Harnessing Wealth for Good

by FCS on

by Bob Lupton

Pete Ochs knows absolutely nothing about hydro-electric power plants. Well, not until recently anyway. Pete grew up a country boy working hard on the family farm in Kansas. Hard work gave him a hearty appetite – but not just for food. Early on he developed a taste for business as well.  

Fresh out of college he landed a job with a bank doing commercial lending. He loved making deals. But the structure of the bank had limits. Stirring in his viscera was an entrepreneurial gene that made him restless with the status quo. It took a long decade to gain the confidence and courage he needed to strike out on his own. But once he did, there was no turning back. 

His first personal business venture was the formation of an investment banking firm that brokered the sale of small-to-medium-size private companies. Such deals only served to whet his entrepreneurial appetite. There were companies on the market that piqued his interest, companies that could have tremendous earning potential with good management, and companies he would like to own and run himself. By the time Pete turned 40, he had fully transitioned into a role that best suited his passions and talent – serial entrepreneur and owner of multiple businesses. By every measure, Pete had become a highly successful businessman.

When it appeared the sky was the limit, that one lucrative deal could be leveraged to land an even bigger and better one, he happened across a book written by oil tycoon Bob Buford: Half Time – Moving from Success to Significance. The book powerfully portrayed the futility of the never-ending quest for “more personal power, prestige, and possessions” and the contrasting fulfillment that comes when you use your resources to make a positive impact in the world.

The message had a profound effect on Pete. He began a serious search to find those places in his world where his best skills could be employed to make a difference in the lives of those who needed it most. 

There was no shortage of need, Pete discovered. His involvement began in his own city, extended to other states, and eventually led to one of the poorest countries in the Western Hemisphere: Honduras. The obstacles he observed in this struggling land were overwhelming – political instability, inadequate infrastructure, insufficient food supply, a disastrous economy. Pete’s farming background quite naturally drew his interest toward food production. Arable land was vast and fertile, but largely uncultivated. Peasant farmers with oxen and wooden plows had little capacity to increase food production beyond the immediate needs of their own families. But with modern technology, Pete believed, this land could produce an abundance of nutritious food. He set his sights on a large tract that could scale up food production, as well as provide employment for hundreds of struggling Hondurans.        

While he was in the process of securing the land, Pete met Jose, a Honduran civil engineer, who made a convincing case that electricity, not farming, was the greater unmet need in the country. Pete knew nothing about producing electricity. But Jose did. Mountain streams could be channeled into large pipes, accelerated down a precipitous fall, and sprayed at great force into turbines that would produce an abundant supply of electricity for thousands of families. The start-up costs would be significant, but the benefit to the people would be enormous. And the profit potential could be attractive. Pete was intrigued. And Jose’s passion was contagious. So Pete decided to set aside his farming idea and venture with Jose into an industry about which he knew virtually nothing. 

Entrepreneurs are that way. They forge into uncharted territory, learning as they go, constantly running risk-reward scenarios, gathering teams of experts, surmounting staggering obstacles, and in the end – if they succeed – changing the course of history. Pete and Jose purposed to do just that. 

High in the remote, mountainous region of Honduras, they located two converging streams that flowed year round. To construct a dam large enough to supply an adequate-sized hydro-electric plant, they had to bring in large, earth-moving equipment to cut access roads. Then, miles of pipe had to be tunneled and bridged from the dam to a thousand-foot precipice to the turbines below. 

The physical challenges were daunting. Government permits and inspections were agonizingly slow. Gaining easements to cross land owned by multiple families was tedious. Appeasing residents whose villages were disrupted by thousands of dust-churning, diesel-belching trucks was no small challenge. But after two years of toil, when the water gates were finally opened and turbines began to spin, lights came on in countless homes across the landscape. The stresses of construction were quickly forgotten. A time for great rejoicing had arrived.

And the cost? Pete’s original projections were low. Unanticipated change orders were expensive. Rainy season flooding delayed construction. Dry season water flow reduced electricity projections to 35% of capacity. Pete had to pursue additional investors to join him in the venture. But in the end, the $8 million project was producing a generous 13.8 megawatts of electricity for the people and a 20% return for the investors.

Pete, the farm-boy, banker, business owner, missionary, is now an expert in hydro-electric production. He is not a civil engineer like Jose, nor an electrical engineer like his plant manager Francisco. But Pete is a businessman with enough smarts to understand the theory and practice of making hydro-electricity, ask the right questions, make informed projections, assemble the right team, keep a tight rein on costs, and turn a profit. He has now incorporated Blue Energy, an environmentally sensitive company that will create 100 megawatt hydro-electric plants throughout Honduras. He has already identified his next three sites.    

Impact Investing. That’s the term being used to describe this kind of investing. It has a triple bottom line – economic, social, and spiritual. The economic value is straightforward – it must offer a reasonable return to investors. It also produces a social good – affordable electricity has obvious social benefits to isolated poverty communities. And it creates good paying jobs. 

But Blue Energy does not stop there. A staff community developer works with village leaders to identify local needs and challenges, sets goals with the community that improve village life, and invests with the community to achieve these priorities. Blue Energy also forms relationships with local churches to enhance the spiritual life of residents. 

Impact Investing is a relatively recent concept in the world of philanthropy. While the levels of traditional philanthropic giving have remained virtually unchanged in recent years, Impact Investing has been on a steady increase. It is introducing substantial investment capital into wealth-producing small-medium enterprises (SME) that have positive impacts on needy communities. In 2015, $60 billion was deployed in impact related investments. Forecasts now project growth between $600 billion and $3 trillion over the next ten years.

This triple bottom line approach to investing in for-profit business creation has the capacity to elevate struggling communities – and entire regions – from surviving to thriving.  And as Pete has experienced, Impact Investing changes the entire trajectory of missions.    

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