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- [00:02]
A
Welcome to High Impact Growth, a podcast from Dimaghi. For people committed to creating a world where everyone has access to the services they need to thrive. We bring you candid conversations with leaders across global health and development about raising the bar on what's possible with technology and human creativity. I'm Amy Vaccaro, senior director of marketing at Dimangi and your co host, along with Jonathan Jackson, Dimangi's CEO and co founder. Today we welcome back Raj Kumar, the founder and editor in chief of Devex. We last spoke with Raj in May of 2023, and in many ways, it feels like a different era. The structural trends he predicted then, like hitting peak. Official development assistance, or oda from Western governments, have accelerated dramatically, leaving the global development community in a moment of existential crisis. In this episode, we're getting real about what comes next. How do organizations survive and even thrive when traditional funding has fallen off a cliff? We'll explore the chaotic new architecture of global development, the rise of new power brokers in philanthropy and development finance, and the urgent need for a new narrative. If you're a leader, implementer, or funder in the development space grappling with uncertainty, this episode will help you move forward and take the opportunity to build something better. I learned a lot in this conversation, and I'm sure you will too. All right, welcome to High Impact Growth. I'm excited for today's conversation. I'm here with Jonathan Jackson, my co host, as always. Hey, John, good to see you. And we are excited to welcome back Raj Kumar, who is editor in chief of Devex. Raj, you were on the podcast in May of 2023, which feels like ages ago.
- [01:52]
B
Different era.
- [01:53]
A
Absolutely. And yeah, so we've been really keen to bring you back onto the podcast because so much has changed. And interestingly, I was looking back at the transcript from our conversation two years ago. It feels like a lot of what you were talking about then has happened perhaps faster and more so than expected. So just really excited to have you back on to hear your perspectives on everything that's happening to the extent that you're willing to share. Yeah. So maybe I'll just jump right in if that's all right.
- [02:23]
B
Yeah, let's do it. And. And you're. You're right, like, sadly, a lot of things did pan out. I mean, some of it for good, maybe, but yeah, a lot of these are kind of longer term structural trends. I was talking about when we were together a couple of years ago, and obviously we had a very acute moment with the election of President Trump and then the creation of Doge. And so we saw something that was really quick and really transformative. But it, it does fit in the broader trajectories that we were discuss couple of years ago in terms of the big, big picture trends and how they're affecting the development space in general.
- [02:58]
C
Yeah, absolutely. And I think, you know, back then, Raj, you were talking about it more recently, the peak oda, and that we had to figure out different mechanisms for business models, different ways to make impact. And obviously, you know, somebody who's been in the space for a long time like, like Amy and myself were, you know, massively heartbroken on how it's played out. But I think the trends were things people kind of saw coming in terms of the need to change business models, the needs to think about different ways of doing this. I know you talk with everybody in our industry, and so I'm curious, how are you engaging with these conversations right now? How are people thinking about this change? I know there was this huge period in Q1, Q2 of 2025 where you're just trying to figure out what's going on, you know, just try to survive and figure out how to right size everything. But now people got to figure out what they're doing for the rest of this year and heading into 2026, I'm sure yourself included at Devex. And so what are you seeing the ways people are going about thinking about this problem and how they're reinventing themselves? Because obviously everybody, regardless of the previous business model, touched ODA in one way or another. Some large, some small, but kind of everybody is having to grapple with this question right now. And so at the center of all this is devex and talking with just so many different folks. How is this conversation unfolding? How are you seeing people grapple with what the future gonna look like?
- [04:18]
B
I think there's different layers to the conversation. One really big, important layer is just, okay, all this aid got cut. You know, the US Government aid has been dramatically slashed. It was by far the biggest in the world in health and humanitarian. But you also see a lot of other countries doing slower, less dramatic, but real cuts, significant cuts. UK cutting 40% of their aid budget on top of the cuts they've already had. Those will be phased in in a more responsible way, I would say, than what the US Government has done. But nonetheless, massive cuts from a lot of places around the world. So I think one big conversation everyone's having is, well, what's this actually going to mean for the outcomes that matter? Like how many kids are going to die, how many people are going to not get education? And there's a lot of speculation, there's some kind of early indications, but it's hard to know. And a lot of people, and particularly a lot of Global south leaders are saying, all right, we've got to scramble to get a handle on our own health system or on our own education system or agriculture system and like, squeeze out the most value we can from the remaining aid that exists. So we don't really know for sure what those impacts are going to be. And I think that's one really big discussion and one that we're leaning into a lot at Devex is trying to figure out precisely what are those real world examples of what's happening. We had a lot of stories that the Doge people were using to argue for cuts that were, some of them were fake, some of them were rooted in some reality. But, you know, here's this program, it's super woke, and it's a good example why we should cut. We want to know more realistically, like, all right, what are some real world examples of what the cuts have done? So I think that's a big layer in the conversation, as you're putting it, John. I think another one is inside organizations where they saw a lot of the trends that I've been speaking about, writing about for a long time, and they were maybe slowly moving as a result of those. And now they face these like, really existential questions, you know, go out of business, merge, totally change their business model. And so they are in the thick of that. I think they've kind of gotten out of the first stages of denial and grief. You know, I think now, I think they're kind of into like, all right, how do we actually revitalize reform the way we work? And so people are asking really tough questions of themselves, I think. And some of the, like, initial rounds of layoffs have happened, but now they're, they're really thinking about what do we do from here, how do we, what's the new vision? And then I guess maybe the last big conversation piece is around what does the broader architecture look like in global development? So if you have all these bilateral aid agencies that have suddenly shrunk, the UN is seeing its funding, you know, really constrained, and they're trying to figure out what do they do from here? So do UN agencies merge? Do they close? How does the UN or does everybody just kind of take a haircut and still do what they were doing? So huge changes in the international architecture Development finance versus bilateral aid, philanthropy's role. I think those are kind of different layers. I'm seeing happening impacts of the cuts, where organizations go from here, NGOs and social enterprises. And then what does the actual architecture land at after we get through this phase? What does it actually look like?
