10 Aug R.I.S.E. Artisan Fund
Interview with Ellen Fish, Director of R.I.S.E. Artisan Fund
When Ellen applied to be part of the Transformative 25, I was intrigued by her fund’s focus on artisan enterprises. Then I learned her initiative was part of the Friends of Tilonia, a non-profit organization working with the Barefoot College.
Founded by Bunker Roy, Barefoot College Tilonia is a community-based organization in rural India that supports poor, rural communities in becoming self-sufficient and sustainable. With training from the College, semi-literate men and women become teachers, midwives, dentists, health care workers, solar engineers, solar cooker engineers, village water system engineers, architects, masons, carpenters, communicators, office administrators and accountants, as well as e-commerce managers, artisans and designers. Ellen has worked with a Barefoot team since 2000 to develop and operate the online shop.
Jen: Why was R.I.S.E. Artisan Fund created?
Ellen: The R.I.S.E. Artisan Fund has evolved from our collaboration with artisan enterprises for the past 20 years. Initially, we focused on the challenges of these enterprises in accessing international markets. We developed Tilonia in partnership with the Barefoot College first, and then Sprout Enterprise with more than a dozen artisan enterprises to market artisan product lines. With our success in attracting international buyers and consumers we then faced the challenge of funding that growth.
We use catalytic capital to support artisan enterprises in building more effective sales distribution, more efficient operations and more timely financial reporting.
Since our inception, we’ve used a range of funding across the early stages of enterprise development to support the entrepreneurs we work with — from grants for seed funding of a weavers’ association to production advances for working capital for the enterprises we promote via Sprout Enterprise® to more recently, working capital loans to BIDUK and Iluméxico.
With the R.I.S.E. Artisan Fund, we want to address the fact that micro, small and early-stage artisan enterprises typically lack the capital resources necessary for them to grow successfully. Only with appropriate capital and support will these artisan enterprises be able to grow, and in order for artisan enterprises to scale, they need to be able to grow and access international markets, producer financing, working capital and investment capital for expansion.
Jen: How are your investment funds catalytic in a way that is different from other funds?
Ellen: Our investment in artisan enterprises addresses three, key impact investment themes that address the sustainable development goals, particularly for rural communities:
First, women’s empowerment as the majority of artisans are small producers, often women, working informally at home. Too often, this means this sector is an overlooked, undervalued and underfunded economic sector with still untapped potential. At the same time, it is well recognized that women are key drivers of economic growth.
Second, sustainability as small-scale craft production can have a lighter environmental impact than large-scale, machine-powered, industrial production. Made by hand using or reusing local, natural materials, craft is the original circular economy. Use of hand-powered processes, natural materials and recycled inputs, reduces energy needs and avoids toxic waste entering and eroding the environment.
Third, climate change as clean energy innovation enables pioneering artisan enterprises to reduce their reliance on energy from fossil fuels. Solar energy powers equipment and lighting. Methane collected from local bio-digesters replaces propane for furnaces and gasification of pine needles – a fire hazard cleared from forest floors – replaces use of diesel fuel to run power generators. Agricultural waste packed in briquettes replaces charcoal for firing clay, and re-designed furnaces burn more efficiently.
All of these are energy innovations that our partners have designed and developed to operate more cost effectively. In addition, many are also engaged in reforestation and biodiversity initiatives that restore local and regional environments which have been degraded
Jen: How do you describe the kind of non-financial returns the fund offers?
Ellen: All of the investment themes I’ve just described include non-financial returns from investment in these artisan enterprises. These enterprises deliver increased income for marginalized communities in remote areas; better economic and education opportunities for women and girls; less waste and environmental damage; cleaner air and water; and more efficient use of resources. This positive impact comes from the holistic way, these enterprises operate as part of a local, eco-system which is often one that they’ve helped to develop.
Examples in our portfolio of enterprises developing these innovations are hybrid enterprises that have both a for-profit and a non-profit arm like Avani & Kumaon Earthcraft in northern India, Xaquixe and Procesos Promambiente Xaquixe (PPX), and Colectivo 1050º and Innovando la Tradición in southern México, and ItzaWood and their jungle school in the Petén jungle in Guatemala.
There are investment opportunities across the spectrum from philanthropic to investment capital in the impact opportunities in the R.I.S.E. Artisan Fund.
Jen: Can you describe how you use integrated capital to do your work?
