Last week at the International Conference on Family Planning (ICFP), PSI’s CEO Karl Hofmann spoke with Devex reporter Lean Alfred Santos. Hofmann shared his thoughts on how to address Global Goal 3 by rethinking business models to foster greater impact. Read the beginning of the interview below:
Aside from multilateral and government financing, what are some of the other funding opportunities that could help boost family planning and SRHR initiatives, especially in developing and least developed countries?
I would say there are three exciting new trends that we have to take advantage of and be aware of. One is the critical importance of raising resources at the national level … I’m not talking about bilateral donors, [nor] international finance institutions, but mobilizing domestic resources [like taxation and appropriations] for core issues — not just on family planning, but for the broader issue of health in the development agenda.
I think the second area of change and promise for us is the fact that we’re at this moment in global development where hundreds of millions of people have been lifted out of poverty over the past 20 years. There’s a tremendous upward momentum in the lives of even the poorest parts of the world. And we have to take that into account and recognize an ability to mobilize resources from consumers — not just governments — in terms of their own health outcomes … If we assume that everything has to be free, we’ll never get there. It’s about allocating the available subsidy in a rational and optimal way.
The third area that I think is really important in terms of new funding trends is what I would call new philanthropy models. You have high net worth individuals like Indonesian billionaire Dr. [Dato Sri] Tahir of the Tahir Foundation, and he is emblematic of a lot of people who are so far still an untapped resource in terms of funding these innovative changes [and programs].
So national resources, money from consumers, and nontraditional philanthropy are all exciting developments on how we look at how to plug these [funding] gaps.
What business models can be implemented to engage more firms in family planning and SRHR initiatives? How can this be made sustainable?
I think we have to recognize that when we are trying to reach the most marginalized and poor communities in the world, there is a need for subsidy. It has to come from somewhere. But there is also the reality that you can’t meet the needs of everybody with a free offer when, in fact, there is an ability to pay on the part of some segments of the market.
It’s really about understanding the marketplace and segmenting it appropriately … The days are gone where we can afford to be generous with a public subsidy in a way that is wasteful. We have to be much more rigorous about leveraging the subsidy and ensuring that it goes only to those who require it.
So the business model could involve, for example, cross-subsidization. An actor in the marketplace could market a certain product or service in a cost-recoverable way, or even a surplus-generating way, and then reapply that surplus to the lower segments of the market that need subsidy. I think there’s a lot to be learned from social enterprises in this regard. There are some important opportunities for the private sector, which may not look at this marketplace as a very interesting place to invest, but I think the role for social marketing organizations and others is to bring that demand forward so that it is ready to be responded to by the private sector.