Articles by Sasha Dichter

Sasha Dichter is the Director of Business Development at Acumen Fund. The following piece is a re-post from his personal blog, which can be found here.

A few weeks ago I started a generosity experiment.  The idea, sparked by a homeless man to whom I did not give, was to spend a period of time saying ‘yes’ to all requests to give – whether a person on the street, a donation request from a nonprofit, whatever.

Some people, like Jeff, really hated the idea at first (“AHH! NOO! STOP!” was his initial reaction); others shared my sense that the practice of being generous itself was inherently valuable.

A month later, I’m glad for the experiment.  I gave more than I normally do and I gave more often.  And it felt good and right, especially during the holidays, a time when presents of all sorts were flying in all directions.

And while I won’t continue giving to virtually everyone who asks, I will give more and more often.  The practice of being generous instead of critical (discerning?) is, I have found, important for at least two reasons:  first, we are how we act, so if I can habitually act more generous, I will be and become a more generous person.  Second, the experiment served as a deeper exploration of how much giving is an act of self-expression, rather than (or in addition to) a “purchase” of a social outcome.

The people who didn’t like my experiment all said something like, “If I pass a person on the street asking for money, I don’t give because I know it makes more sense to give to a homeless shelter.”  Put another way, one could better purchase social change for a homeless person by giving to a shelter or a food bank.   Objectively, that’s probably true (though one doesn’t know for sure).  However, it also misses something: first, because whether or not you give a dollar or two to a person on the street really doesn’t affect the larger donation you’ll hopefully make to the homeless shelter or the food bank; second, because the act of saying ‘no’ over and over again is reinforcing something in you and in me.

I’m not saying give every time, I’m asking us to be honest about why we do and don’t give, and to recognize the effect it has on us.

Let’s take an extreme example: suppose that over the course of the year I’m asked to give 200 times – maybe 100 times directly and 100 times by various nonprofits in various ways.  And let’s say I have a limited amount of money to give, which I do.  Isn’t the practice of saying ‘no’ 195 times and ‘yes’ 5 times reinforcing a mindset and habit that I’m the kind of person who says no when people ask for help?  And couldn’t there be a way to say “yes” 15 or 50 or 100 times that would reinforce something else entirely?

I don’t want to take this too far – to the conclusion that all philanthropists should spread their funding widely so that they can practice saying ‘yes.’  That’s not right either.

But I do want to push myself and others to ask whether it is healthy to think of every giving decision from the head rather than from the heart.  Can’t the argument that “this isn’t the best use of my money” be paralyzing or, worse, an excuse never to part with any money, because nothing is ever good enough?

Maybe a request for a gift isn’t always chance to analyze what is or isn’t the “best” use of my money.  Instead, maybe a request for a gift is an opportunity to practice being the person that I want to be – someone whose first response is to be open and generous.

And maybe, with practice, I will be transformed in a way that is powerful for me and for the world.

(Editor’s note: this post first appeared on Sasha Dichter’s blog.)

Last week when speaking on the “Creating Private Capital Markets” Panel at the Harvard Social Enterprise Conference, I noted that one of the big opportunities for Acumen Fund and other organizations in our sector is to capitalize on a huge influx of talent.  Demand to work in our sector is at an all-time high, the result of the rising profile of social enterprise; the blowup in the financial sector (a lot of people with financial skills are rethinking their path); and, hopefully, because society as a whole (or at least the younger generation) is taking a momentary pause to reconsider our definitions of success.

Acumen Fund and other organizations in our sector are currently experiencing overwhelming levels of interest.  One data point that I mentioned on the panel: for the 10 summer internship positions Acumen Fund has open globally, we received 700 applications from an amazing group of candidates.  We’re going to do our best to find the 10 people who are the best fit for our needs this summer, but the bigger, harder question is, “What about the other 690?”

This question was salient enough that Jonathan Greenblatt, co-founder of Ethos Water, saw fit to repeat it in the lunchtime plenary panel where he spoke together with Bill Drayton, CEO of Ashoka; Clara Miller, CEO of the NonProfit Finance Fund; and lecturer and political analyst David Gergen.  This helped me realize that “the other 690″ isn’t just a question for Acumen Fund, it’s a question for our sector.  With all of the creative destruction underway in the global economy, there’s a fundamental shift in how talent will be deployed.  For burgeoning sectors like ours, this creates a demand/supply imbalance for talent, and a collective opportunity if we want to take it.

A couple of ideas to chew on:

What if some of the economic stimulus money were used to create a new Global Peace Corps, one that takes some of the best and brightest people of all ages from around the world and gives them opportunities to work on projects (private and public) that are creating positive social change?

