Seeing our stocks go up feels great. Using some of the profits to give back to communities and help those in need feels better. As much as we search for the places where we can get the highest returns for our money, let's also search for the charities that create the most impact on the world with the money we donate.

There are two charities that are the biggest drivers of promoting water access to impoverished communities globally: Water.org and WaterAid.

While both charities have the name “water” and share a common goal, the approaches they take in promoting water access vary. WaterAid is focused on turning dollars donated funds into water infrastructure for communities while Water.org turns donated funds into microloans for households. Measuring the impact of how much $1 donated to each charity creates is hard, but if we think about their approaches from a bigger picture, we we might get an idea on which charity's approach creates a bigger impact.

When you donate to WaterAid, you’re funding the development of a community water system. WaterAid has its own vendors and its own team of volunteers and workers to set up these water systems. Once the water system is created, that water system only supports that community.

When you donate to Water.org, you’re funding a microloan that a household takes and they use that loan to support the installation of water and sanitation facilities in their home. That household will be paying local vendors to install those systems. As much as microlending receives a bad reputation, Water.org keeps the terms of the microloan affordable and favorable for the borrowers and because of this, they’re able to say that 99% of their loans get repaid. For additional context, the average loan size is $358. After that loan gets repaid, the capital is recycled and is then used to create another microloan for another household.

If you’re wondering how Water.org is able to have a 99% loan repayment rate as it lends to people that make less than $6.85 per day, consider the economic benefits that come with having water and sanitation access to your household. Those that rely on a vendor for water pay a lot for it. By having their own water system, they're able to save a lot of money and use the savings to pay off the loan. Others that have to walk long distances to get the water themselves can now use the time saved to start a family business, work a second job, pursue an education, etc. As for the health benefits, not only do the recipients have lower healthcare costs but they also become more productive because they have access to water. The economic opportunities that are created because the recipients are paying local vendors to install water and sanitation systems creates more economic opportunities within their communities and with access to water, they're able to capitalize on those new opportunities.

After gaining an understanding of what WaterAid and Water.org both do, I conclude that Water.org provides a bigger impact for its donors than WaterAid.

Water.org's microfinancing strategy delivers transformative results by empowering individual households to finance customized water and sanitation solutions. Their loans allow families to pay local vendors to install home facilities, catalyzing economic ripple effects. Remarkably, Water.org achieves 99% repayment rates on these tiny loans to ultra-poor borrowers. This is enabled by the huge benefits - time savings, improved health, and income generation - unlocking a cycle where water access boosts productivity and earnings, funding repayment, and lifting families sustainably out of poverty.

These loans get recycled to help additional households, multiplying the impact. So rather than building limited community wells, Water.org kickstarts an engine of opportunity via financial inclusion. In this way, Water.org sustainably scales impact in a locally-driven manner that WaterAid's direct implementation model cannot easily match. By recycling loans, Water.org reaches over 44 million people - far greater than WaterAid's model focused on constructing communal systems one community at a time. The decentralized, empowering approach allows Water.org to uplift many more lives through the power of water access and microfinance.

From the perspective of investing or running a business, here are lessons that we can gather from Water.org:

For a business operating in the era of cloud computing, as companies do business globally, it might be a better move to rely on more local cloud computing providers to handle the business's cloud computing needs in a specific nation (leveraging local networks) than rely solely on their main cloud computing provider (either AWS, Azure, or GCP).

For a major e-commerce platform like $AMZN by letting third-party sellers dominate the platform, the Amazon platform can remain competitive to $WMT and thrive at levels that other retailers dream of (decentralization).

For clinical stage biotech firms, focusing on one's niche and having that niche be improving the life of people with a specific condition and not splitting your focus between many different drug pipelines that all tackle completely different diseases in hopes of "growth" will take you farther in the industry. The clinical trial data will help measure the impact of the drug that the biotech firm made to treat that specific condition.

I hope this memo has given you a new perspective on the world.