Protecting the Development Innovation Ventures Fund


WASHINGTON, D.C. — The Development Innovation Ventures (DIV) fund is the investment arm of the Global Development Lab, a project founded in 2010 by the United States Agency for International Development (USAID). To date, the fund has awarded more than $90 million to projects in more than 40 countries.

The venture capital fund supports efforts to curb extreme global poverty, but it stopped accepting new grant applications on July 28, 2017. The announcement came as part of an email to grant recipients, saying the funding application window was closing due to “shifting resources constraints.”

These constraints and uncertainty of the future are due in part to the Trump administration’s plan to cut foreign aid funding. Still, many are hopeful that the suspension of grants will be temporary.

How does Development Innovation Ventures work?

The fund works largely the same way a private venture capital fund would. After vetting of an organization’s viability, the fund employs tier-based investing. As the organization succeeds, the Development Innovation Ventures fund injects more money to help with growth.

The only difference between the Development Innovation Ventures fund and a private fund is the source of funding. DIV derives most of its funding from USAID. Money isn’t just handed out; only 3 percent of applications are selected to advance to the first funding round.

Last year the Development Innovation Ventures fund awarded more than $6 million in grants. If that sounds like a lot, consider this: USAID works with less than 1 percent of the total federal budget.

Trump’s plan is to cut that less than one percent by almost a third. In the past, that one third of less than one percent has supported efforts to secure clean drinking water and increase crop yields in developing nations.

What has the Development Innovation Ventures fund done?

Of the $6 million awarded in 2016, some of the projects funded helped fight jaundice in newborns in India, provided low-income communities in Peru with solar panels, and trained healthcare professionals and supplied the vision-impaired with glasses in Rwanda.

All of these projects are examples of the U.S. exerting soft power. Soft power involves investing in the health and productivity of a nation, which keeps the area stable. When an area is stable, extreme political groups have a hard time garnering support. So in the long run, exercising soft power now may save the U.S. from using hard power later — like boots on the ground.

Many in the U.S. House and Senate recognize the need for soft power. That’s why in 2016, Rep. Joaquin Castro (D-TX) introduced a bill called the Global Development Lab Act of 2016 that would protect funding for the Lab and the Development Innovation Ventures fund through 2021.

The bill passed the House in September 2016. It’s now waiting to be reviewed by the Senate Foreign Relations Committee before it can be brought to the floor and voted on.

Thomas James Anania
Photo: Flickr


About Author

Thomas Anania

Thomas lives in Worcester, MA. His academic and personal interests include economics, sustainability, writing, and baking. Thomas recently shaved his head completely and embraced the bald!

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