Leverage Point
Civil Society
How are academics, philanthropic organisations, or other grassroots groups collaborating with financial institutions to advance gender lens investing? Whose knowledge is valued, and who has a seat at the table?
Introduction: Why this matters
Thanks to sustained engagement with governments and NGOs, there is now a growing demand amongst investors for data on gender. However, this demand has revealed a gap in experts to provide it and the limitations of relying solely on data to address bias.
Investors are not the only members of the gender-smart ecosystem. The many community-led, nonprofit, and public sector organisations that represent the intersecting interests of women and gender equality have a lot of valuable data and insights on barriers and opportunities, necessary policy shifts, and social/cultural norms work that is required for change.
“We’ve got specialist impact measurement partners, because a party that we’re working with on measuring the impact on indigenous communities, that’s their expertise. And that’s not transferable, for example, to climate. And similarly, our climate experts can measure the climate impact on Indigenous communities, but they can’t give us the deep social metrics that we need within those communities.”
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“There isn’t some rational thing that says, ‘if I just show you enough data, you will overcome bias.’ So we said ‘we use data to fix the business case,’ which would then have people think differently about gender. What it did was create a never-ending need for more data. Because we will never have enough data to overcome bias.”
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“The whole continent of Africa has only one institution for learning an innovative financing program: the University of Cape Town. [We] need to build local capacity and local institutions; we are working on a program to enable 30 or 40 African business schools to acquire competence around innovative finance.”
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GenderSmart view
While the majority of attention and technical assistance to date has been focused on fund managers and entrepreneurs, capacity building for investors is just as important, so that local context, lived experience and proximate voices are part of investment process, strategy and decision making.
Sana Kapadia
Head of Content
Power shifting - or at least sharing - with communities
Investors are increasingly recognising that, often, the real expertise lies within the communities where women live and work. Traditional investment structures put most of the power in the hands of the investor, meaning that gender-smart investors must get more creative — and more willing to ‘let go’ — if they want their investments to be effective. Participatory funding models like community advisory panels are one tool for transformation.
“Some individual philanthropists who come on board with us sometimes feel like they have a say and they’re used to being the boss. It does take a little bit of guidance and saying, ‘You know what, you may think that you’re the technical expert, but you’re the technical expert in a very different context. We’re very different people demographically. So how about you let me guide you on this?”
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“How do we also ensure that ultimately, the recipients of the work that we’re doing are also being heard? Because I think it’s so easy to just be sitting in a conference room coming up with all these concepts and ideas. But the truth is, where’s the voice of the ground?”
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“In working with entrepreneurs in a given context, we are likely to find more prevalent people from more privileged backgrounds. So we would have a community panel in place that would ensure that we would have representatives from the less prevalent populations and ensure that that access is given or that the product actually is helpful for those”
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“Historically, these [women entrepreneurs] are the types of people who have been lifted out of the financial equation for so long. We’ve had to learn to listen to those types of constituents and bridge the gap across the table between those constituents and the wider investing community.”
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“There’s continued recognition of women as actors, women as not beneficiaries, as actors as allocators, as asset managers, first time fund managers. We’re not yet doing enough, but I think that conversation has gotten at least some recognition of importance.”
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Mismatch between capital and entrepreneurs
Traditional financial structures and the capital they offer do not necessarily fit the needs of small and growing businesses founded or led by women entrepreneurs. From how we assess credit worthiness to how we structure terms, the gender smart ecosystem needs to continue rethinking how different approaches can have a ripple effect across the financial system. This includes expanded catalytic capital for certain market segments.
“Instead of fitting our women entrepreneurs into existing capital structures, and different capital stocks, we’re starting to look at designing new structures that fit for how the ventures are being run versus trying to fit them into the finance tracks”
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“You have concepts of gender lens investment and all that, but on the other side of that operation level, how are you going to implement those concepts? Like, if she does not have collateral, then what are the alternative ways to see that money goes to them or the capital is accessed?”
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“We tried out different types of products and investments with entrepreneurs that wouldn’t necessarily pass a traditional credit assessment, and so far, all the money has come back, which just shows that the perceived risk needs to be reevaluated.”
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“We essentially have large swathes of capital that’s designed for companies that don’t exist. And so we then try to build those companies to meet the needs of capital versus designing capital to meet the needs of the existing businesses.”
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Investors aren't developing a deep enough understanding of the local issues affecting women and girls
In particular, engaging men and boys is critical to achieving the sort of societal and cultural changes that gender smart investors are seeking to make. Acting in a vacuum, and in a way that is disconnected from efforts on the ground, can lead to negative unintended consequences. For instance, the data saying that women are more likely to use their income to support their families and communities does not always reflect the reaction of men who see women being “given more opportunities” based on this data (for example, one interview told the story of a livestock gift to a woman being used by her husband as a dowry for a second wife).
The solution? Gender-smart investors need to bring more than just money to the table. Where appropriate they can fund civil society actors to provide insight and other services to businesses and investors, and improve outcomes across the board.
“Before they invest the resources and energy on specific areas, it is important to understand the background upon which women live — the cultural issues, the socioeconomic challenges that women and girls face within the local communities.”
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“We expected investors to have a little bit more than just giving money to the community in terms of, not just business skills and whatever, but also thinking about social norms. So engaging men and boys.”
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“Putting money in the hands of women is very important in rebalancing relationships, but of course, it can create the complete opposite of what you want. We’ve seen in some of the other countries that we worked in, that if you didn’t bring men into the conversation at the very beginning, as to how women were going to know that women were going to have access to money and cash in an economic power, that could result in backlash and balance.”
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“Indonesia is predominantly Muslim. But still, it’s more open for women’s participation than India. So I think we need to understand the cultural nuances and have more local fund managers and local LPs actually allocating the capital.”
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“There’s often an assumption that investors are smarter, or that investment is the strategy that should be privileged. Whereas what’s really true is that we need it all. We need grassroots organising, and organising at the UN, and organising it at government levels, too, to really socialise this and make it happen.”
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Long-term engagement and future thinking
Because gender-smart investors often seek a positive impact on society alongside returns, investors need to be committed to this work beyond a quick injection of capital. Civil society actors can hold investors to account, inspire, and provide insights around the longer term changes on gender equity and on the impact of gender equity on other social and environmental goals.
“Sometimes [investors] come in like, ‘Okay, this is what you wrote in your proposal, but I just went online and saw Fenty do this in the US because one of our projects is on makeup.’ And you’re just like, I mean, cool, but makeup looks different in different groups in Kenya… If you’re thinking about quick wins and recouping your money in the next 2, 3, 5 years, that’s a good idea but no, thank you.”
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“If the war [in Ukraine] ends and Ukraine is victorious, there will be massive investments in that part of the world. And we — gender activists and investors — must be ready for that. We have to be thinking about it now. I’m not aware of in-depth of future planning and strategising that says, ‘You know what, we’re going to rebuild the Ukrainian economy with a gender lens that’s going to embrace the role of women, women’s businesses, women’s work, the care economy’.”