Funding Innovations: Electricity and Poverty

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November 2010; Source: PRI Makers Network | Did you know that 1.4 billion people lack electricity? Rather than switching on the light, they depend on candles and kerosene to light their homes. According to the World Bank and the International Monetary Fund, the lack of electricity is a significant infrastructure impediment to poverty reduction.

In 2001 a company called E+Co began working to bring alternative lighting technologies to Tanzania, a country where 86 percent of the population lives without access to electricity, by distributing 30,000 solar photovoltaic home systems. The Lemelson Foundation spotted an opportunity to expand the supply chain for the distribution of solar systems in Africa by building on E+Co’s program. Beginning in 2008 working with E+Co, Lemelson provided seed capital PRIs to five new solar photovoltaic businesses and growth capital to two existing companies. Today, E+Co manages 13 solar investments in Tanzania and provides training to more than 80 solar entrepreneurs.

Oddly, this PRI Makers Network article doesn’t provide much information about the foundation providing the grants and PRIs. Located in Oregon and created by inventor Jerome Lemelson, the Lemelson Foundation aims to support “the inventors of tomorrow” helping “innovators” develop and implement new technologies.

The foundation’s grant program is, at least on paper, very impressive and well articulated and focuses on three themes: “From the Classroom to the Real World,” providing hands on learning in engineering and science for students from grade school to college, “From the Garage to the Marketplace,” developing long-term partnerships with organizations that support inventors, and “From the Marketplace to Individual Lives,” supporting the growth and scaling of innovation enterprises through taking risks on early-stage innovations and investing in organizations that finance and mentor technology-related social entrepreneurs.

The program provides four kinds of funding: seed capital for early-stage, high-risk enterprises; grants, loans, loan guarantees, and equity to match capital to organizations’ stages of development; co-funding to encourage other funders to provide risk capital; and investments in capacity building to help nonprofits manage and sustain core operations.

The $280 million foundation has made disbursements amounting to $82 million between 2002 and 2008, including substantial loans and grants to E+Co. Lemelson isn’t just interesting for its PRIs. Look at its Form-990 for an extremely detailed item-by-item description of the portfolio of what appears to be a foundation that really does support social entrepreneurs.—Rick Cohen