- [07:37]
C
That's a great summary, Raj. And in that architecture question, there's been a lot of discussion on my world, at least on the digital side of, hey, there's still 8 to 9 billion currently in the budget from USG. How do we think that's going to get spent? There's questions on what's the UN going to look like, as you mentioned, when do you think we start to see some of these questions get answered or data points come in on what this new architecture is going to look like from just a practical timeline standpoint? We're having this conversation August 18, 2025. How and when do we start to see things play out in the real world? Based on the timelines you're aware of,
- [08:22]
B
I'm thinking two to three years from now, things will have shaken out into a more stable place. Exactly what it looks like. I don't know. But I think it probably means just a much reduced UN role, You know, much, much reduced size of agencies, maybe merged agencies, but really big changes at the U.N. i think in the U.S. system, there's going to be a lot of chaos because, you know, they fired so many people who used to run the programs and you know, a lot of the complaint was, well, USAID was really bureaucratic and it was really slow and you know, let's, let's reduce that. Okay, well if you get rid of a lot of that bureaucracy and a lot of people did those jobs, you're not necessarily going to hop instantly to some hyper, efficient, quick, you know, fast paced model. I think it's very likely instead you're going to see a lot of balls dropped. You know, a lot of programs that just people like, wait, what's the status? We don't know. We can't, we haven't heard back from anyone. There's no one responsible. So I expect a lot of chaos for probably the next 12 to 18 months in the US system. I think what the Trump administration is likely to try to do is to move toward finding new partners, you know, to not want to just continue funding the same groups that USAID used to fund because they really believe in a structural reform here. Why do that? But it's not easy to stand up new partners overnight. So I think that's another sort of storyline I'm looking at, well, who would these new partners be and is there an opportunity for social enterprise? I know a lot of your audience are social entrepreneurs. Is there an opportunity for those groups in this space who might have more of a market based model, maybe more private sector oriented, so they could align a little better with some of the worldviews in this administration? Is there opportunity? It's a little early to know, but I expect chaos. 12 to 18 months and then things maybe settle out. The midterms will tell us a lot too about what kind of role Congress is going to have in this, whether the administration might get larger budgets from Congress and just not spend the money, or will Congress actually say, no, we need you to spend the money and play more of a role in defining what the architecture looks like. So, yeah, 12 to 18 months of chaos, the U.S. then it settles. And overall maybe two to three years. And so I think this gives us a moment when the clay is soft where there's a chance to sort of shape this new, this new world and at least the narratives around it. So while it feels like a pretty tough time for people who are in the space doing this work all the time to get hit by the kind of atomic bomb of doge, you know, there's still a chance here to shape the outcomes to some degree. And, and so I think a lot of advocacy groups, a lot of implementers are in the middle of it now and kind of saying, all right, let's get involved, let's have more of a voice, let's talk about what we can, what we can do to align. Maybe the way these structures are going to get formed into something that's going to have more impact in the real world.
- [11:21]
C
Yeah, that makes sense. And one of the things Amy and I have been talking a lot about over the last couple years is the need to increase value for money. We talked about this two years ago when you were on the podcast of just how important it is that we're increasing the value we're providing, but also bringing down the cost. So much of the old architecture was kind of a pitch of, oh, I'll add a lot more to my program for a lot more money as opposed to like, hey, this cost effective best practice works. How do I bring the cost down even further? Do the same thing, no shiny hood ornament, no glossy new thing we're doing, just do it better, faster, cheaper. And that's something that we're looking a lot at in our new platforms around pay for outcomes models. Just really A huge focus on cost effectiveness of scaling, what works, what's proven. I'm curious, you know, I've been trying to think about our role and how we mold that clay and others roles. What are you seeing work right now or resonate? You know, kind of like what? Just like the practical back office conversation that happens that could move, whether it's my personal view or other people's views. But like how do you contribute to that conversation right now? Like what is the mechanism you're seeing have a chance of helping shape things?
- [12:34]
B
Yeah, I think there's a few different entry points. So one, and I think about this as a journalist telling stories is like help get the realities of what's happening out there to people so they can have informed discussions. So you know, to the extent you other social enterprises, other NGOs are seeing real world things happening as a result of aid cuts, those are opportunities to get this story out and get people including in Congress, including in the British Parliament, including in the UN to talk about them and say, hey, here's a, an example where maybe it's all a bad news story. Maybe it's like, hey, there was money coming to this program, it was a really cost effective program and now it's gone. And now here are the effects of that which could be really expensive actually. You know, maybe it's leading to like dispossessed people migrating or leading to terrorism. You know, kids who are in school and now they're joining like you know, terrorist groups. Like those stories extent that they're real and that they're happening and I think they will unfold in the coming months. Getting them out could help inform the urgency around a discussion at the policy level. Okay, we got to get this right. This is not okay. It's over. We had these doge cuts and now everything's done. We need to be engaged in this from a policy standpoint. And then on the flip side, stuff that's working. Here's a program that doesn't do the sort of bureaucratic stuff nobody wanted to see, that maybe aligns better with the administration's views and is actually providing great value, great service. It's something governments want, host country governments want this, communities want it. We need more examples of what you might want to spend money on, what you can make a case to voters that hey, this is a good place to put your tax dollars. So I think getting into that level of discussion is important, just big picture. One of the mistakes I think our community has long made is we talk to ourselves way too much. So we use a lot of lingo, we talk in abstract terms. We assume a lot. And one reason why Doge and others were so able so quickly to just undermine the public support for development assistance. And obviously the US was extreme, but again, look around the world, OECD countries, essentially, voters are pulling away from support for aid. We never really built a strong foundation, and I think we never did it because we didn't always just like, level with people about here's stuff that works, here's stuff that doesn't, you know, in plain terms and ways anybody can understand. I think we need more of that. So I wouldn't want to go back and replicate some of the mistakes made in the past. I think going from here, we should engage the public in these debates, bring them real, real facts, real stories, warts and all. You know, really, really talk about this work and how hard it is and, and when it works and when it doesn't.
