Articles by Jacqueline Novogratz

Jacqueline Novogratz is Founder & CEO of Acumen Fund. This article was first posted on The Huffington Post on February 25th, 2010.

Sitting on panels to interview candidates for Acumen Fund’s fellows program is always a highlight for me. Yesterday was no different as we met with five of 56 finalists from 600 candidates who applied from 65 countries for our one-year program. Each person at our New York City panel was engaged, alive and curious about the world. For some reason, the majority were from immigrant families — from Peru, China, India, Germany. Each told stories of struggle and all had grown up in families where hard work, discipline and a focus on giving back were core values. While all could be doing anything they wanted, coming from careers at Goldman Sachs, IBM and consulting, among others, they were hungry to serve. Throughout the day I thought about this next generation so willing to take risks, so eager to change the world; and I thought about the power of the immigrant experience in the U.S. Mostly, I felt blessed.

The day, however, was a long one, and by the time I left the group dinner in Brooklyn, I was feeling under the weather and thinking about my 4 a.m. wake-up for my early flight the next morning. I waited a long time for a taxi, and when a dilapidated yellow cab pulled up, I poured myself exhaustedly into the seat. The tall, wiry, dark-skinned African with enormous hands drove for a few hundred feet and then asked me if I minded if we drove a little out of our way so that he could pick up food he’d just ordered. I sighed and asked how far out of the way it was, and he said it would be just five minutes each way. That prospect didn’t thrill me and I asked if he was sure the food would be ready, and he told me not to worry because he’d drive back over the bridge to get his food after he’d dropped me off.

It was well past 10 and I liked the easy familiarity of the guy and so said, no, let’s go and get your food. He thanked me profusely and we sped across Brooklyn. Five or six minutes later, he pulled the car to the side of the street, and sprinted to a Halal Chinese food joint. Within a flash, he was back in the car and we were heading toward Manhattan.

The driver chatted happily as we drove through Brooklyn, telling me that he loved living in New York City, that in Congo he could never have worked his way up to buying a taxi, and that he was making money and sending it home and was now seen as a hero by his family. Everyone accepts him in New York, he said, even more than in his country where there is too much violence and mistrust. “I love the American dream”, he said, “and I am living it!” He added that he thought New York was different than other cities because everyone was accepted here, and he didn’t want to live anywhere else.

We arrived at my apartment, only 10 or so minutes later than we would have otherwise, and my fare was about $12. I handed him $20 and was about to tell him to keep it all because his spirit was so effusive, but he wouldn’t accept the bill. “Please,” he said, ” the fare is on me because I took you out of your way,” and I said, no, no, no. And he said, “OK, you can give me $5 but only $5 — that’s all I want.” And I laughed because something had made each of us want to be generous. So often, though, it is those with so much less who make the first move to offer something of themselves. This time I insisted and gave him the $20. The driver finally accepted and then insisted on getting out of the car to shake my hand.

At dinner, one of our partners had spoken about looking for light these days, and finding random acts of kindness every day in unexpected places. I thought of the hard life my taxi driver had left and his open, optimistic attitude toward the world and others. I was thankful that this man had managed to remind me that my time is not all that precious. So often when I am in Africa, people go way out of their way to help me, even if they’ve never met me before. We could use bringing some of that spirit to our fair city. It starts with taking just a moment to see one another, and it goes from there.

Dear Friend of Acumen Fund -

In the first years of Acumen Fund’s existence, the two most challenging questions we faced were “Can this scale?” and “Will you ever exit?” As I wrote in my last letter to you, we’re seeing significant scale in our investments ranging from maternal health, to public toilets and solar energy. Of course, the more we find answers, the deeper our questions become. Regarding scale, we’re now doing more intense dives into understanding the trade-offs. On one hand, how do our investees avoid corruption in partnering with government; and on the other, how do they avoid being pushed to serve a wealthier clientele by more traditional investors focused more on profitability than on serving the poor?

Regarding exits, the news is good. Indeed, we exited two investments this quarter and hope to exit a third in the coming months. Most exciting is Jamii Bora, the affordable housing development outside Nairobi, Kenya, which has fully repaid its $250,000 loan! Three years ago, we lent this money so that Jamii Bora could build a housing development for low-income slum dwellers who had proven their ability to repay, but would never qualify for a traditional bank mortgage. I remember standing on the open land an hour outside Nairobi’s slums, listening to the inimitable Ingrid Munro, Jamii Bora’s founder, laying out her vision: the organization would build 2,000 houses, each equipped with an indoor kitchen and bathroom, a garden and a place for laundry; they would use solar energy, and create an efficient water system so that the water could be treated and recycled; and they would eventually see a town of 12,000 people flourishing.

