Looking to reform the way aid reaches crisis zones, the 3 Million Club has opened an online store that delivers life-saving items directly to those most in need
For a number of years, there has been a growing critique within the nonprofit sector about whether the current model being used by large international aid organizations working in the developing world is really the most effective way to help local populations.
In most cases with major nonprofits, they work with large international and local team infrastructures, which while well intentioned, lead to significant overhead and far less value reaching the people who need it most.
According to a report from the United Nations, 60 cents of every dollar in a traditional aid group’s budget is spent on an organization’s operational costs, leaving only 40 cents over to be doled out through their local partners and programs.
With this much apparent waste, it can unfortunately make many people question the value of getting involved.
In hopes of reforming the aid sector, a trio of angel investors decided to try their hand at transferring some of the efficiency and scrappiness of the startup experience into the process, integrating technology and stronger business models to produce stronger results.
The team of Franck Benhamou, Dan Vigdor and Ran Tushia wanted to find a way to bring life-saving supplies to vulnerable populations, but without the heft that comes with standard aid organizations. In search of guidance on how to actually pull it off, they turned to long time humanitarian professional Chamutal Afek-Eitam.
After over 16 years of working with the UN and other aid projects, Afek-Eitam saw an opportunity for disruption, putting smarter implementation of technology and lean business practices to work with the goal of getting the most value to the end recipients.
Believing in the value of incorporating technology into the aid space, Afek-Eitam had previously worked on information sharing for the aid community project Humanitarian Genome, where she worked with programmer Ishay Green, who later linked her with Ran Tushia. He contacted her about how to get a more efficient project underway, incorporating the startup model’s lean business and technology into the humanitarian world.
Together with the angels, she founded the 3 Million Club, bringing Oren Sela with his background in digital marketing on as COO. They have since received added backing from Wix, eBay, Fiverr, and the asset management Lexinta Group.
They are working with communities in Haiti, Nepal, and now starting in India, with plans to expand to more locations.
E-commerce for good: working simple and lean
One of the most important lessons that the 3 Million Club seems to have taken from the world of e-commerce is the need for simplicity. In the shop on their site, donors have a number of different options to choose from, including nutrition, shelter, medical, water, sanitation and hygiene.
Still in the early stage, they currently have only a nutritional bar on offer that is designed to pull a child back from the dangers of malnutrition over the course of 12 weeks.
A two-week supply of 20 bars can be bought for $10, with the option to buy larger packages. This includes a 20% surcharge to the cost of the product to pay for their operations, which is quite low when compared with the minimum of 60% for most organizations mentioned above.
Making the most out of the donations is the core of their mission, leading to their motto that “What you buy is what they get.”
She says that according to their math, they should be able to break even in three years based on the marketplace alone, reducing the need to fundraise while creating a sustainable long-term project.
This is important if they will be able to have long-term efficacy in this space. The Global Humanitarian Assistance Report for 2015 found that despite a record breaking $24.5 billion raised for aid projects in 2014, the UN-backed organizations fell $7.5 billion short of the capital needed to meet the goals.
“What we’re working on now is developing our platform to get more people to purchase the product and to reach local manufacturers that are making mosquito nets, incubators and medical equipment, stoves,” she tells Geektime, noting that these vendors will be able to advertise on the platform to reach the public directly. With the launch of their platform with the nutritional bar, the 3 Million Club is now looking for new innovations to get into the system.
Cutting costs by empowering local NGOs and vendors through technology
Some of Afek-Eitam’s harshest criticism of the large aid groups is how they receive an oversized section of the pie when it comes to receiving funding.
According to the Global Humanitarian Assistance report, only 0.2% of international funding goes to local NGOs that Afek-Eitam says often have a better sense of what is really needed on the ground and know how to work in the native context.
This is crucial since the direct intervention of outside forces can end up having a disruptive effect on the local economy and social structure, especially after the project ends.
Afek-Eitam believes that in most cases — clarifying that this is not a hard and fast rule — the best thing that an international actor can do with their project is as she tells Geektime, “just let go,” believing that it is smarter to allow the local vendors to do the work without placing costly foreign staff on the ground to do monitoring.
Afek-Eitam recognizes that no system will ever be perfect and that some losses will be a part of the process. In 2014 out of $25 billion, 30% went missing. The question comes down to how to limit that loss. “Corruption is something that is there and we can’t end it,” she says. In her approach, the 3 Million Club works to send products only to the communities and not cash.
Secondly and perhaps more interesting is her belief that tracking technology can vastly improve the situation. Not only can they optimize their operations for effectiveness, they can be assured that the goods reach their final destination, keeping everyone in the chain honest.
She notes that this approach of putting the power in the hands of local actors is not always possible everywhere, but that on the whole, it is a much more effective and perhaps sustainable way to work.
Instead, she sees a way for technology to play a key role in helping to track the use of funds. This means not only making sure that the products bought by donors on the site actually arrives where it is supposed to, but also collecting and analyzing data to learn to work more efficiently.
“There’s a big problem since it’s impossible to track where your money is going. All that money goes into a big pool without designated destinations,” she tells Geektime, explaining that, “The vast majority of organizations have no clue where your money is going.”
While Afek-Eitam is still mum on what kind of technical solution they will be using, she tells Geektime that their local partners will be able to benefit in their own operations as well.
Their technology allows for proper information management for the suppliers on the use of their product, as well as for the donors. This enables the factory to get constant orders, helping to sustain them.
She adds that this is a strong incentive for local manufacturers and agencies to work with her project.
Unfortunately, she says that she has not seen much movement from the aid community towards integrating technology into their operations. “The current nonprofit system is a very old school model, and they are slow to implement new technologies,” says Afek-Eitam. “Their intentions are good, but the road to hell are paved with good intentions.”
Laying the groundwork
In the long-term vision over the next three years, the 3 Million Club’s vision is for the tracking software to be given to local and international organizations for their own purposes of tracking and being transparent. In the short term, they are focused on improving the shop and developing the technology.
“It’s more than capacity building,” she says of their vision in creating a better-run aid system in that it helps to eliminate waste by cutting out the middlemen, supporting local actors, and being transparent to the actual donor which is important as they are a 501c3 U.S. registered charity.
“Anybody can open a shop, but the tracking is the disrupting factor that makes a huge difference for the efficiency in aid and for supporting local ecosystems, and not creating dependencies on the international system as it is today.”