- [15:20]
C
Yeah, that, that makes a ton of sense. We. When this first happened in February, Amy and I were talking a lot about how to communicate out to our government partners, funders, et cetera. And it is shocking how different the message is, you know, when you're talking to your, your customer base versus the public versus foundations. And one of the things that we were realized is we're about to find out really quickly whether anybody valued our software. You know, governments no longer have ODA money paying for products. Are they going to keep trying to use them? And we were extremely excited that to a T, all the governments maintained wanting to use our platforms and reached out to figure out what's the path to sustainability here. That's also money that's going away. And, you know, we were really struggling with this question of how are we going to survive with various business lines in the market. We know there's a ton less money to go around. One of the things we've been trying to do is really say, look, we have to make this so easy. The governments can really just decide, is digitizing my community health workforce a priority or not? And so we're actually trying to bring the cost of our national scale offering all the way down to $5,000 a month. Like all in this used to cost a million dollars a year. All in, 60k a year. You can't change anything. You got to take it as is because that's the only way we can run it that cheap. But it's definitely good enough. It's not perfect. It's definitely good enough. Is this a priority? And if it's not we totally get it. Let's put your effort in our effort elsewhere. If it is a priority, we can make this work. And really shifting how we come to the table with governments trying to be much more clear, trying to be much more honest about what we really can deliver at a cheap price point versus what you know is too expensive in today's day and age, for, for what's available, funding wise. And we'll see. You know, we still have to go socialize that and bring that up to governments, but we're trying to keep it super simple and just say, look, if you really want to do a digital program for your community health workers or maintain your existing digital program, we can get this price point all the way down. And we don't know if we're going to be able to pull it off internally, but we have alignment. You know, we're still just as passionate as ever about believing community health workers are one of the best bang for the buck, you know, in global health. Can we make this work? But we've even tripped over our own selves trying to communicate this story out at various points in the past. And finally we were just like, let's pick a number where you just don't want to do this. If you say no. It's so affordable that if you're serious about digitizing your CHWs, it should be an easy yes.
- [17:52]
B
I love that. And I think this sector has always suffered from a unclear line to customers. You know, I think economists call it an agency problem. It's like, okay, we're supposed to serve the poorest people in the world who have very little voice. They're marginalized and for these reasons they, they're poor and they don't have access to health services or whatever, but they really don't have a customer voice in the, in the marketplace. You know, there's so many intermediaries and many of them, you know, really well meaning philanthropists and NGOs. And. But in the end there's not a lot of customer voice. And so you can end up building these systems that are way too expensive, complicated, compliance, heavy, you know, they're meeting all kinds of interests and needs that are well prioritized above, you know, the actual end goal here of like, are you getting health services to somebody who needs it in some far off village? And that, that's a tough thing to solve. Right? You know, the closest, you know, analogies might be just government services in a rich country, you know, some, you know, some town in here in the United States, where does that municipality like, does that local mayor get voted back into office? You know, well, only if they're filling the potholes and, you know, can you get a close connection between citizen and elected officials. And in this case, we just have so many intermediaries, they're so spread apart. So, yeah, I think you're thinking about this the right way. Like, how do you get closer to those ultimate customers and at least national governments, you know, health ministries. A lot closer, because a lot of health ministers are waking up right now and discovering, you know, I don't really have control over my own health system, you know, because there was so much foreign money coming in and it was funding things outside of the purview of the health ministry because it's flowing through NGO projects and initiatives and, you know, they just don't really know how much money is being lost actually. And you know what, when this money's pulled back, what falls apart in my system, they don't really have a clear line of sight to that. So, yeah, if there's a very thin silver lining here or if we try to mold the future shape of the sector, you know, obviously more outcomes driven, more voice for the people, you're trying to end the end customer. And ideally, you know, putting health ministers and governments more in the driver's seat, I think that's likely to lead to better outcomes in the long run.
