Rainer Arnhold Fellows and our Henry Arnhold Fellows. And hopefully, in doing so, you’ll get a meaningful, graspable picture of what we do.
Denver: Well, thanks, Kevin, for being here today and for a most interesting conversation. It was a real delight to have you on the program.
Kevin: This was super fun and it’s always great to be interviewed by a great interviewer.
Denver: Thank you.
Listen to more The Business of Giving episodes for free here. Subscribe to our podcast channel on Spotify to get notified of new episodes. You can also follow us on Twitter, Instagram, and on Facebook.