What if all of the 690 people who applied to Acumen Fund’s summer internship - plus their colleagues who are interested in working at Endeavor and Root Capital and the World Resources Institute and the International Aids Vaccine Initiative and the Gates Foundation and the Clinton Foundation and a hundred other fascinating places to work - created vibrant, online communities on Ning or Facebook or Twitter or through NetImpact to share their own entrepreneurial business ideas, and what if the best of these ideas were made available to early-stage investors and grantmakers and social venture competitions run by business schools around the world?

What else should we be doing?

Last Sunday, I had the opportunity to speak on two panels at the 10th Annual Harvard Social Enterprise Conference. The SE Conference is an impressive, energetic gathering, with more than 1,000 attendees packed in on a snowy day in Boston. The backdrop of the financial crisis was everywhere, and you could tell that many students on campus are thinking differently about their careers. At the same time, nearly every panel referred to the opportunity presented by the Obama administration, specifically the potential for the Office of Social Innovation, which from all reports is on the verge of being created.

A keynote by Linda Rottenberg kicked off the day, providing perspective on the arc of the social enterprise sector over the last decade and our opportunities for the years to come. Linda asserted that we spent the first 10 years answering the question, “What IS social enterprise?” and that we’ll spend the next 10 answering, “What have you DONE?” I agree with Linda, though I think that the sector still has a long way to go in terms of clarifying our language and explaining in simple terms what we are and the unique value we bring in combining the best of the private and public sectors as levers for change.

In my morning panel, I had the opportunity to share the stage with Jeff Walker, Ex-Chairman and CEO of CCMP Capital and Chairman of Millennium Promise; Michael Chu, one of the founders of Accion Internacional (an early microfinance pioneer) and Co-Founder and Managing Director of IGNIA Fund; and Peter Kellner, co-founder of Endeavor and Co-Founder and Managing Director of Uhuru Capital Management (launched on Monday), a fund of funds that will give a portion of its management fees to support social enterprises.

The room was packed, with close to 150 people in a classroom that comfortably seats 90. Each panelist gave opening remarks, and we jumped into the discussion. Early in the discussion, Michael Chu made the observation that, across the panel, we represented “a spectrum of theories of change,” each complementary in nature. 

Michael makes a good point, especially given that, from the outside, it may look like we’re all trying to bring capital to bear in a new way to fight poverty and make social change. But the theories of change do differ. 

Millennium Promise uses almost all philanthropic capital to catalyze a set of simultaneous interventions in Millennium Villages, and the results in terms of increased agricultural output, decreased disease burden, and improvements in well-being in these villages is impressive.

Acumen Fund, with our focus in India, Pakistan and East Africa, has set out to provide critical goods and services to the poor, as a way of removing barriers and bringing choice and opportunity. With more than $40 million in approved investments that have touched more than 30 million lives, we have a solid investment track record and have invested in many of the most successful social ventures in the geographies where we operate. We are “impact first” investors, and our main goal is return of our capital, not return on capital.

Endeavor’s principle aim is to foster the growth of “high impact” entrepreneurs in the developing world – to create a vibrant entrepreneurial economy to catalyze change.

And IGNIA, which began making investments in 2008, is leveraging its experience with Compartamos microfinance bank which, in its recent IPO, gave outsized financial returns in addition to its large-scale social impact.  Michael Chu was clear that IGNIA’s goal is to invest in small- and medium-sized enterprises with an explicit goal of “above market” returns.” 

Given the amount of opportunity, the scarcity of capital, how underserved these markets are, and the potential of entrepreneurs to create new business models that integrate the best of the private and public sectors, this is not a question of which is the “right” approach.  Rather, our collective opportunity is to roll up our sleeves, do the work, be rigorous and transparent about what we are seeing and learning, and to be relentless about sharing these lessons learned so that the sector as a whole can better understand where and how we can use the market as a listening device to learn how best to lift millions of people out of poverty.

Fortunately, thanks to the ANDE network, the Rockefeller Foundation’s Global Impact Investing Network, and Acumen Fund’s PULSE platform to collaborate on metrics, the sector as a whole is creating the platforms we need for more collaboration. Stay tuned.

Editor’s note: You can also follow Sasha Dichter on his personal blog at http://sashadichter.wordpress.com

With all the changes that are going on in the world – a financial meltdown on one hand, a new U.S. President brought to power on a wave of change from below on the other – we see tremendous opportunity. The time is ripe to create a step change in terms of awareness, excitement, and membership in Acumen Fund’s community of supporters and advocates – from tens of thousands to hundreds of thousands…and someday millions of people who believe that markets and entrepreneurship have a central role to play in the global fight on poverty.