- [20:17]
C
Yeah. And I think the need to also offer some stuff can't fit into outcomes funding. It's still going to have to be a project. And that's just true about some hard, complex things, but it's also not always about financing, although financing is now this huge problem. Often the project's just too hard to do. I was given this analogy of different digital offerings that I've seen in the market and different digital scopes. And I was talking to a funder and they're like, well, the government wants to do this massive horizontal registry for all things. I'm like, you can't. It's just too hard. That is a good hypothetical idea. Even if they had 10 million in funding, that project is just too hard to build, run and maintain. You need to do smaller stuff and build up that expertise before you take a project that complicated on. And, you know, you see this in governments that are much higher resource, like here in the US and, you know, big government systems failing to implement because they're just too hard to do. So I also think, well, yeah, I
- [21:20]
B
mean, you guys are in the SaaS business in a sense, and if you think about, like, successful SaaS models, it's land and expand is often the best way to do it. And what that boils down to is you're landing a few end customers. Often it's like a few employees at some company who actually, they have a problem, they have a pain point. Your software helps solve it. It's cheap enough, they can sign up for a couple seats. Maybe it's even free, you know, for a lot of SaaS. Software as a way to get in and people use it and then they're like, yeah, I need this. And then they show the value, and then it grows inside the organization. They get to an enterprise level, it gets more complicated security and permissions and stuff. I think that approach has a lot of benefits versus the one you're talking about where it's like, oh, we're going to have this massive new project that's going to do everything with every bell and whistle, and it's going to be determined from the top, and then everyone is mandated to use it. Those things are very painful to do to pull off successfully.
- [22:16]
A
Raj, I'm curious. You know, I think one of the things that we've been talking a lot about is really like, the funding, right. And you've talked about, okay, we hit peak oda. We've seen it like fall off a cliff. There's really, you know, you're basically describing, like, two to three years of really, like, uncertain where things will land. But I'm curious, like, if you had to predict kind of what funding looks like in two to three years, like, what does that look like? Is there other. Other donors coming in? Or is it that we're shifting more to this more kind of business model, right. Where SAS models and, you know, we're actually, folks are paying based on value that they're getting and there's less of this donor influence. Like, what do you. What do you see as the, the shifting. If you had a crystal ball, right. And looking ahead for funding landscape.
- [23:05]
B
Yeah, I do pretend to have a crystal ball. Every year I write these predictions at the start of the year. And usually, you know, I'm like, part. Right. Like, the stuff I'm talking about is happening slowly. There's some this year, it was crazy. I had five predictions in my January article, and four of them came true in, like two weeks because of, because of what happened, including Picoda. I was like, oh, Pico is going to happen. And it just like instantly happened. One of them didn't play out yet. And it gets to your question, which is around philanthropy. So basically, broadly, I think the way this sector is going to look, going for the financing picture, there's going to be a lot less bilateral oda and what's left of it is going to end up going mostly to humanitarian needs because know, with climate change there's going to be more crises, more conflict. And so there will be just those urgent humanitarian moments when countries say, I've got to write a check, I've got to support this. And so I think you just see a larger. It's already happened, you know, over the last decade, more and more of bilateral official development systems has gone to humanitarian aid. So I think that will just accelerate as the pie shrinks. For oda, then I think where the action comes is basically development finance. So the multilateral development banks and the development finance institutions like World bank and dfc, good examples. I mean, I think DFC is going to grow a lot in this administration. Obviously was created by the first Trump administration and seems to have real support from the White House and from the President's team. So I think DFC probably is going to have a bigger role. And I think the World bank, it's another good example where they got a little bit of a cut from the administration in their budget request, but not much compared to all the rest of what happened in development. They were supposed to get 4 billion for their IDA replenishment from the Biden administration's pledge and they ended up getting 3.2 billion. So not bad in the scheme of things broadly. I think the money is going to come from a growth at the MDBs, the DFIs and philanthropy. And that is going to change the way the development sector works quite a bit because it's a different kind of money. It's not project based grants, it's not direct flows through NGOs, it's a lot more national level, it's a lot more private sector. And there are implications, good and bad. Some of the bad ones. Some of the worrying things are you could move as president Trump clearly has a very transactional approach to everything foreign policy related and maybe just everything in life. You're going to probably see more of that happen in foreign aid. And so you could end up with a lot of deal making. And in the deal making, are development goals prioritized or not, you may end up with them being very deprioritized. I think about the Cold War era. Foreign aid went up a lot during the Cold War. The U.S. and the Soviets were trying to win allies and friends around the world and spending more and more on foreign aid. But development objectives were not a high priority. So we had a lot more aid, but effectiveness was not really the priority issue. We could end up in a similar era here. There's a lot of debate about DFC might grow, but their funding might now go more to high income countries or middle income countries or really targeting things like critical mineral access, which could have good development outcomes attached to it, but might not necessarily. You know, it depends sort of how you do it. So I think those are some of the risk sides of it. And the upsides are you might connect more to the market mechanisms that John and I were talking about. Like you might really get investment into businesses and you might create more of a direct link between governments and their voters because they're the ones taking on debt, you know, to do a big project. You know, their regulatory environment becomes more important for driving things like, you know, their energy grid. So you could see more of that. So I think there's a lot of possibilities and potential as well as risks, but that in general you're just going to see a lot more money in. The MDB and DFI system started pre Trump, but it's going to continue and accelerate. Most OECD countries are spending more now. Even as they shrink their OTA budget, they're spending more on their bilateral development finance institutions. And the MDBs have potential to take their existing paid in capital and do more with it. So called sweating the balance sheet but basically leveraging it more, borrowing more against the assets that they have and being more aggressive in the way they invest and lend. And so yeah, I just think that's going to be a really, really growth, growthy area of our space. And the other one is philanthropy. Philanthropy is a bigger question mark. I get a lot more pushback on this one, including from people in the philanthropy world, many of whom are like, look, don't count on the rich people. They, they have their own priorities. This is not one of them. You know, yes, some are giving, but don't necessarily expect a lot