Disclosure Statement
Operating Principles for Impact
Management

Water.org
May 15, 2023
Water.org hereby affirms its status as a Signatory to the Operating Principles for Impact Management. This
Disclosure Statement applies to Water.org’s work to catalyze sources of capital to power water andsanitation solutions for those living in poverty.
Water.org is a global nonprofit organization that works to bring water and sanitation to the world by helping
people get access to safe water and sanitation through affordable financing. As of May 5, 2023, together
with our 154 partners around the world, we've catalyzed more than US$4.4 billion in capital to support smallloans that bring access to safe water and sanitation to more than 55 million people in the 11 countries inwhich we operate.
The information contained in this Disclosure Statement has not been verified or endorsed by the Global
Impact Investing Network (“the GIIN”) or the Secretariat or Advisory Board. All statements and/or opinions
expressed in these materials are solely the responsibility of the person or entity providing such materials anddo not reflect the opinion of the GIIN. The GIIN shall not be responsible for any loss, claim or liability that theperson or entity publishing this Disclosure Statement or its investors, Affiliates (as defined below), advisers,
employees or agents, or any other third party, may suffer or incur in relation to this Disclosure Statement or
the impact investing principles to which it relates. For purposes hereof, “Affiliate” shall mean any individual,
entity or other enterprise or organization controlling, controlled by, or under common control with the
Signatory. This Disclosure Statement affirms that Water.org’s core business is conducted in alignment with
the Impact Principles. Total assets under management in alignment with the Impact Principles are US$0
million as of May 15th, 2023.

Gary White
Chief Executive Officer
Water.org
May 15, 2023

PRINCIPLE 1: Define strategic impact objective(s), consistent with
the investment strategy.
The Manager shall define strategic impact objectives for the portfolio or fund to achieve positiveand measurable social or environmental effects, which are aligned with the Sustainable
Development Goals (SDGs), or other widely accepted goals. The impact intent does not need to
be shared by the investee. The Manager shall seek to ensure that the impact objectives andinvestment strategy are consistent; that there is a credible basis for achieving the impact
objectives through the investment strategy; and that the scale and/or intensity of the intended
portfolio impact is proportionate to the size of the investment portfolio.
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Water.org is a registered 501(c)(3) global non-profit organization that empowers people
living in poverty with access to safe water and sanitation through affordable financing.
Water.org aims to catalyze blended forms of private and public finance to enable
households to obtain their own improved water solutions while also enabling water
service providers to enhance the quality, availability, and accessibility of water andsanitation services and supply chains.
Water.org is committed to achieving SDG 6, and specifically helping bridge the financing
gap to deliver access to safe water and sanitation for people living at the base of theeconomic pyramid (BOP) using market-driven financial solutions.
- Water.org addresses SDG6.1 and 6.2 by increasing access to improved WSS
services through scalable, market-based solutions. Moreover, our interventions
contribute toward SDG 6 achievement by utilizing a model that is financiallysustainable and therefore scalable.
- The assets Water.org borrowers construct with water and sanitation loans move theirhouseholds upwards along the JMP service ladder towards the goal of safely
managed services.
Water.org takes a holistic approach to create impact and defines its solutions at threelevels:-•Direct impact: We partner with local financial institutions,by providing technical assistance, connections and small
grants, where needed, so they can provide small,affordable loans to people in need of water and sanitation
at home.
- Collaborative impact: We work with partners acrosssectors, including water and sanitation and financial
services, and other international development
organizations to expand access to affordable financing forwater and sanitation. We provide technical assistance, share
best practices, and collaborate with stakeholders so they can develop, implement,
and scale effective solutions.
- System impact: We work with governments, sector institutions, and other partners ata systems-level to influence policy and practice changes that increase the flow ofcapital for household water and sanitation solutions.
These solutions are aligned with the following strategic impact objectives:- increase people reached with improved WSS,
- increase the amount of financing for WSS improvements,- develop partnerships and ensure partnership sustainability,- implement changes in policy and sector systems to improve the enabling
environment for WSS financing, and-