We need someone to help us make this happen, so we’re hiring for a Business Development Manager – Marketing. What does that mean? It means we’re looking for a storyteller, a translator, and a listener, who at the same time is ready to roll up their sleeves with data and numbers and analytics. You might be a great blogger or an old-school marketer with lots of new tricks up your sleeves. But either way you bring off-the-charts passion, energy, commitment, and humility to this role.

Put another way, you’re probably either a super-duper marketer who knows how to use online tools, or you’re world-class with online tools and also have got some great marketing ideas. If you’re neither of these things, this job (PDF) probably isn’t for you.

We’d like to see what you can do – details on how to apply are on this Squidoo lens.

Editor’s note: This post first appeared on Sasha’s personal blog. We cross-post it here because of its clear implications for Acumen Fund, our community and the non-profit sector as a whole.

Matt Flannery, the CEO of Kiva, wrote an excellent post on nonprofit overhead over on the Social Edge blog. Kiva has been a game-changer in the poverty alleviation space: they use Kiva.org to connect donors to microfinance loan recipients in the developing world. What’s important is the loan part — rather than getting a grant the borrower has to pay back the microfinance organization, which in turn pays back the funder. Conceptually, this is similar to Acumen Fund, where I work - we raise philanthropic donations and then make debt and equity investments in enterprises that serve the poor in the developing world. When we’re paid back, we recycle that capital into new investments.

One of the challenges that Acumen Fund and Kiva both face is that our models - focused on innovation, accountability, investment, and better leverage for each philanthropic dollar - are in direct opposition to the traditional metrics that rate nonprofit efficiency. This is because invested capital (loans and equity), unlike grants, don’t factor into ratio of “overhead costs as a percentage of total cost.” It just stays on the balance sheet but is not part of the annual budget.

The conventional nonprofit wisdom is that “best in class” nonprofits will spend no more than 20% on “overhead,” breaking down roughly to 10% on fundraising and 10% on administrative costs.

As Bridgespan, one of the leading consulting organizations to the non-profit sector, reports, “Many organizations and their funders are locked in a vicious cycle in which nonprofits are pressured to under-invest in overhead and to under-report their true overhead costs, even when those costs are still below what their senior managers feel is needed.” Worse still, Bridgespan reports that “The majority of nonprofits [75-85% they studied] under-report overhead on tax forms and in fundraising materials.”

If we’re going to break the cycle, we have to uncover how flawed the underlying logic is. Here’s where the logic falls apart:

An example:

Both the Grameen Bank and BRAC in Bangladesh are world-class organizations that have changed the lives of tens of millions of poor people (mostly Bangladeshi women) through the provision of microfinance services. Both organizations were founded by visionary leaders upon whose shoulders my generation stands in our work to bring an end to global poverty.

Yet, if forced to choose, I would argue that Grameen had the greater impact on the world because Mohammed Yunus, Grameen’s founder, won the Nobel Prize. This was a major marker that “mainstreamed” microfinance and allowed the world, and not just the development community, to understand that lending money to poor people could change their lives in new and exciting ways. The result was a huge influx of commercial capital, and significantly more growth in the sector - ultimately leading to millions more served.

My question is:

in the 30 years prior to Yunus receiving the Nobel Prize, does it sound right to you that every meeting Yunus had with a world leader, a powerful donor, or a leading journalist would have been counted in Grameen’s “overhead” cost, as separate from the “program” cost of delivering microfinance services to Bangladeshi women? Should Grameen have “stuck to its knitting” in delivering microfinance services and not wasted money on all the “overhead” of external communications and building a community of friends, advocates, advisors, and supporters, which ultimately led to a global movement in support of microfinance? (and yes, I know it wasn’t all Yunus, but without him, I don’t think we’d be where we are today).

My point is:

it’s not just a little wrong to try to separate out “program” from “overhead,” it’s an outdated (or maybe it was never right) mode of thinking that is based on the premise that nonprofits are primarily delivery mechanisms for pre-determined services. In reality, nonprofits play an active role in shaping our collective understanding of how to solve important social problems.

And getting back to Kiva and Acumen…:

There’s a whole new segment of hybrid organization - encompassing the likes of Kiva, Acumen Fund, Root Capital, E+Co, Agora Partnerships, sitawi, and others - that deploy mostly non-philanthropic capital for social ends. Much as we’d like not to worry about the conversation, people do often ask about “overhead ratios” when making philanthropic decisions.