more. Will, my read of it is a little bit different. I think there's just an unprecedented amount of money at the top. The inequality is getting worse. More than 3,000 billionaires in the world now. And it doesn't take many of them. Even if you keep it a similar percentage who are giving, you're going to see a lot more given. And there's a populist wave on the left and on the right. And I think billionaires see this and they realize, look, if I don't give away more of my money, it's probably going to get taxed away and I'd rather control it. So I, I expect this year, in 2025, you will see a huge amount of money move into donor advised funds to take advantage of the existing tax rules that will let billionaires write off that money, even though it hasn't actually been given to a nonprofit activity yet. It's just sitting in a fund. So I think you'll see a wave of money move into those. I already think you'll see, you know, there's a lot of money, I'm hearing anecdotally from conversations with billionaire philanthropists of money going into foreign bank accounts, you know, going into foundations in Switzerland, like moving money out of the US So that they can use it for overseas donations over time while, while all those things are allowed and not taxed because there was a lot of concern that, you know, you would see new taxes and new constraints come out through the, through the one big beautiful bill. So I just think philanthropy isn't yet having this new era, but it's coming. You've got people like Howie Buffett and his siblings that when Warren Buffett passes away, they'll have 150 billion or so to give away. They could be around the scale of the Gates foundation, which itself is 9, 10 billion a year. There's just a lot more money on the sidelines in philanthropy. And I expect, although it won't happen instantly and it won't be smooth and it'll have lots of warts on it too, it will come out into the broader development space and there's a chance we all wake up five years from now and actually this sector is bigger than it was before all these cuts. It's different money. And in the end, money shouldn't matter so much. It should matter outcomes. What are you actually achieving? But, but it could be bigger in dollar terms if you're considering all that development finance money, a lot of which is lending. And if you're considering all this philanthropy, it could get to that sort of scale. It's hard to believe, but some of the wealthiest people in the world now could give it levels of governments. Even though they tell you no, don't count on philanthropy. It's not like government money. You can never get the scale of government with individual donors. That used to be true. I'm not convinced it's true anymore. There's just so much money at the top.
- [31:00]
A
So I'm curious. This kind of goes back to in the beginning, you shared sort of your framework for the things you're seeing. And impacts on the outcomes. What are orgs doing and what is the broader architecture? But if we think about like what do orgs do and orgs like Tamagi, but also like Ingos that have been working in this space, what would be your advice to us and to our audience of like, how do we. Because it is. It's such a shift. Right. Orgs have sort of figured out how to work within the way that money was moving. Right. And this is a drastically new future. Like, yeah. What would be your advice to. To us and to our audience? Right. For like, how do you prepare and how do you stay agile to. To kind of work in this new world and to help move in this direction if this is where things are going. Right, with MDBs, DFCs and philanthropy kind of growing.
- [31:53]
B
Yeah. I think it is a really existential moment for a lot of organizations, especially smaller ones, where they got enough of their money through the old market and now that money's drying up and it's not so quick and easy to pivot. And maybe a lot of that was funding some core overheads, some core staff. So what do you do in that context? I think there's no easy advice here, but a few thoughts come to mind. So one is thinking about alliances. A lot of social enterprises are very product specific and thinking about either merging or joint ventures or just having some kind of a. An alliance where together you're trying to move a conversation in a sector so that you're not trying to fund your own advocacy at a very small scale, but you're approaching larger philanthropies, you're approaching a larger global discussion on a key topic area. Maybe it's a disease area, you know, maybe it's a health systems issue. But you're approaching that as a group of social enterprises who all offer different products, but that are kind of aligned in. In their worldview. And that maybe paints a picture to philanthropists and even to the development finance world that look, you might look what we're doing as a very cottage industry. You might want to go do critical mineral mining, like big stuff. And our stuff might look really small to you, but actually it fits into a bigger picture. And you can find a way to fund health systems. You can invest in health systems through social enterprises like ours. I think that narrative is important because right now it feels to me like a lot of social enterprises on the outside looking in to these big policy discussions because they're often just seen as too small. They're too much of a sideline issue to the big World bankers who are thinking about moving billions of dollars. I think alliances, mergers, potentially, you know, might make sense, joint ventures might make sense for some of the social entrepreneurs out there. I think generally being Lean and Mean like, this is because we could see a few years of transition before we know what the new world is like. You're seeing a lot of funders, you know, waiting. They're like, you know, in wait and see mode. They want to keep their powder dry. That's dangerous, you know, for a lot of small groups who need consistent funding, you know, sustainable funding. So being really lean and mean probably makes sense, not assuming, like, oh, the worst is behind us. You know, I think we could see more shoes to drop, more cuts, more change. So I think, like, really focusing in and then maybe to John's earlier point, just getting really, like, hyper customer obsessed. What is this thing we're offering? You know, in your case, it's that software platform, like, how cheap can we do it? And really get down to the core value proposition of what you're doing, because if that holds true, if that's strong, then maybe you can survive whatever the storms are of the moment.
- [35:01]
C
Yep. And I think going back to the point you're making on Lean and Mean, we're doing a lot of outreach to funders, both that we've worked with in the past and new funders, to really understand their perspective on localization and, you know, how they're now thinking about that. Are they really trying to fund small orgs that can only accept like 100k or something, you know, and for the most part, we're talking with people who I think you would put in the kind of top third of thinkers, you know, and. And they're kind of like, we were already above average in our giving. Like, we're just trying to make sure we don't lose the momentum that our current portfolio had, you know, so what we're seeing is an acknowledgment of, like, yeah, everything's changing, obviously, and we need to think about what everything looks like in the future. But for now, we just want to stabilize our current portfolio. So if you're not already in with a lot of funders right now, I think it's very challenging to initiate new discussion. Even if your idea is great and aligned to that funder, I think at some point we'll see that change. But for right now, we're definitely seeing the funders, to your point, either keeping that powder dry or just saying, look, we believe in the organizations we've already funded. We spend A lot of time coming to the conclusion that we should have funded them in the first place. Our mission right now is just to keep all of them going while we weather this very difficult period and then help enable them to compete in the new era as that starts to take shape.
