American Foundation Mixes Investments and Donations to Maximize Impact

The Kenyan company EcoSafi is on a life-saving mission.

Every year, more than three million people die prematurely from inhaling harmful particles released when cooking over open fires. In Kenya alone, an estimated 30,000 people lose their lives for that reason.

EcoSafi has developed a solution that saves lives: a simple, clean-burning stove that emits far fewer health-damaging particles.

Instead of charcoal or firewood, the stove uses biomass made from sugarcane waste – and it’s included, either free or at a low price, when customers subscribe to the company’s pellet fuel.

With support from the Mulago Foundation, EcoSafi is now expanding its solution across East Africa.

The American foundation has backed the company with both a USD 300,000 convertible loan and a USD 500,000 grant to further develop the stove, explains Mulago’s CEO Kevin Starr.

“We were really excited about EcoSafi’s business model, but when we spoke with them, we realized they didn’t yet have the perfect stove,” Starr says.

“So we gave them half a million dollars to take it to the next level. And they ended up producing, in my opinion, the best biomass stove the world has ever seen.”

The neglected side of the brain

Blending philanthropy and investment is still uncommon. But for the Mulago Foundation, it’s simply the way to get results.

“Our grant gave EcoSafi a real push forward. And that’s our goal as philanthropists – to make good things happen that otherwise wouldn’t,” Starr says.

Eighty percent of Mulago’s annual funding goes to traditional philanthropy; the remaining twenty percent to investments, often in the form of loans.

It’s an approach that’s slowly gaining traction in global philanthropy – and one more foundations should embrace, Starr argues.

“We can and should harness market forces to improve people’s lives. The goal is to use philanthropic capital to create as much impact as possible. But many philanthropists just don’t see that opportunity.”

No organization on its own can truly achieve – and sustain – exponential growth of impact over time.

Kevin Starr, Director, CEO, Mulago Foundation

The hesitation, he believes, comes from a mix of blind spots and bureaucracy anxiety.

“Even people who are quite sophisticated about finance tend to treat their work in the social sector as pure charity – they neglect the financial side of their brain,” he says.

“And they probably assume it involves endless paperwork. But it doesn’t. We’ve found it’s surprisingly easy to do in practice.”

They have to be unstoppable

Mulago afinds organizations for their portfolio through their fellowship programs.

Each year, around 20 new social entrepreneurs join – half tackling poverty and half working on environmental challenges.

What they share, says Starr, is that they are “unstoppable.”

“They need to come across as determined, ambitious, almost impossible to stop. They should love what they do more than anything else they could imagine doing.”

They also need deep domain knowledge and the ability to communicate their mission – or a team combining a great storyteller, a technical expert, and a builder who can make things happen.

“All those qualities can exist in one person. But often it takes co-founders. But that’s what we look for,” Starr says.

Impact at scale

However, determination isn’t enough.

Mulago deliberately pursues impact – a concrete, measurable change in the world attributable to one’s own effort.

And it has to happen at scale.

“We have a very specific view of what scalability means. It has to be clear who will deliver it, and who will pay for it, when you’re aiming for exponential impact,” says Starr.

Few organizations can achieve that on their own.

“No organization on its own can truly achieve – and sustain – exponential growth of impact over time. You have to know from the start who you’re designing the solution for, who can replicate and scale it.”

That’s why Mulago draws a sharp distinction between growth and scale.

“Growth is mostly linear – there’s a direct link between how much money you can raise and how much you can do. Scaling means that, at some point, you decouple the money you raise from the impact you create. That decoupling is the key to true scale.”

Three essential questions

To be a fellow and to continue into the portfolio, organizations must provide convincing answers to these three questions:

• Who will deliver the solution at scale? Is the solution designed for actors who can actually scale – governments, companies, or large NGOs? The organization must have a credible plan for broad implementation.
• Who will pay for it at scale? It must be clear who will finance the solution as it grows. For NGOs that may be governments or foundations; for businesses, customers. The point is that the model must sustain itself financially.
• Is it simple, affordable, and logical enough to spread widely? Does the logic hold? Is the target group large enough? Is the solution simple enough to execute – and affordable enough that people will pay for it?

Unrestricted funding

Mulago doesn’t receive applications. Every company and NGO in its portfolio has been identified through the fellowship program, which effectively serves as deep due diligence.

Participants receive not just money, but also mentorship, training, and access to a network of more than 250 past Mulago fellows.

Once accepted in the Mulago portfolio, funding is unrestricted.

“We’ve never done anything but unrestricted funding. We can’t imagine doing it any other way – if you trust an organization, why would you tell them how to spend their money?” Starr says.

But it’s not blind faith.

“There’s a big difference between trust built on a shared understanding of what you’re trying to accomplish – and a track record – and just sending money out the door without doing your job.”

Funders, he says, have to do the work of understanding.

“We take the time to understand what they do, their strategy for scale, what they’re achieving, who’s on the team, and their financials. Once we know them well, it’s about giving them the money – and letting them do their work.”

Measuring to improve

Starr describes the relationship as a joint venture aimed at maximizing impact. Measuring outcomes is a central part of that collaboration.

“The main reason an organization should measure is to get better at what it does. If they want to improve, they have to measure. They can’t fly blind. Satisfying a funder comes second,” he says.

There’s no friction over measurement between Mulago and its partners. On the contrary, there’s agreement on a shared framework built around four elements:

• Purpose: What exactly is the organization trying to achieve?
• Indicators: Which metrics best show whether it’s succeeding?
• Method: How will the data be collected over time?
• Counterfactual: What would have happened without the intervention?

“Impact is what happens with us, minus what would have happened without us,” Starr explains.

“If you don’t grasp that difference, you risk claiming effects you didn’t really create – and then you never learn to get better.”

Philanthropy requires reflection

Mulago’s approach isn’t complicated, Starr insists. Others can easily learn from it.

“The truth is, not everyone can do what we do. We put a lot of effort into understanding an organization before it joins our portfolio – and not everyone has the capacity for that.”

He also values diversity in the philanthropic field.

“I know many excellent funders. Their methods may differ from ours, but they work methodically. They have a systematic way of assessing what they fund and they hold themselves accountable.”

Ultimately, Starr’s advice to the philanthropic world is simple:

“You need to know what you’re doing – and think carefully about it. Philanthropy isn’t hard – but it’s tricky.”