In closing, here are four (more or less related) thoughts:

- Until “social investors” like Acumen et al. can develop a common vocabulary to assess how efficient and effective we are (or are not), we will be at a disadvantage in the philanthropic marketplace

- The nonprofit sector as a whole would be significantly stronger, and better positioned to weather economic downturns, if nonprofits didn’t rely on annual funding cycles. But raising money over 18 months to pay for costs over 5 years requires an upfront investment - one that will look “inefficient” based on traditional ratios

- If you care about fundraising efficiency, ask how much it costs an organization to raise a dollar, not how much they spend in total on raising money.

- Even when asking this question, take the answer with a HUGE grain of salt - raising money, teaching, inspiring people, changing attitudes, motivating people to act….there’s huge overlap in these activities. If you don’t agree, please read my NonProfit CEO Manifesto and let me know how we can all do this better.

“If you could change your life,” Seth asks, “would you?”

Seth Godin just announced an alternative MBA that he’s personally giving to a small group — application deadline is December 14, program starts January 19th, six months with Seth and a select group of people. It sounds amazing. You should tell amazing people you know about it.

Hats off to Seth for caring only about things that are valuable (as opposed to what’s conventional and expected), and for his being totally willing to put his money where his mouth is in terms of creativity, innovation, and break-all-the rules ideas. I’ve no doubt this will be incredible.

Here’s the full scoop: http://www.squidoo.com/Alternative-MBA.

Want to know a little about your professor-to-be? Check out Seth’s talk, “Influencing the Masses”, which he delivered at last month’s Acumen Fund Investor Gathering.

On Tuesday, November 11, Acumen Fund will host its annual benefit Celebration. The purpose of the event is to honor our global community and raise the visibility of the social issues our work addresses. The evening will include great food, camaraderie among friends and partners and a moving presentation by our incoming class of Acumen Fund Fellows. As for entertainment, be prepared to have your socks knocked off by Tony Award winning playwright and performer Sarah Jones and South African singer-songwriter and social justice advocate Vusi Mahlasela.

Acumen Fund welcomes your participation for what is sure to be a colorful, joyful event with lots of spirit and a real sense of community. For those who want to support Acumen, but cannot attend the event - fear not! We encourage you to send someone on your behalf.

Click here to purchase tickets, and visit our website for more information about the event.

For readers out there who are looking to work with non-profits, GOOD Magazine is hiring for a role to manage their relationships with non-profit organizations.

GOOD magazine’s business model is to take all (yes, 100%) of its subscription revenues and donate it to a selected group of non-profits. (And yes, Acumen Fund is one of the non-profit partners; you can subscribe and chose Acumen Fund here).

GOOD magazine is all about celebrating and sharing innovative ways to change the world for good. More interesting still, GOOD is part magazine, part movement. For example, on September 23rd in New York they are having an event called “Mavericks of Education” featuring Wendy Kopp, Ninive Calegari, and John Wood. I’m sure it will be a great way to spend an evening. From GOOD’s website:

Frustrated by the current state of our education system? Come take part in the salon series goodebut of GOOD Conversations featuring a powerhouse line-up including Ninive Calegari, co-founder & CEO, 826 National, Wendy Kopp, founder & CEO, Teach for America and John Wood, founder & CEO, Room to Read. Join the conversation and learn how these mavericks worked inside and outside the system to make change happen.

To apply for the job, email Liza Vadnai (liza@goodinc.com) and to RSVP for the event, email conversations@goodinc.com with your name, email address, city and state.

This post first appeared at Sasha’s blog.

I recently received Dial 1298 for Ambulance’s first newsletter. 1298 is an ambulance service in Mumbai. In 2007, Acumen Fund took a $1.5 million equity stake in 1298 to fund expansion of their service. Since then, 1298 (the number you call when you need an ambulance) has grown faster than expected in Mumbai and is already expanding their service to two new districts in Kerala. The company has captured a lot of press attention, with coverage from the Economic Times, DNA, the Hindustan Times, and others. 1298 currently has 51 ambulances which have taken more than 50,000 trips since inception.

Before 1298 launched its service, Mumbai had only about 12 working ambulances that fitted with intensive care equipment (which were primarily linked to specific hospitals); 9 out of 10 trips were to transport dead bodies. These weren’t ambulances; they were hearses.

1298 is one of a number of Acumen Fund investments that defies easy classification. The operating “special purpose vehicle” organization is structured as a for-profit business company that integrates smart cross-subsidies to achieve a social mission, while the supervising umbrella organization “Ambulance Access for All Foundation” is a not for profit. (If you ever needed proof that our terminology isn’t keeping up with what entrepreneurs are doing on the ground, then there you have it).