Recently, I visited a development with 750 constructed houses along with thriving shops and a full-fledged school. More than 240 families - or about 1,300 individuals - have moved in, and many have painted the trim on their block houses, and planted gardens in backyards. Most thrilling to me was visiting Jane’s home, for I had spent time with her a year ago in her temporary dwelling in the Mathare Valley slum (here’s  my TED talk on her journey). Her house was beautiful: trimmed in orange and green with sunflowers touching the roofline, it seemed a palace compared to the shanty where Jane had spent her life.

The most extraordinary moment occurred as we stood in her new indoor bathroom which contained a toilet, sink and shower. “In Mathare,” she said, “the water is dirty and the children are always sick. The little ones especially are always suffering with diarrhea and it is too far to go to the toilets and too dirty and expensive as well. My only option was flying toilets, but the diarrhea could be so bad that the children would soil the floor. But now, the toilet is right here in your house.”

She then demonstrated the ease of using a toilet and flushing waste away. Nothing has ever reminded me of the indignity of defecating in bags and then throwing the waste on rooftops like the sight of Jane and her new toilet. More than 1.5 billion people have no access to good sanitation. It needn’t be that way.

Never before have I understood in a spiritual sense the potential of patient capital. Capital can be used to draw us close or to distance us from one another. Traditional societies that forbid usury want to ensure the group stays together and supports one another. The sub-prime debt phenomenon, on the other hand, is a powerful example of using capital in a way that distances. Wall Street investors had no stake in whether homeowners repaid their mortgages as they thought they were “safe” up to a certain default rate. Borrowers had no relationship with a traditional banker. The system was bankrupt of values and accountability.

In an increasingly interdependent world, we must think of ourselves as a single tribe. In a world with so much excess wealth on one hand and poverty on the other, we need a new asset class. Patient capital is money invested not for undue profit but to support opportunities for disadvantaged communities. Money earned is used to invest in others and not for personal gain; and investors provide management support for the sake of the others’ success. In return, the investee is accountable to repay as a member of that same community.

Patient capital can be a cornerstone of a new social contract and a more nuanced type of capitalism for our 21st century world. Acumen invested a quarter million dollars in an organization focused on slum dwellers to build an affordable housing development – an investment banks would not make. Today, a hopeful, diverse community exists. Jamii Bora has repaid Acumen, and we can now invest in other organizations focused on bringing life sustaining services to the poor. Finally, Jane’s joy in what she has herself accomplished is a joy shared by every Partner and team member of Acumen. She did it herself, of course, but it was the brilliant vision and execution of Jamii Bora and the patient capital financing from Acumen and others that enabled her to realize her dream.

The week in Kenya was one of the most extraordinary I’ve experienced: I’ve detailed it in a fairly long journal. Ecotact toilets now serve nearly 15,000 people a day; Insta is producing more than 15 million packets of protein-fortified porridge and is on its way to creating a retail market; and we are engaging in an exciting new agricultural investment focused on hybrid seed production and distribution.

Finally, on a personal level, thanks to Acumen Fellow Suraj Sudakhar, over 90 people in the Kenyan slums have joined seven self-organized book clubs to read The Blue Sweater, (which comes out in paperback today)! He and seven young men from the slums organized a gathering for nearly 100 people in Kibera to discuss the ideas in the book while I was there (an event I recount in the Huffington Post.) The quality of the questions was incredible. People asked about balancing family and leadership, about financing existing projects, and about what individuals there could do to help bridge the gap between rich and poor. It was truly one of the most moving evenings of my life and I thank every one of those young men for giving so much of themselves to make it happen.

It has taken me a few weeks to understand what happened that night. First, I was struck by the generosity and organizational efficiency of the young men who encouraged people to come from five different slums, some of them traveling more than 90 minutes on buses. Second, though everyone spoke about the corruption and challenges to those living in the slums, no one put themselves into the category of being “poor.” Rather, they hungered for what they could do to overcome challenges and help others as well. Ultimately, the individuals in that room seemed to transcend a feeling of Us and Them, and moved to a place of We. It is on this shared sense that I feel an ever-deepening commitment to this work and everything that it promises.

It will take each and every one of us, rich and poor alike, to build the world we dare to imagine. But that night in the Kibera slum, for one powerful moment, I got a glimpse of what is truly possible.

I wish all of you everything that the world has to offer,

Jacqueline

P.S. As I wrote above, the paperback version of The Blue Sweater comes out today! You can help get the word out by buying books for your friends, writing reviews on Amazon or Barnes and Noble, and checking www.thebluesweater.com for promotions and supplementary materials. I’m giving all profits to Acumen and other social issues and so appreciate your support.