Ellen: We leverage philanthropic capital to support enterprises through early stage growth and development as well as reinvestment of earnings from our ecommerce operations.
First, we provide grants to help early stage enterprises build business capacity and entrepreneurial skills and to digitize their operations for better production management and development of online market platforms to expand their sales.
Next, we provide financing for equipment, materials and production to enable enterprises to grow profitably, and finally, we help entrepreneurs, who want to raise investment capital to enable their enterprises to scale, become “investment ready.” We are coaches and mentors along this journey.
Jen: What is transformational about the businesses that you invest in?
Ellen: The R.I.S.E Artisan Fund invests in artisan enterprises who are redesigning business models based on holistic and community-based approaches. Our values are aligned with the entrepreneurs and enterprises we support. The founders have a high degree of integrity. They value fairness and operate with respect for the people who are part of the enterprise.
These entrepreneurs are building businesses by investing significantly in skills development and training, as well as in revenue or profit sharing with everyone who is part of the enterprise, and many of the enterprises have shared ownership structures. And finally, these enterprises are engaged in the revitalization, revaluation and representation of traditional crafts and cultural heritage. They honor the cultural traditions of their communities.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Ellen: We are inspired by dynamic entrepreneurs with a business vision and aspiration who are changing the status quo in their communities. Entrepreneurs in our network are leading community initiatives for education, clean energy technology and business development all while creating economic opportunities in rural communities with few alternatives to subsistence farming.
The rural communities are often marginalized or indigenous communities. The communities lack basic infrastructure, like paved roads, electricity or water and sanitation systems. Basic services like health care or schools may be unavailable or not affordable. Men often migrate to distant cities for work leaving women and children behind. Their families become dependent on remittances which may be infrequent or insufficient.
By supporting the growth of these artisan enterprises, we help to create livelihoods in these remote communities. Local teams are trained and developed with the business skills to manage these enterprises. One example is the online enterprise, Tilonia.com, run by “graduates” of the night schools of the Barefoot College Tilonia. Other examples are Kumaon Earthcraft, the artisan enterprise created and developed by Avani, our NGO partner in northern India, and Colectivo 1050º, the brand and artisan enterprise created and developed by Innovando la Tradición.
Jen: What does a foundation or investor need to understand in order to invest in transformational businesses?
Ellen: The returns on a 100% impact portfolio are magnified since financial returns as well as social and environmental returns are realized. This “single pocket” thinking is cognizant that you cannot invest for positive impact from a philanthropic “pocket” to achieve your impact goals while still investing for financial returns from an investment “pocket” that ignores or disregards those goals. With the advancements in the field of impact investing — from performance metrics and benchmarks to investment opportunities and advisors — it is possible to achieve positive returns through the lens of “impact investing” across an investment portfolio. It is possible to shape a 100% impact portfolio that achieves your goals.
Jen: What do you tell people who think your fund is risky?
Ellen: Philanthropic investors are making a tax-deductible contribution directly or making a grant from a donor advised fund to provide philanthropic capital that this fund will invest and reinvest. Recoverable grants or revenue-based investments will return capital, creating a revolving fund.
The funds invested will be reinvested again and again, multiplying the impact of your gift and the difference you make with your contribution.
Investors using their investment capital have an opportunity to select a risk / return profile that makes sense in the context of their investment portfolio. A diversified portfolio using an asset allocation strategy will normally include a range of investments across a spectrum of risk/return to achieve the target return for their portfolio. We don’t think the challenge for impact investors is the risk as much as identifying the impact opportunities.
Unless investors make the effort themselves, or are working with a financial advisor ready to assist them in identifying these impact opportunities, these opportunities are not typically ones recommended by financial advisors or getting the media attention that the stock market does.
Investors need to identify the investment and impact themes they care most about, and then develop an investment strategy and identify investment opportunities appropriate for their portfolio.
Investment Thesis/What is your rationale for your approach to investing? The R.I.S.E. Artisan Fund invests in and supports early-stage artisan enterprises that create sustainable livelihoods for rural communities with few economic alternatives. Powered by Realize Impact and Sprout Enterprise®.
Geography: Emerging Markets
Year Founded: 2000 (Friends of Tilonia, Inc.)
# of Investments: 25+
# of Investors: 3500+ (donors, funders, supporters, investors)
Funds Raised: $1.4 million since inception
What’s on Ellen’s Minds?