Using Co-Creation to Construct a Portfolio for Women’s Economic Empowerment
By using a lean, hybrid co-creation to solicit proposals and identify activities that increase women’s economic empowerment, INVEST enabled USAID to deploy funding at a speed that matches the urgent needs of women globally.
By Emily Langhorne, INVEST Communications Specialist
When women have access to employment opportunities, economies grow. In the past 50 years, increased educational attainment for women accounts for nearly 50 percent of the economic growth in OECD countries, and achieving parity in labor force participation rates between men and women in these countries could boost global GDP by more than 12 percent over the next 20 years.
Evidence shows that lower levels of gender inequality correlate with increased income, economic growth, and national competitiveness. At the same time, increases in gender equality are associated with reduced poverty, a more equitable distribution of income, and improved living conditions for individuals, families, and societies.
While significant progress has been made, many women throughout the world still do not have access the same economic opportunities as their male counterparts.
According to UN Women, in 2018, women’s global labor force participation was 63 percent, compared to 94 percent for men — with women over-represented in informal and unsecure employment. In 18 of 289 economies analyzed, husbands could legally prevent their wives from working, and 104 economies still had laws that prevent women from working specific jobs.
Widespread gender gaps in financial inclusion and economic empowerment slow economic growth and hold women back. When women have less opportunity to participate in the workforce, they have less access to social protection. Men are more likely than women to have sick leave, unemployment benefits, and retirement plans, and many women have no access to maternity services, such as prenatal, delivery, and postpartum care.
In short, women can’t wait. They need greater access to economic opportunities, now.
The United States Agency for International Development (USAID) recognizes the need to close these gender gaps quickly. Since 2012, USAID’s Gender Equity and Women’s Empowerment Hub (GenDev) has been working to reduce gender-based violence, increase the capability of women and girls to realize their rights and determine their life outcomes, and reduce gender disparities in access to and control over resources, wealth, opportunities, and services.
Recently, USAID GenDev has been working to catalyze the field of gender lens investing (GLI), strengthening and promoting the evidence that confirms GLI investing is smart investing — it increases profits for companies, returns for investors, and positive outcomes for women.
In 2019, USAID GenDev approached USAID INVEST — an initiative that mobilizes private capital for better development results — for assistance in rapidly building and funding a broad portfolio of activities with a focus on gender lens investing as a method for increasing women’s economic empowerment.
The barriers to women’s economic empowerment differ greatly from country to country and sector to sector, so INVEST’s challenge was to recruit organizations with the expertise necessary to tackle these varying obstacles. Using multiple procurement mechanisms, INVEST cast a wide net to catch a diverse group of partners who could create innovative solutions for the many different types of economic challenges that women face globally. Through this experience, INVEST has learned a few lessons that can assist international development agencies seeking to construct a portfolio centered on women’s economic empowerment.
Lesson One: Remember to Play Your Strengths
USAID GenDev had already partnered with INVEST to implement activities that expand opportunities for women throughout the world. Through working with new partners, using a rapid procurement procedure, and streamlining the sub-contracting process, INVEST has helped USAID find a niche solution to increase access to working capital loans for women fish traders in Indonesia’s fisheries, create a field examination handbook to increase women’s access to finance in Colombia, and more. By expanding this portfolio with a set of activities focused specifically on GLI, INVEST now had the opportunity to assist in testing the effectiveness, sustainability, and scalability of using blended finance interventions to empower women economically.
Because USAID and INVEST’s teams had a strong understanding of the activities needed to catalyze GLI and build its evidence base, they could issue an RFP with explicit requirements and the expectation of receiving high-quality proposals designed to meet them. However, their experiences with GLI had taught them that gender-smart businesses have different needs than gender-focused funds, so they decided to implement a two-track GLI activity and concurrently issue two “partner” RFPs — one to address the need for methods to de-risk gender-smart investments and the other to provide tailored GLI technical assistance.