Let me congratulate Acumen investee David Kuria, founder of Ecotact, for being named the African Social Entrepreneur of the Year for 2009 by the World Economic Forum! This is fantastic recognition for David and his team’s work on bringing affordable, high quality sanitation services to thousands of people every day. Currently, Ecotact serves more than 9,000 customers daily through 10 toilets operated throughout the city of Nairobi, Kenya and other nearby locations. The toilets cost 5 shillings per use, though individuals also can pay a bit more to take a shower in a clean environment – a real luxury for thousands who travel into the city from the slums and far-flung rural areas to work in offices after long, dusty bus ride. Ecotact is showing that public-private partnerships can work on behalf of all people and we are proud to be a part of this effort.

At a conference last week, I had the pleasure of meeting with Jeff Seabright, Coca-Cola’s Vice President for Environment and Water. He spoke about the company’s policy to reach a water neutral footprint. In other words, for every liter of water Coke extracts from aquifers, it will take action to replenish the earth’s water supply. In some areas, the company is planting trees; in other communities, it is providing drip irrigation to farmers who otherwise would use flood irrigation to water their crops.

This is a thrilling initiative. First, it underscores to me that many of the world’s new standards are likely going to come from corporations who increasingly see themselves as global citizens. Of course, regulation is critical – and I am not naïve about the damage multi-national corporations can cause to the environment. But this is an important step forward, and I do believe that young people especially will hold companies to a higher standard of behavior and the smartest companies will stay ahead of this curve.

This initiative also excites me because it may provide an algorithm not only for corporations but for all of us. What would it take to influence our individual behavior so that we took the attitude that we give back to the world what we take out of it? We now have sophisticated tools to measure our carbon footprint – therefore, we know what steps could be taken to offset it. The same calculations can be done for water.

We could take this further as well, for example, around luxury consumption. What if we each created some sort of match for ourselves, whereby we would contribute to organizations fighting poverty in proportion for what we spend on luxury consumption? In other words, we would not “charge ourselves” for what we think we need in terms of the essentials (and this figure may vary widely according to overall income, of course). But we might contribute to charity at a rate connected to the very non-essential – not only to make us think about what we’re consuming but also create a different kind of redistribution that would be encouraged not by government taxation but by an individual’s own – but perhaps shared – moral code.

In the early years of Acumen Fund, one of our Partners told me that he was considering buying a Lexus when it hit him that he could, instead, buy a good (but less expensive) car, and give the difference to Acumen Fund. Years later, that gift is one of the most meaningful to me. I saw the partner recently and he told me that after seven years, he’s still driving the car and that every now and then, he smiles to himself thinking about the meaning the particular car enabled him to create. There’s something to this idea…

I’m so excited to share the news that Maria Eitel, president of the Nike Foundation and an Acumen Fund advisor, has been asked by President Obama to become the CEO of the Corporation for National and Community Service. Maria’s nomination was announced yesterday during an event with President Obama, the First Lady, Vice President Biden, Sen. Kennedy and others, as the President signed the Serve America Act.

We are so proud to work with Maria and have learned a great deal from her. The work at Nike, focused on girls, is important for the world – and The Girl Effect is one of the best examples I’ve seen of social marketing. If you’ve not seen it, watch it now! I know the Foundation will miss Maria, and at the same time, I believe Maria is uniquely positioned to lead this important work for the US and the world. This next generation of young people is an extraordinary one – finding opportunities to link them to real public service opportunities, not only in the US, but hopefully globally as well, could really change the world.

I know you all join me in wishing Maria our warmest congratulations and support. Hooray Maria!

Photo credit: Flickr user malla_mi; used under a Creative Commons license

I recently gave a keynote address in Milwaukee, Wisconsin to Engineers Without Borders, an amazing group of 12,000 students and activist-engineers who devote themselves to working on global issues at the community level, using their engineering skills as well as a values system grounded in a belief in community partnership. Exciting.

While there, I discovered that Milwaukee is positioning itself as the “Silicon Valley of Water”. Situated on a Great Lake, with four great universities in the area, a history of producing top engineers and a dying industrial sector, a vision focused on bringing forth technologies for clean water on a global basis is thrilling. (John Schmid at the Milwaukee Journal-Sentinel wrote an excellent article connecting this to Acumen; do take a minute to read it.)