improve the efficiency of capital for Water.org and across the WSS sector

PRINCIPLE 2: Manage strategic impact on a portfolio basis.
The Manager shall have a process to manage impact achievement on a portfolio basis. The
objective of the process is to establish and monitor impact performance for the whole portfolio,
while recognizing that impact may vary across individual investments in the portfolio. As part ofthe process, the Manager shall consider aligning staff incentive systems with the achievement of
impact, as well as with financial performance.
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Water.org manages impact on a portfolio basis by analyzing monthly partner loan
portfolio reports and progress, conducting household visits and viability assessments,
and through rigorous research. These methods allow Water.org to evaluate the outcomesof its interventions, explore different financing solutions, and work through multilateral
partnerships to bring about system-level policy and practice change.
The Global Operations Team is responsible for integrating impact into program design.
This is reflected in annual performance reviews and through quarterly impact reporting. In
addition, Water.org’s staff incentive system incorporates organizational performance,
including measures of impact, to determine employee incentive payments.

PRINCIPLE 3: Establish the Manager’s contribution to theachievement of impact.
The Manager shall seek to establish and document a credible narrative on its contribution to theachievement of impact for each investment. Contributions can be made through one or morefinancial and/or non-financial channels. The narrative should be stated in clear terms andsupported, as much as possible, by evidence.
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Water.org believes that access to capital is the most important barrier to overcome inorder to solve the global water crisis – a crisis that requires a radical increase in global
financing, 3x the current investment. Water.org’s solutions strategically use donor funds
to attract private investment and fill in the financing gap.
Our solutions are grounded in the concept of our flagship WaterCredit model. ThroughWaterCredit, Water.org provides technical assistance to institutions to help structuresmall, affordable loan products for households for their water and sanitation needs.
We have broadened our efforts and joined forces with others to increase financing forwater and sanitation, helping even more people in need. Water.org also established
WaterEquity, the first-ever impact investment manager dedicated to ending the global
water crisis, with an exclusive focus on raising and deploying capital to water andsanitation enterprises throughout Asia, Africa, and Latin America.
Water.org’s contribution to the achievement of impact for each intervention is
documented using our monitoring and evaluation framework. Grounded in our theory ofchange, our framework is the underlying process we use to capture and understand theperformance of our work across all three levels of impact.

PRINCIPLE 4: Assess the expected impact of each investment,
based on a systematic approach.
For each investment the Manager shall assess, in advance and, where possible, quantify theconcrete, positive impact potential deriving from the investment. The assessment should use asuitable results measurement framework that aims to answer these fundamental questions: (1)What is the intended impact? (2) Who experiences the intended impact? (3) How significant is theintended impact? The Manager shall also seek to assess the likelihood of achieving theinvestment’s expected impact. In assessing the likelihood, the Manager shall identify thesignificant risk factors that could result in the impact varying from ex-ante expectations. In
assessing the impact potential, the Manager shall seek evidence to assess the relative size of thechallenge addressed within the targeted geographical context. The Manager shall also consider
opportunities to increase the impact of the investment. Where possible and relevant for theManager’s strategic intent, the Manager may also consider indirect and systemic impacts.
Indicators shall, to the extent possible, be aligned with industry standards and follow bestpractice.
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Water.org assesses the potential positive impact prior to beginning a new intervention byworking together with our partners to set program targets, including for people reachedand capital mobilized.
• Continuous monitoring through the processes outlined in Principle 6 ensures that ourinterventions are meeting performance targets and creating positive impacts. Program
evaluations are also frequently used to gain an independent assessment of theintervention’s impacts.
• Key performance indicators (KPIs) are collected throughout the intervention and are used
to measure impact and inform our work. The types of KPIs we collect on a regular basis
Keyperformance indicators (KPIs) are collected on a regular basis and used to measure and inform our
include:work. The types of KPIs we collect on a regular basis include:
Reach:• Number of people reached• Amount of mobilized capital• Efficiency of capitalHousehold:• Characteristics: household size, age,gender, location, income• User satisfaction with the water andsanitation improvement andintervention• Changes in socioeconomic status
and water and sanitation practices,safety and time savings

WASH products:• Types, functionality, usage

Partners and interventions:• Channels and innovations• Forecasts vs. actuals• Sustainability of business operations• Partner capacity and progression
against set milestones• Capital efficiently