Track one offered direct support — either blended finance related or operationally-focused — to gender-smart investors and funds. Track two sought to provide portfolio companies with gender-smart technical assistance via a sidecar facility–an instrument through which USAID-supported fund managers provide portfolio companies with business advisory services that help them incorporate gender-smart practices into their operations and strategy while increasing their likelihood of success.
Under the RFP for track one, INVEST made two awards — one to WIC Capital and another to CARE.
With catalytic funding provided by USAID, WIC Capital has launched and is fundraising for its $13.5 million open-ended fund. Through its fundraising, WIC Capital will continue to provide financing and tailored business support to women-led businesses in Senegal and Côte d’Ivoire, growing its current portfolio.
CARE, having also received catalytic funding from USAID, launched the CARE SheTrades Impact Fund, a $75 million gender-justice fund targeting early growth stage companies in South and Southeast Asia. CARE is also developing a technical assistance facility that will provide the fund’s portfolio companies with tailored technical assistance to improve gender outcomes and financial returns.
Under the RFP for track two, INVEST made an award to the AlphaMundi Foundation, which is now using USAID funding to provide tailored, gender-smart technical assistance to nine SMEs in Latin America and East Africa that have received private capital from one of AlphaMundi Group’s gender-lens investment vehicles. The tools and approaches tested with these companies will be shared with G-SEARCh, a research coalition of impact investors that seeks to discover and share the most effective ways to embed gender equality into SMEs.
Lesson Two: It’s Important to Know What You Don’t Know
Using traditional tools like RFPs works well when international development agencies have a clear idea of what approach would best solve a specific development challenge. However, sometimes development agencies understand the problem well but have difficulty identifying the best solutions, particularly when it comes to building a market-driven approach with sustainable outcomes.
When designing an activity to support GLI, USAID wants to collaborate with private-sector actors and learn from the insights they’ve gained by working in the fields of blended finance and women’s economic empowerment. As a result, INVEST decided to use co-creation instead of a traditional procurement mechanism. That way, rather than searching for and funding the right partners to implement carefully planned activities, USAID could open their search to a broader range of creative solutions.
Co-creation is a design approach that uses a participatory process. It brings together different stakeholders with the intention of collectively constructing a product, solution, service, etc. that is informed by and provides value to all participants. In a co-creation workshop, ideas are meant to be shared and improved upon, rather than withheld with the hopes of gaining a competitive advantage in the competition for donor funding.
“Co-creation is a way of saying that we don’t have the answers, and we need your help,” says INVEST Senior Investment Advisor Nora Brown. “It’s about bringing partners together to have a multi-way conversation to design solutions collaboratively based on our different vantage points. Listening to each other and learning from each other can lead to much better, more effective solutions to the problem we’re trying to solve.”
Co-creations are an excellent listening tool, and hearing the private sector speak about their objectives in partnering with USAID is an important aspect of private sector engagement (PSE). By prioritizing collaboration with the private sector to create development solutions that create both financial returns and positive social and environmental results, USAID is able to fund projects that could eventually prosper without foreign assistance subsidies, thereby creating sustainable and scalable solutions that help build local markets.
Convening and designing solutions with the private sector also helps ensure the additionality of a blended finance transaction — i.e. making sure that a development agency’s involvement made a difference in the closing of a transaction and wasn’t an unnecessary subsidy. For example, collaborating with the private sector helps USAID determine the type and amount of support required to mobilize private investment into a project, fund, or company that contributes to positive social or environmental results.
For co-creation procurements, INVEST solicits expressions of interests (EOIs) rather than traditional proposals. In an EOI, an organization submits a brief concept for how to address a problem and illustrates their institutional capacity rather than put forward a final, immutable solution.
To develop a GLI portfolio, INVEST sought EOIs that contained innovative approaches that leverage USAID resources to catalyze commercial investment for women’s economic empowerment in the countries where USAID operates. EOIs aren’t as formal and rigid as RFPs in their scoring criteria because the goal is to identify participants and concepts that will add value to a collaborative co-creation process, not to make funding decisions based on the EOIs themselves.