I also couldn’t help but think that this approach of retooling some of America’s own cities to focus on transforming other parts of the world could have an incredible impact on transforming the cities themselves. It is this virtual cycle that we need not only to be aware of but to pursue avidly, and to communicate effectively. My mentor John Gardner would often tell me that sometimes you have to “push the inevitable”. Taking our best and brightest and asking them to focus on solving some of the world’s toughest problems from a sense both of humility as well as audacity is what is needed at this critical time in our shared history on the planet.

Nicholas writes a compelling column - At Stake are More Than the Banks - on the need to remember the poor during the G20. He cites a world in which the top 500 individuals earn more than the bottom 400 million combined, and a rising malnutrition/starvation rate.

I read this in the context of considering the prevalence of a debate between whether international aid is a good thing or a bad thing. We’ve got to get away from false dichotomies and move toward more nuanced discussions of what works, what solutions we might try and how we build systems that truly empower people. If we are going to extend the fundamental principle that all human beings are created equal, then this is the time for innovation and invention not only with our financial systems but with our philanthropy and with international development as well.

Indeed, the time is now for moral leadership, for a greater sense of urgency and for thoughtful action.

Credit: Daniel Goodrich

Acumen Fund is eight years old today! It is hard to believe we were approved as a public charity on April 1, 2001 with the ability to raise nonprofit funds and invest loans and equity in both for-profit and nonprofit enterprises. The world was so different then – just after the dot.com bubble burst, just before 9-11, long before the financial crisis. The idea of investing philanthropic funds was a new one, and each day was one of discovery.

Eight years later, our learning curve continues to be steep, but we’ve accomplished a lot and learned enormously through the years. We now hold five investments serving more than a quarter million low-income customers sustainably. Water Health International serves more than 350,000 customers, bringing safe drinking water to 287 villages – and the company intends to grow to a million customers in the next few years.

LifeSpring Hospitals, a healthcare franchise in India - now with six hospitals - is opening a new hospital every 35 days, and the results in terms of women served with safe, reliable healthcare are remarkable. 1298 Ambulances runs a fleet of nearly 100 ambulances, providing services for people of all classes in Indian cities where for too long, people have expected little or no provision of emergency services. A to Z Textile Mills produces 20 million long-lasting bednets yearly, providing protection to nearly 40 million people and employing 7,000. Global Easy Water Products has sold drip irrigation systems to more than 300,000 of the world’s poorest farmers, enabling them to double their yields, on average.

Drishtee is bringing information services to nearly 5,000 Indian villages; and BEEPZ (formerly Advanced Bio-Extracts) is working with 3,500 farmers, producing artemisinin for 60 million doses of malaria treatment yearly. In Pakistan, more than 15,000 people now hold health insurance policies and more than 300,000 women are borrowing – and repaying – their tiny loans. And these are just a few of the 40 investments made by Acumen Fund in South Asia and East Africa. We established Acumen Fund to help create a world where all people had access to affordable, quality basic services like water, healthcare and energy – and we now see a number of important models to do that.

In the past years, we’ve also built a metrics platform - PULSE, formerly PDMS - that is being beta-tested by 50 partner companies, intermediaries and foundations – and we hope this brings greater accountability to measuring social impact as well as financial returns.

We’ve seen 24 Acumen Fund Fellows from around the world participate in our program; and most have gone onto help run important social enterprises or are running social investments funds: I believe we are planting the seeds for the sector’s next generation of leaders.

We’ve built our own team to 60 people in offices not just in New York, but in Pakistan, India and Kenya. These teams are supported by incredible advisors who give more of themselves than we could have hoped – along with our global board and advisory council who make our work possible. And we couldn’t be prouder to be supported by more than 200 Acumen Partners who have contributed significant financial resources, enabling us to have a $40 million portfolio that we hope to grow to $100 million in the next few years. Thanks to everyone who is such a vital part of our community.

Thanks, mostly, to our team members around the world who give so much of themselves every single day. To say it is an honor to work together is an understatement.

It has been an amazing eight year journey; and yet, in some ways, we’re just getting started. There is a lot of work to do, and we’re ready to take on the challenges. We are looking for new and creative ways to raise funds in this difficult economic environment. We are considering questions of talent: more than 600 individuals from top business schools applied for our 10 summer internship spots, and how the world uses this resource is a question we take seriously. We are working on strengthening our performance management as well as bringing for our insights from the work in order to influence others more directly.

These challenges - while big - aren’t daunting, for now we have a platform on which we can stand, one that is strong and clear and focused. I personally have never felt as energized by this work, especially in this historic moment, for we have a real chance to help imagine and reinvent our financial systems so that they can be extended, ultimately, to all people on earth.

Happy Birthday, Acumen!