- [36:25]
B
I think that's right. And I think a lot of funders are caught a little bit between their advocacy work and their funding. They don't want to be seen as a gap filler where it's like, okay, US Government cut, but it's, everything's fine because this foundation stepped in and fully funded the program. And then there's no argument to go back to Congress and say, hey, you should fund this thing because there's no harm. And obviously it's a zero sum situation. The foundation might be able to do that, but then they take money away from something else they could have or should have gone and funded. So they're a little bit stuck. They might be trying to keep their current portfolio active and alive, but not necessarily grow it, not necessarily fill gaps. So even their existing grantees might get hit because some of their funding could have been coming through usaid.
- [37:11]
C
Yeah, for sure. And I think, I think most, you know, have some exposure. And so that, that's been one of the big questions for us as somebody who like, you know, has historically played a reasonable role in advocacy on the digital health side. And talking with folks is just what are those conversations that are going to be meaningful right now? You know, mine exactly to your point of those alliances, like, I'm just harping on, the only thing that matters right now is lowering our cost and not just Mogi, but like our industry, like it's just too expensive, it's just too hard. There's nowhere near the amount of technical assistance or, you know, bodies you can throw at these complex software implementations. Like, everybody's got to simplify, everybody's got to take cost out, everything's got to be more turnkey and then maybe it's worth it to governments. But I think those like old school projects we were doing even just last year of these, you know, two to three year big builds, it's just like nobody has the time, nobody has the money, and frankly nobody has the personnel anymore to be doing this thing. So. But we're, we're trying to, you know, I think, I think that resonates a lot with social entrepreneurs and across many different areas. But there's a lot easier said than done. You know, now is kind of the last time people are one of the most difficult Times to be trying to bring your price down, you know, because everybody's struggling with financing right now. So I don't know how we get from here to there as an industry, but it's something that I think is critical right now is just more value for money, lower cost. That's how you can weather some of these challenges. In the immediate short term, it's just, can you maintain your customer base? But that might include lowering our price. And we did that on our main product, our SaaS offerings, and we're doing that international scale programs because we just came to the conclusion like it's just gotta be cheaper with full style.
- [38:55]
B
Yeah, but like the analogy, if you think about startups in Silicon Valley, you know, having venture capital backing them, they can take a long Runway before they get to the point where they need to break even. So they can offer a really cheap product, they can try to squeeze costs out, but they might have some years to do that. And unfortunately, when you quickly dry up funding for social enterprises now, they have no Runway.
- [39:20]
A
So.
- [39:21]
B
So it could be really hard to actually get to a low price point and in some ways might just be counterproductive. You know, like they could have had, they had steady funding for like three years or five more years in these really tough markets where customers are really cash constrained. They could have got there, but this like artificial cliff that was created just makes it so tough. And I think you'll probably see, you tell me what you think. I think you'll probably see social enterprises go under that had actually pretty good ideas, pretty good products in development, a real product market fit coming together, but just couldn't get there on squeezing their prices down in this really constrained window.
- [39:58]
C
Absolutely. We're seeing some really competent, really good friends of ours who are on a reasonable path that just aren't going to be able to make it to your point. There's not enough Runway there. And frankly, the best outcome, even two years ago when the market was still good, was wildly mediocre for digital health companies. You know, like we, we always talked about impacting profit in that order, and profit was always going to be extremely hard, even when the market was much bigger. And so the terminal outcome two years ago wasn't great. Now the terminal outcome is that much harder, you know, to envision. So even if you can make it through, it's not, it's not a bridge funding or gap funding. To your point, Raj, it's really like, what is that new transition going to look like? Do you really have a price point that you can Sell to governments. Because if the future is DFIS and multilateral development banks funding it, going through the government, it's going through public procurement, it's hard. It's not that, you know, easy, quote, quote, unquote, easy check from USG or Gates, that's going to be funding you. You're going through a public tender process. You're competing against local firms, you're competing against bespoke software, you're competing against AI. So that I think the market both got smaller, but also harder. As you think about the durable business model one could have now, hopefully there'll also be some silver linings where people do still have support from their funders that can carry them through this period. We're in a very fortunate position. We have a significant amount of capital from some of our funders, but it's challenging out there for sure. And it's an extremely difficult position for a lot of social enterprises who deeply believe in their model, deeply believe in the impact they were having with their product. But even when there was a lot more money, didn't necessarily have the math working out in their favor. And now it's just completely upside down.
- [41:56]
B
Yeah, I mean, the impact social enterprises working in the toughest markets, the toughest problems in the world, they always needed a longer Runway than like a Silicon Valley startup that's selling, you know, products to rich people in rich countries. So you take that problem and then you make it like exponentially worse by, you know, a sudden rapid drop off in funding. There probably are opportunities for some foundations, for some impact investors, maybe for some bigger social enterprises, even some international NGOs. I've been talking to some international NGO CEOs about, you know, could they acquire some of these social enterprises in their platform, some of the ones who have a little bit of endowment or just enough capital and assets on the sidelines. And some of these social enterprise are pretty small. They might be burning cash, but not so much. And if they have a product that actually works, could they roll that into some of the international NGOs programs, some of their platform around the world? So I think there will be some opportunities here too for people who are very entrepreneurially minded in this moment. But, you know, it'll be a shakeup, no doubt about it.
