Water.org uses several financing approaches to address the water and sanitation finance gaps faced by communities at the base of the pyramid. Their WaterCredit model partners with microfinance institutions to provide loans for water and sanitation, mobilizing over $1 billion in commercial capital. Their WaterEquity investment funds use blended finance with philanthropic and private capital to invest in water enterprises. Technical assistance helps attract private investment by mitigating risks. These approaches have enabled Water.org's partners to reach over 10 million people across 13 countries. Lessons learned indicate demand for financing, the need to align offerings with institutional needs, and addressing policy barriers to encourage investment.

1. Blending WSS Finance at the Base of the Pyramid
An Overview of Water.org’s Financing Approaches
GIZ Blended Finance Conference
October 4, 2018

2. Finance Constraints – the WSS sector and the BOP
2
Water Sector
Finance
Gap
Tariffs
Taxes
Transfers
BOP Families
Finance
Gap
Opportunity
Costs
Payments
Labor

3. 3
People pay a total of
$300 B
each year in coping costs
Women and children spend 258 million
hours each day collecting water. That is
time not spent at work or in school.
Universal access to basic water and
sanitation would result in $32 billion in
economic benefits each year from
reductions in health care costs and
increased productivity from reduced illness.
Every $1 invested in water and sanitation
provides a $4 economic return.

4. WaterCredit – a proven and powerful approach
4

5. The WaterCredit Model
5

6. CBOs
Community-based
organizations
Enabling Partnerships
Unlock capital
Direct impact
Digging wells
WaterCredit
Microfinance WaterCredit Adoption
Technical assistance
WaterConnect
Utilities
Global Advocacy
System change
WaterEquity & WCIF3
Spinoff and $50M fund
Impact Investing
Idea sparks
WCIF1
Investment Fund
Philanthropy
Donations
1990 2003 2013 2015 2017 2018
6
Evolution of Water.org’s Financing Approaches

7. Potential
Market
Served
Debt / EquityDebt / Equity / EnhancementPhilanthropic  DebtPhilanthropic
CommercialSocial Impact InvestmentSmart Subsidy/TACharity
Capital Spectrum
WaterEquityWaterCredit
Addressing WSS Finance Market Gaps

8. A Global Network
8
People Reached
Less than 100K
100K – 500K
500K – 1M
More than 1M
87Active partners
13Countries

9. $-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
$1,000,000,000
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Mobilizing $1B in Commercial Capital
First WaterCredit
loan
Partnering with MFIs to
unlock local capital
markets Scaling in more
countries (e.g.
Bangladesh,
Indonesia, Peru,
Philippines)
Partner
diversification
in India
Sustained
and
expanding
water &
sanitation
portfolios
$1M $15M
$250M
$1B

10. 10
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
$1,000,000,000
2013 2014 2015 2016 2017 2018
PEOPLEREACHED
Capital Mobilized Revenue People Reached
Increased Capital Leveraged and People Reached per Dollar Raised

11. Blended Finance at Work
11
Model Instruments Objectives
WaterCredit
Grants
Technical assistance,
Training/Capacity Building
Attract private investment
Mitigate perceived risks
Water Service Provider/
Bank Linkages
Technical assistance
First loss guarantees
Attract private investment
Target infrastructure for BOP
Mitigate potential losses
WaterEquity
Sub-ordinated debt (WCIF1)
Blended returns by investor
category (WCIF3)
Place private investment
Match risk and returns

12. Lessons Learned
Demand for WSS Financing at the BOP
• People in poverty can participate in WSS financing solutions
• Want to improve WSS services and can become good customers
Partnerships with financial institutions and WSS enterprises
• Align offerings with institutional needs
• Invest repayable capital when ready
• Ensure WSS conditions are favorable for success
• Monitor outputs and outcomes over time
Remember the enabling environment
• Address policy barriers that discourage WSS investment
• Utilize investment opportunities as incentives to encourage better WSS performance
12

13. Ideas for Enhancing Blended Finance for SDG6 Achievement
• Sequence and cluster capacity building, pipeline development, and investment funds
• Incentivize private capital leverage ratios in investment decision-making
• Place initial investments in shorter-term efficiency “wins” to build credit history and
trust, and
• Facilitate creation of longer-term bond markets in emerging economies
• Target taxes and subsidies
• Absolute base of the pyramid
• Co-investments and credit enhancements for private investment
• Incentives for improved WSS performance
• Water conservation measures
• Align WSS service provision & capital plans with financing strategies
13