(Photo used under a Creative Commons license, courtesy of Flickr user Dey)

I’ve recently been asked by several people, including team members at Acumen Fund, whether or not one should give to a beggar. The question has weighed even more heavily this week in India, where beggars have knocked on my car’s window daily. Ultimately, I agree with Dr. Martin Luther King, Jr. who said, “True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring.”

Indeed, Acumen Fund’s entire mission is based on principles of dignity and freedom; we work to build systems that enable individuals to access affordable, quality services so that they can make their own decisions and choices. Our deepest philosophy rejects systems that insist only on hand-outs, and yet, we also have learned that sometimes hand-outs are indeed necessary, especially when people are barely surviving.

But too many no’s make a stone of the heart, and some level of inconsistency may be what makes us most interesting and even beautiful as human beings. There are times to give alms, a time just to give a few dollars to a person standing in front of you because he so clearly needs it right there in that moment. There are certainly times to give your coat on a cold night.

Rather than endlessly debate this paradox, our shared goal should be asking ourselves daily what we are doing to help create a world in which all human beings really are treated as equal, a world in which dignity trumps charity, a world in which giving becomes mostly about solving problems while also celebrating small kindnesses daily – as long as they are about the other person and not about yourself.

I write from Nairobi, where people have been dancing in the streets on this historic day of America’s inauguration of its first African-American president, Barack Obama. The Kenyans we’ve met have called him their brother, their son, and even the Second Coming. “He will bring the fighting countries close and end the wars,” a man told me while we were in Kibera, one of this city’s largest slums.

Though expectations of President Obama may be impossibly high, this inauguration has brought the entire world together for a brief moment of unity, hope and inspiration. I couldn’t have felt prouder to be an American, to feel so connected to Kenya, to believe more strongly today than ever that we can all become global citizens in the truest sense of the word. 

President Obama’s speech carried so many themes that lie at the core of Acumen Fund’s mission.  He promised more compassion for those who are suffering in the developing world, and recognized the power - and limitations - of markets, urging a new level of innovation and creativity as we solve the problems ahead. 

Barack Obama’s vision is soaring and powerful, and he will need each and everyone of us, regardless in which country we live, to succeed.  We at Acumen Fund will do all that we can to help and will do so with determined optimism and renewed effort. 

Yes. We. Can…..

This is a terrific blog post from our Advisor and great friend Seth Godin who provides all kinds of ideas for getting involved and doing something worthwhile on Martin Luther King Day. Indeed, he provides thoughts for daily giving and he’s right - if we all gave an hour a day - or even a week - we could transform the world — especially if we did it in ways that amplified important voices, leveraged our resources or enhanced an organization’s sustainability.

Seth suggests we think about highlighting leaders and innovators. Lately, I’ve been thinking a lot about heroes, how we choose them, how we make them, and how and why we follow them. So many of the leaders who’ve most impressed me are the truly unsung heroes and include the customers we serve, the entrepreneurs we support, the teammates, board and partners with whom I’m privileged to work. What can each of us do to bring especially those voices who never get heard to a larger public? My instinct says that we’re getting readier to listen daily, and the time is now to bring forth visionaries who can see a path through the markets that too often ignore the poor and traditional charity that too often sets expectations too low for the poor.

We’d be interested to read your favorite stories of people who have little or nothing and yet manage to survive with dignity and grace, against the odds. Each time I read such a story, it redoubles my commitment to working toward a world where every single one of us really does have the chance to solve our own problems and make our own decisions.

We at Acumen Fund are deeply saddened to learn of yesterday’s terrorist attacks in Mumbai. Our thoughts go out to the victims and their families, our Mumbai-based investees, Fellows and friends and everyone connected to people who have been affected by the attacks. Our personal connection to Mumbai makes the city a home to us, even if we don’t live there.

While watching the TV coverage, I did want to share another feeling of connection, and that was to everyone associated with Acumen-investee Dial 1298 for Ambulance, who have been on the scene and responding to the attacks since they occurred late Wednesday night, as seen in footage on CNN, IBN and other networks.

1298 operates under the ethic of “ambulance service for all.” Per its own policy, it provides free service to all accident and disaster victims - as well as to victims of terrorist attacks. Knowing that a few years ago, the city was so much less equipped to respond to such an emergency underlined the true service that 1298, now with 51 medically-equipped and professionally staffed ambulances, is making to the city where it was founded. We at Acumen Fund feel a great sense of pride, just in seeing how much can be built to change things in a constructive way and in this case, it was due to the hard work of the team at 1298. We thank everyone at the company for the work you do and the ethos of service you hold.