- [43:02]
A
Raj, I'm curious to go a little deeper on this idea of shifting from projects to paying for outcomes that we've touched on here. We talked about it a couple years ago when we spoke as well. And also, just as you're speaking about the need for social enterprises to kind of come together and tell a bigger story. Like to me, that feels like one of the stories or that feels like the story that Dimaghi is wanting to tell and talk about. Right. Is like, what can that look like? It is a big shift, right, from this kind of old school project approach. What do you see from your vantage point? Like, what are the changes that would need to happen to make paying for an outcome possible?
- [43:45]
B
Yeah, it sort of depends on who's going to pay for it. But I think there's a lot of potential for like the Silicon Valley billionaire crowd who I think could get excited around durable outcomes that they can put their name on. So sort of like Bill Gates has had an obsession with ending polio and hopefully one day he's going to get there. I mean, he's done amazing work and gotten pretty close already. But there's a chance that when he passes away at some point he will be remembered for polio eradication, maybe even more than for creating Microsoft. And, and I think he realizes that. And that's a great thing. That's, that's something that we should applaud and, and support. And I'm hoping we could see some other, you know, similar, similarly kind of data oriented, evidence minded billionaires, particular kind of Silicon Valley mindset, let's say, maybe even the New York hedge fund mindset, but some of those really uber wealthy people saying, you know, I don't want to just set up a foundation and get some, you know, people to applaud me during a gala or something. I want to actually achieve a tangible, durable outcome. It could be a zero goal kind of an outcome like ending a disease, or it could be some really significant policy shift. You know, like I expect somebody like Mike Bloomberg has worked a lot on ending smoking, cigarette smoking, and he did it as mayor of New York and is funding those kind of programs all around the world. It may not, it might not be so easy to get like a, a zero goal, like no one smokes or something in the world, but he'll probably be able to say, hey, like, this is how many lives I saved. Or you know, countries that have changed their policies and laws around smoking or excise taxes, like really durable, substantial measurable impact from his funding. So I think there's an opportunity with that crowd of funders to encourage them around outcomes that are really specific and measurable and durable that they can get some credit for. And so that's one category. I think another category is appealing to foreign policy and national security interests, like having the debate on Capitol Hill or in the European Parliament or the British Parliament around here is why you don't just want to fund humanitarian aid at a certain level, but you want to achieve these humanitarian outcomes and you want to be able to connect them really directly to your national security interest. So maybe in Europe it's like stemming the tide of migration and being able to show like, hey, we have programs that work, that actually work. They increase agricultural yields, you know, increase educational attainment, that keep people where they are, give them more options, you know, domestically, what have you. Like, I think that conversation doesn't always happen in the outcomes world. It's often just more like we stop it. This is how many kids got educated. We're not necessarily drawing the link to foreign policy and to national security. And I think that's going to be really important in an era of much constrained official development assistance. So I think there's work to do there in the outcomes world. And then ultimately, I think the big vision, the one that I've got that I'm talking about is like, I think development should be locally led and tech enabled. And so I think to the extent you can frame an outcomes based program in those ways, connecting it to national security or connecting to some big picture goal, an ambitious goal, but say, like, here's the most cost effective way to do things, the most durable way to do them, et cetera, it's locally led and it's tech enabled. And this is what we're doing. You know, I think those narrative frames are important and I think they can probably lead to, you know, better results for social entrepreneurs who are out there trying to promote an outcomes based worldview.
- [47:42]
A
I really, I like that frame of locally led and tech enabled. And actually that gets me to the next thing I did want to ask about before we close our time together, which we're coming up on here, was localization. So I think, you know, two years ago we were talking about localization. You were saying that, you know, even large NGOs really support localization, even though it may pose a risk to them. What's happening now with localization? Right. As these aid budgets have, have shrunk dramatically, is there still a commitment to localization? Especially if usaid, which was seemingly the biggest champion of the movement, has pulled back? Yeah. What does this look like going forward?
- [48:25]
B
Yeah, it's interesting. I mean, there's some people out there now in our community who are really angry at localization. They're like, hey, this contributed to the demise of usaid. And you know, part of their thinking which, you know, I think there's some truth to it maybe because a lot of the argument and language around localization got used by the DOGE crowd. And essentially their feeling is like, look, by promoting localization we made it seem like the existing USAID system was corrupt and inefficient and so we just undermined political support for it. I think there's some grain of truth to that and I think it's worth exploring, like maybe localization was just the wrong frame. And I think what we might look back at it and say that was a mistake, that what we should have been focused on was outcomes. And if you're outcomes focused, you naturally go to like a locally led, tech enabled approach because the most cost effective stuff is going to end up being locally led. But if you make your goal localization, you could end up with this very bureaucratic matrix of like, well, what counts? And is your board local? And wait, you're using an international brand name. And you know, you can get into this legalistic thing that takes you far away from what you're really shooting for. Because ultimately the goal here is development. It's like a long term sustainable development, human dignity, like those are the things you're shooting for. If the best way to do that is through localization, great. But if you're not aiming for the right thing, you might set yourself down the wrong path. So I think localization, the way it was defined before is not going to come back, is my feeling. I think we're going to go more toward bigger picture goals. Some of those might come from governments like the US Government around things like critical minerals. Those might be the big picture goals. And then you could have an argument with a member of the cabinet who cares about that, who has that portfolio and say, here's the best way to do it. It's going to be through enabling these local organizations who are going to ensure that there aren't children in these mines, you know, and that's going to allow big American corporations to purchase those products and put them in their electronics. You know, there may be a way to get there, which actually is highly about localization, but that's not the goal. You know, it's a bigger picture, more ambitious goal than that. That's my guess about where we go from here around localization. And I think it has become sufficiently polarizing, even though it's bipartisan. You have seen Republicans and Democrats who believe in it, but they believe in it for similar reasons, which is, hey, we got to get cost effective here, but it's not going to, you're not going to go to your average American voter in the Midwest and talk about localization. It's very much what I said at the beginning of term of art for us to talk to each other. And I think we got to get out of that, that mindset and get much more into stuff we can just say to anybody that makes logical sense to any voter, any taxpayer. Not sure this is it.
