SITAWI commits to expand its social loan and donor-advised fund offering to include new funds and mechanisms with specific focuses that will allow the social sector to grow and change more lives in Brazil. SITAWI has extensive knowledge of the Brazilian social sector, providing social loans since 2009 and opening its first social fund in 2011.Through loans, venture philanthropy, donations and other support for social projects, SITAWI commits to allocate a total of $3.5 million by 2016, bringing SITAWI's cumulative total of funds since it's foundation to $5 million.
Together with anchor partners, SITAWI commits to expand and co-develop tools, raise funds and operate them, including (subject to partner and donor priorities): 1) an expansion of social loan work; 2) sector-specific funds that SITAWI is currently performing research on, which include funds specifically focused on women's issues (from economic empowerment to advocacy) and sports, as well as educational, regional or community-based funds; 3) a tool to support long-term collaborations and potentially mergers between social sector organizations, allowing them to achieve economies of scale and more transformational outcomes (advanced as an initiative through R&D in 2013, with a view to launch in 2014); 4) support of ongoing efforts to create social impact bonds in Brazil: and 5) the creation of an Interim CFO Fund to bring greater professionalism to the sector.
In comparison with current 'closed' social funds, these new mechanisms will be open to new donors and partners, thus creating the opportunity to engage multiple stakeholders, to build a movement, and to create a philanthropic culture in Brazil. SITAWI is well placed to build on its existing skills and expertise in the social sector, consulting and finance to bring additional resources to the sector, and allocating a total of $5 million over SITAWI's lifetime before the end of 2016.
SITAWI's deliverables for this commitment divide into Products, Resources, and Allocation.
The full mix of products created will be a combination of SITAWI's own priorities and those existing among donors (corporations or philanthropists from Brazil or overseas), who will contribute resources to SITAWI's work. By 2016, SITAWI will have allocated an additional US$3.5 million in the social sector, bringing its total in social sector contributions over the organization's lifetime to US$5 million. At the same time, SITAWI will raise US$1 million from existing and new donors (from major donors to online giving) that will allow it to meet its fixed operational expenses. As SITAWI achieves greater scale, it will be able to reduce its use of donations for operating expenses, redirecting them towards expansionary and transformational programs.
In order to meet this target, SITAWI will raise funds based on the following timeline:
- Prior to 12/31/2014 -$1,000,000
- Prior to 12/31/2015 -$1,500,000
- Prior to 12/31/2016 -$2,000,000
And will allocate resources in the form of loans, donations and project-related payments on the following timeline:
- Prior to 12/31/2014 -$750,000 (reaching 10-15 organizations and impacting 8,000-20,000 people)
- Prior to 12/31/2014 -$1,250,000 (reaching 15-25 organizations and impacting 12,000-35,000 people)
- Prior to 12/31/2016 -$1,500,000 (reaching 20-30 organizations and impacting 16,000-45,000 people)
To find these social entrepreneurs, SITAWI will continue its work with accelerators and incubators, and raise its profile within Brazil throughout the lifetime of this commitment. SITAWI plans to have a strong presence at national events for social enterprise and nonprofits in December 2013, a regular column in a national newspaper, and has had an item on a national television channel broadcast in October 2013. These initiatives will be deepened in addition to SITAWI's ongoing efforts to build its pipeline.
According to the Gini coefficient, a measure of income inequality calculated by The World Bank, Brazil is the fourth most unequal country in Latin America. To reduce the effects of this inequality, Brazilian civil society has seen an increase in the number of nonprofit organizations, with an estimated 300,000 organizations currently in operation. However, total funding, whether through donations or government subsidies, remains close to $8 billion annually. This means that even the average nonprofit will only receive approximately $23,000 in donations or government subsidies. As a result, Brazilian nonprofit organizations often find it difficult to pay rent or full-time staff, making it even more challenging for them to effect transformative changes.
To bypass these challenges, social entrepreneurs have created independent social businesses, or nonprofit organizations with business units, that fund themselves through their social business alone, or through the integration of these units with donations or venture philanthropy.
As is the case for any business, the social business component of such organizations requires access to reliable financial solutions to facilitate growth. However solid these businesses may be, they are frequently excluded from the traditional banking sector, limiting their potential for growth and for impact.
SITAWI has built up a reputation for efficiency and focus in various areas of social and sustainable finance, including social and environmental loans, philanthropic fund management, consulting support for nonprofits and social enterprises, and social impact bonds. It continues to look for new partners with interest in taking these initiatives forward in Brazil.
SITAWI has built up a reputation for efficiency and focus in various areas of social and sustainable finance, including social and environmental loans, philanthropic fund management, consulting support for nonprofits and social enterprises, and social impact bonds