PRINCIPLE 5: Assess, address, monitor, and manage potential
negative impacts of each investment.
For each investment the Manager shall seek, as part of a systematic and documented process, toidentify and avoid, and if avoidance is not possible, mitigate and manage Environmental, Socialand Governance (ESG) risks. Where appropriate, the Manager shall engage with the investee toseek its commitment to take action to address potential gaps in current investee systems,
processes, and standards, using an approach aligned with good international industry
practice. As part of portfolio management, the Manager shall monitor investees’ ESG risk andperformance, and where appropriate, engage with the investee to address gaps and unexpected
events.
••Water.org’s monitoring and evaluation framework allows us to identify potential risks andnegative impacts, while validating the resulting change that often occurs in complex
environments. The practice and tools of our framework allow for flexibility to adjust to
various local contexts and impact levels. It ensures global practices and standards formeasuring and reporting our impact with confidence.
Water.org’s partners undergo a rigorous due diligence process to ensure they are alignedwith corporate governance standards. During the due diligence process, Water.org
gauges the potential partner institution’s interest in water and sanitation lending,assesses their financial health and operational capacity, and estimates the potential for
impact, while also ensuring that the institution is operationally and ethically sound.

PRINCIPLE 6: Monitor the progress of each investment in achieving
impact against expectations and respond appropriately.
The Manager shall use the results framework (referenced in Impact Principle 4) to monitor
progress toward the achievement of positive impacts in comparison to the expected impact foreach investment. Progress shall be monitored using a predefined process for sharing
performance data with the investee. To the best extent possible, this shall outline how often data
will be collected; the method for data collection; data sources; responsibilities for data collection;and how, and to whom, data will be reported. When monitoring indicates that the investment is nolonger expected to achieve its intended impacts, the Manager shall seek to pursue appropriate
action. The Manager shall also seek to use the results framework to capture investment
outcomes.
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As a data and evidence-driven organization, Water.org is committed to rigorous
monitoring, evaluation, and learning processes. To conduct our monitoring, evaluation,and learning practices effectively and objectively, the Insights and Innovations team
operates as a separate unit within the organization. To remain accountable to our global
stakeholders the Insights and Innovations team regularly engages with vetted 3rd parties
to conduct independent monitoring visits, research, and evaluations. This allows for the
Insight and Innovations team to remain lean and adapt to regional contexts.
Core areas of the Insight and Innovations team’s activities include:- Monitor: Measure and track progress and impact.
- Evidence: Build an objective and credible evidence base to instill confidence in ourwork through data analysis, program tracking, result measurements, research, andbusiness case studies.
- Learning: Synthesize learnings and incorporate best practices to improve
performance through efficient adaptation and uptake for future interventions.
- Validate: Conduct due diligence to confirm results to inform current and future
strategies.
Water.org’s monitoring framework ensures that progress is monitored regularly andthrough a variety of methods outlined below:

Following partner certification, Water.org and the partner work together to develop
parameters of the scope of engagement, organizational demand assessment, and a pilot
program for WSS lending. Water.org partners set impact targets based on market
assessments and agreed-upon key performance indicators. Water.org staff forecasts
expected impact data on a quarterly basis.
Partner institutions regularly collect and report performance data. This data is uploaded
through Water.org’s MIS platform, WaterPortal. This platform is used to track, manage
and report all partner and intervention-related data. Water.org partners upload portfolio