- [51:39]
A
What you're saying resonates because it is, it is fairly jargony, right? Localization, like what does that even mean? And what I'm taking from what you're saying is you're like localization becomes the byproduct of doing the most cost effective outcome driven work possible.
- [51:54]
B
Yeah, I think we got to get ambitious as a community. I love the way the World bank and the African Development bank have framed their whole M300 initiative which we're going to get electricity to 300 million people in Africa. We should be thinking like that in the development community because that's something you can say to anybody and they get it. You can talk to any person around the world and say there's a big group of people who don't have access to electricity. They obviously need it just like we all do. And here's this ambitious plan to get there that is much better to talk about. And of course that's going to include a lot of locally led initiatives, local regulation. Government's got to be in the driver's seat in these countries and they've got to have interoperable grids and all that stuff. But at a very high level, I think that's a much more ambitious and sellable proposition to the world and to the public than something really technocratic like localization.
- [52:45]
C
Yeah, definitely agree with that. And I think hopefully we will see some version of that in the health community. And when we're talking about these big numbers, some of this is obviously going to have to be fairly grant driven and reaching people who don't have any ability to pay. But these governments and countries all have big private sectors even of people who are relatively poor. And that part of the industry can use investment and might have a return, you know, so as we talked about, definitely, you know, there's going to be different ways to move capital into those bigger initiatives that can resonate with an audience that doesn't know what localization means or is kind of confused how it was operating or how it could operate. And I think you're absolutely right. The ability to talk about that as a goal unto Itself is probably behind us. But the reason why people wanted that to be a goal, you know, was relatively aligned to your point of like it just, it makes way more sense. Local organizations know better. They, they know how to deliver this more cost effectively like they should, that that's the more cost effective way to deliver these outcomes. And in some cases it's the only way. Like it just wasn't even, the project wasn't even like succeeding at its outcomes at all, much less at a higher price point.
- [53:54]
B
Right.
- [53:54]
C
It's not, it's not just price. It's like it just doesn't even work sometimes when you don't do it the smart way.
- [54:01]
B
Yeah, totally. I think, yeah. The more as a community we take what's happened as a wake up call to not just defend what was, but to really reimagine what we want to be. And in that process go out and talk to everyone, including the biggest critics of aid, including average people. Don't know anything about it. I think that's much more likely to help us design a system that lasts, that has political support in the global north, that can incentivize and encourage philanthropists to get involved. Incentivize, encourage average people. Something like humanitarian work. It shouldn't just be about an elite group of humanitarian aid workers. This should be something every human on earth sees themselves in, in some way. And I think we can tell this. I think there's a lot of exciting stuff that actually happens in our space that we can just do a better job telling those stories, building more support and ultimately more funding for it and getting more ambitious about what's possible.
- [55:01]
A
Raj, this is beautiful. I literally could ask you like hours more questions, but this is such a beautiful place to end. It feels like you're giving me one. I think a lot of ideas for us to even consider with Dimagi and hopefully the audience as well. But I just love that place to end of like let's use this as a wake up call to design a better path forward. There's something better ahead as a result of all of this. And let's not just get defensive of the way that it was, but actually listen and learn from what's just happened.
- [55:35]
B
Definitely. Great to be with you guys. Thank you, John. Thanks, Amy. Great to see you both.
- [55:40]
A
Thank you so much, Raj. Really, really appreciate your time.
- [55:43]
C
Bye Bye.
- [55:44]
A
Thank you so much to Rajkumar for a truly insightful and honest conversation about the future of our sector. This was a dense and critical discussion, but a few key takeaways stand out. One, the architecture has fundamentally changed. Traditional government aid or ODA is shrinking and shifting towards humanitarian crises. The future of development financing lies with multilateral development banks or MDBs, development finance institutions or DFIs and a new wave of large scale flags. 2 It's an existential moment for organizations in this new world. Survival depends on adaptation. Raj advises organizations to think about forming alliances to tell a bigger story, becoming lean and mean to weather the transition and getting hyper customer obsessed to prove value. The old models of project based funding are no longer a reliable path forward. Third Outcomes is the new North Star. The language of localization may be on the decline, but Raj encourages us to rally around big, ambitious and measurable outcomes like electrifying a continent or eradicating a disease. When we shift focus to achieving a clear goal in the most cost effective way, locally led and tech enabled solutions become the natural, necessary path forward. Fourth this is a clay is soft moment. Despite the kitchen chaos and painful cuts, this disruption presents a rare opportunity. It's a wake up call to move beyond defending the old system and instead reimagine a better one. By engaging the public with honest stories of what works and what doesn't, we can build a more durable, resilient and impactful system for the future. That's our show. Please Like Rate Review subscribe and share this episode if you found it useful. It really helps us grow our impact and write to us@podcastemangi.com with any ideas, comments or feedback. This show is executive produced by myself. Karthana Balachander and Michael Kelleher are producers and cover art is by Sudan Chikanth.