The EOI solicitation was intentionally broad: INVEST sought to bring together a cross section of organizations — a variety of players from within the women’s economic empowerment ecosystem who come at the issue from different angles. The team wanted to include organizations that work closely “on the ground” with women and women-owned businesses, those that manage global funds of funds, and those at every level in between.
INVEST received 59 responses to its EOI, and ultimately invited 16 firms with diverse capabilities and footprints in women’s economic empowerment for a two-day co-creation workshop in Washington, D.C, in November 2019.
USAID wanted to deploy funding to activities quickly, so INVEST’s team recognized that further operational tweaks were necessary if they were going to identify and implement activities rapidly. To build and support a strong portfolio of organizations using innovative blended finance approaches to empower women, INVEST had to innovate operationally by piloting a simplified, streamlined co-creation process..
Lesson Three: You Can’t Have Technical Innovation without Operational Innovation
Co-creation is a valuable tool. However, the typical co-creation process can be costly and time consuming.
To deploy funding and implement activities quickly, INVEST piloted a streamlined, simplified co-creation. Working with Design Thinkers Group (DTG), an innovative agency that works globally to help organizations look at problems differently and tap into the creativity of their employees, INVEST took a lean, hybrid approach to co-creation that allowed them to make fast awards in a cost-effective way.
During the co-creation workshop, the invited organizations were asked to refine their concepts in collaboration with INVEST, USAID, and other participants.
“This was a different design of a co-creation workshop than the ones we’ve done before with USAID because the idea wasn’t that we had to have new concepts coming out of the other end of the workshop. Usually, an EOI is the invited organization’s ticket in the door for a co-creation: USAID uses it to try to build a mix of stakeholders or players so that they have a diversity of capabilities, perspectives, and experience represented at the co-creation. Then, we ask participants to park those EOIs at the door because the goal is to come up with new concepts together. For this co-creation, USAID wanted to convene a group of people they’d pre-selected to have a structured conversation around GLI in the context of W-GDP. They wanted them to refine concepts and possibly identify some partnering opportunities, but creating entirely new concepts wasn’t the overarching goal.”
– Marc Bolick, Managing Partner, DTG.
Participants engaged in a variety of tasks designed to produce solutions for the challenges to women’s economic empowerment and to share subject-matter expertise that could inform USAID’s general GLI strategy. Attendees created a visual representation of their organization’s EOI concept so that everyone in the room understood the GLI solutions being proposed, mapped the ecosystem of blended finance for women’s economic empowerment and identified places where USAID could play a role, and more.
“This co-creation brought the right people together from the women’s economic empowerment space to inform USAID’s thinking,” explains Lisa Gans, INVEST Strategic Investment Advisor. “Bringing these groups together gave USAID direct feedback from the ecosystem on the best way to use blended finance to reach its development goals.”
During the workshop, participants also had individual meetings with representatives of USAID and INVEST. These face-to-face conversations helped participants better understand USAID’s development goals so that they could further customize their approaches to align with USAID priorities. This innovative addition to the co-creation process provided participants with an alternative way of iterating on their concepts beyond just large group presentations, which helped level the playing field for firms new to working with USAID that had great ideas but were less familiar with how USAID typically structures its activities.
At the end of the workshop, participants were given time to refine their concepts based on what they’d learned. They could also combine ideas with another organization to create a new concept that pooled their strengths to better address an obstacle to women’s economic empowerment.
USAID and INVEST reviewed the new concepts in the following weeks and determined which organizations would be invited to submit their concepts as proposals for funding. Because of the collaborative nature of co-creation, the proposals were much stronger than the original EOI concepts, having been shaped by the sharing of ideas among participants and USAID representatives.