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data on a monthly basis and undergo monthly and quarterly quality checks to ensure
accuracy.
Impact data from the WaterPortal is extracted and analyzed to understand loan data
(number of loans, principal disbursed and collected, product types), as well as borrower
trends (age, gender, income levels, location). This data is used to assess the program
progress with respect to key program targets and draft quarterly reports. These reports
are shared internally with Water.org staff, as well as externally with our partners andother external stakeholders.
Program Monitoring Visits (PMVs) are used to validate information reported by thepartner and to ensure that interventions are meeting the goals set out between Water.org
and its partners. PMVs take place during the implementation of the intervention, throughhead office and client visits, allowing staff to troubleshoot challenges prior to theintervention’s end.
- Head office visits are used to assess partner’s progress towards sustainability,
provide feedback to the partner and adjust workplans and budgets as needed,
capture lessons learned for future implementation, and check and validate
information reported in the MIS.
- Client visits involve borrower interviews conducted by third party contractors to verify
that loans disbursed were used for an approved water or sanitation improvement andthat the improvement is functional. The frequency of these visits is determined prior
to the intervention in collaboration with the partner staff, water.org staff and according
to funder requirements. These survey reports are uploaded into the mWater platform.
These forms/surveys are managed by Water.org staff, and are updated at minimum
annually, including review of indicators/activity categories.
Using Outcome Harvesting, Water.org also captures qualitative impact data related to oursystems change efforts. This method allows us to track changes in behavior,relationships, actions, activities, policies, and practice as a result of our interventions.
This information is collected on a quarterly basis by Water.org staff.

PRINCIPLE 7: Conduct exits considering the effect on sustained
impact.
When conducting an exit, the Manager shall, in good faith and consistent with its fiduciary
concerns, consider the effect which the timing, structure, and process of its exit will have on thesustainability of the impact.
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Water.org’s exits are built into the structure of its interventions and partnerships. Waterand sanitation loans create social and economic value for lending institutions, which
inspires our partners to continue lending after our involvement ends and creates interest
among new partners to explore lending for water and sanitation.
Prior to conducting an exit, partner progress towards sustainability is assessed using theWaterCredit Sustainability tool. The WaterCredit Sustainability Tool (WCST) uses
qualitative and quantitative techniques to determine the sustainability of a partner’s waterand sanitation portfolio, assess the degree to which the microfinance partners areoperating sustainable WSS portfolios, the potential challenges to scale, and the partner’s
technical capacity.
Water.org completes a final assessment prior to the end of a partnership. During the lastyear of an intervention, Water.org discusses the portfolio strategy with partners after
Water.org’s exit. This will determine the partner’s ability to continue scaling WSS portfolio
after current program ends, and if a new program should be considered. This involves
several activities:- Endline survey and Impact assessment (as applicable): Ensures proper comparisonof household level impact. Engage a third party for enumeration.
- Program/Initiative evaluation: Assesses program effectiveness.
- PMV requirements: Ensures that all the required visits and borrower surveys havebeen completed.
- Final partner financial (and/or program) audit: Ensures that the final partner financial
and/or program audit is completed.
- Partner budget management: Assesses the budget burn rate and determines if thepartner will be able to spend down the budget by the end of the program.
- Wrap up visit: Closing meeting to debrief the program and exchange lessons learned
from both parties, discuss partner’s plans to continue WSS lending and reporting
expectations.

PRINCIPLE 8: Review, document, and improve decisions andprocesses based on the achievement of impact and lessons learned.
The Manager shall review and document the impact performance of each investment, compare
the expected and actual impact, and other positive and negative impacts, and use these findings
to improve operational and strategic investment decisions, as well as management processes.
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Through the regular monitoring and evaluation of its interventions through the tools andprocesses previously mentioned, Water.org constantly reviews its interventions to assess
progress against targets, and identify lessons learned, challenges, and best practices.
Insights generated as a result of these activities are disseminated to relevant internal andexternal stakeholders, and learnings are regularly incorporated into future intervention
design and through annual operational planning.

PRINCIPLE 9: Publicly disclose alignment with the Principles andprovide regular independent verification of the alignment.
The Manager shall publicly disclose, on an annual basis, the alignment of its impact management
systems with the Impact Principles and, at regular intervals, arrange for independent verificationof this alignment. The conclusions of this verification report shall also be publicly disclosed. These
disclosures are subject to fiduciary and regulatory concerns.
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This Disclosure Note re-affirms the alignment of Water.org’s policies and procedures with
the Operating Principles for Impact Management and will be updated annually.
Water.org engaged BlueKey Inc. to conduct an independent verification of this alignment
in December 2021. The independent assurance letter is included at this link.
Water.org will replicate this independent assurance by December 2026 or when materialchanges are made to impact-related policies and procedures, whichever comes first.