Lesson Four: Identify All Strong Solutions, Regardless of the Amount of Funding Currently Available
By using a lean, hybrid co-creation to solicit proposals and identify activities that increase women’s economic empowerment, INVEST enabled USAID to deploy funding at a speed that matches the urgent needs of women globally.
The workshop provided an interactive forum for discussing the challenges faced by the financial sector in supporting women’s economic empowerment, and organizations from across this ecosystem began to foster new relationships, share ideas, and contribute their niche expertise. Many organizations voiced an interest in exploring future partnerships, indicating that the workshop may have a ripple effect on advancing women’s economic opportunities beyond the concepts designed for the INVEST proposals.
Several organizations partnered in revising their concepts for submission, and four organizations played a role in multiple proposals. One participating organization that received funding for their proposal entirely changed the original concept outlined in their EOI based on the feedback they received at the workshop. In the end, INVEST received 10 strong proposals at a much lower cost than would have been incurred through RFPs.
“When you want to create a portfolio, and not just make one award, this type of co-creation is highly cost-effective,” explains INVEST Chief of Party Kristi Ragan. “To get a portfolio with the level of innovation and global coverage like what we got would have required three RFPs at a minimum, each one with its own costs.”
Furthermore, the timeline for making funding decisions for GLI proposals received through the co-creation process was much shorter than the timeline for those received from the RFP process. Even though INVEST selected fewer activities for funding through the RFP process, the decision-making process took nearly twice as long.
Of the 10 activities proposed by workshop participants, INVEST initially awarded funding to five of them: Patamar Capital, KIVA, MEDA, WOCCU, and Deloitte.
- Patamar Capital launched the Beacon Fund, a new $50-million evergreen fund serving women-led and women-focused businesses in Southeast Asia.
- KIVA is designing and structuring the Kiva Invest in Women Fund an innovative, gender-smart investing vehicle that aims to dramatically increase investment in women by raising $100 million in capital and reaching one million women with quality financial services.
- MEDA is addressing the challenges that women-owned businesses face in East Africa when trying to access financing by developing and administering tailored technical assistance to 20 women-owned SMEs applying for capital. Four of the businesses will be eligible to receive financing through this activity.
- WOCCU is piloting a GLI Accelerator Kit to increase credit union investment in women-owned enterprises in Senegal and assessing four additional countries for expansion of the Kit post-pilot.
- Deloitte tested the hypothesis that blended capital can incentivize financial service providers in Indonesia, Kenya, and Vietnam to expand their movable property lending offerings in support of financial inclusion for women.
Upon making these awards in early 2020, the INVEST team also determined that every activity proposed from the co-creation process was structured wisely, ready to implement, and had clear impact , so they decided to “greenlight” the other five proposals. In doing so, they essentially asked these organizations to extend the timeframe guaranteeing the cost and feasibility of their proposals in hopes that USAID or other donors may be able to fund these activities in the future. That way, more women worldwide could benefit from the innovative solutions already created and identified through this co-creation.
In October 2020, those hopes came to fruition when USAID awarded funding for the implementation of two more concepts from the co-creation: Deetken Impact, in partnership with Pro Mujer, is now providing gender-focused incubation programs for investee companies of the Latin America-focused Ilu Women’s Empowerment Fund, and RENEW is developing a gender-smart SME investment playbook for fund managers that supports the creation of GLI success stories in Uganda and Rwanda to show that GLI investments in African SMEs can deliver impact and returns.
“It’s exciting to be working with multiple partners that have the expertise and ingenuity to advance a gendered lens around the world,” says INVEST Senior Investment Advisor Noemi Danao-Schroeder, who oversees this portfolio. “Because this GLI portfolio is truly global, these activities have the potential to positively impact a tremendous number of women.”
Economically empowering millions of women in the developing world is no small feat. It requires working across varying sectors and geographies and overcoming significant obstacles. But women can’t wait. That’s why USAID, INVEST, and their private-sector partners have come together to implement the most innovative and effective GLI strategies, right now.