The cross subsidy model is deceptively simple. Patients who want to go to a private hospital in a full-service ambulance - staffed with a doctor - pay 1,500 rupees (about US$35). Those who go to public hospitals pay either half price or nothing. 1298’s leadership is committed to having 15-20% of the company’s calls be serviced free or at reduced cost. This simple logic takes away the cumbersome process of identifying who can afford to pay and who cannot.

Yesterday morning, Acumen Fund hosted a monthly breakfast for members of our Partner community featuring Acumen Fund Director of Capital Markets and Energy Portfolio, Raj Kundra. With 30 guests in attendance, this promised to be an engaging discussion.

Brian Trelstad, Acumen Fund Chief Investment Officer, opened up the discussion with reference to Acumen Fund Advisory Council member Peter Goldmark, who observed in 2006 that marginal changes in the climate will affect those on the margins first and most profoundly. Later that yearin no small part due to Peter’s influence - Acumen Fund made a Clinton Global Initiative commitment to launch an energy portfolio, and we began our work in energy 12 months ago.

Raj began the talk with a description of the Acumen Fund model, and how we raise philanthropic capital to invest in breakthrough enterprises that provide critical goods and services to the poor with a focus on health, water, housing, and most recently energy. So while Acumen Fund acts like a venture capital firm, we differentiate ourselves with our focus on large-scale social impact, coupled with economic sustainability, as our primary objectives. We invest in management assistance to support our investees both before and after we make an investment. And we believe in the power of sharing what we are learning, based on the recognition that in a world with trillions of dollars of capital, we will always, by definition, be a relatively small player.

Raj continued with a discussion of the poverty trap that poor people face with respect to energy. As of 2005, poor people spent more than 14% of their incomes on energy, and Raj estimates that these numbers have increased to over 20% with the recent surge in energy prices. In addition, the poor often use fuel sources that are expensive, inefficient, and dangerous (for example, kerosene lamps or burning wood for cooking in open spaces). Finally, with limited access to energy, productivity (whether on the farm or the result of the shortened day for studying or work) is simply lower, all of which contribute to a poverty trap.

LifeSpring’s maternity hospital outside of Hyderbad, India, is full of surprises. While the building is simple, and the maternal services they offer are low cost, the facility is immaculate and the quality of care is world-class. Expectant mothers dot the waiting room, along with their mothers or mothers-in-law, who do most of the talking. New babies gurgle, smile, cry and sleep. The energy in the halls is palpable.

I first visited LifeSpring on Mother’s Day, where, as part of a free vaccination offering, the hospital sat new mothers and their families for photographs. Later that week, I visited with LifeSpring manager Anant Kumar and Acumen Fund Fellow Tricia Morente.

LifeSpring addresses a powerful and daunting problem. Fewer than half of Indian women are cared for by a skilled attendant during childbirth, and the chances, over a lifetime, of an Indian woman dying due to complications in pregnancy and childbirth are 1 in 70.

Mr. Ayyapan, the Chairman and Managing Director of Hindustan Latex Limited - a large Indian public sector company - and his team created LifeSpring to address this problem. Acumen Fund then joined in as a 50/50 joint venture partner to help take the concept to scale.

Lifespring’s maternity care hospitals offer a low-cost alternative to public clinics, which are free but often low quality. At LifeSpring, expectant mothers pay 1500 rupees (about US$35) to deliver a baby. This price point seems to make sense, and Mr. Kumar told us that the mothers typically decide based on quality of service, and the fathers based on price. The opinion that prevails will often depend on the education level of the mother.

Yesterday, I visited a vision camp run by Acumen Fund investee Scojo Foundation, about 50 miles outside of Hyderabad.  I was joined by Vipin Sharma, who is the Operations and Partner Channel Manager at Scojo Foundation, India, and by Acumen Fund Fellow John Tucker.  Scojo holds these camps regularly, as an opportunity for their vision entrepreneurs to educate people about reading glasses and sell them high-quality glasses that cost around 150 rupees (about $4).

Presbyopia – ageing-related reduced vision – typically affects people age 35 and older. It is estimated that in India alone, 20 million people are short-sighted.  For people whose livelihood depends on good vision – tailors, weavers, and anybody reading or doing detailed work – a pair of Scojo glasses can pay for itself very quickly.

While many of the people coming to the camp have vision and eye problems, only a portion of them suffer from presbyopia. The rest receive referrals to ophthalmologists at local hospitals. For those suffering from short-sightedness, Scojo has an elegantly simple series of tests, first developed by the World Health Organization, to calculate someone’s prescription. In addition to the standard tests, illiterate customers are fitted with a pair of glasses and asked to thread a needle. Time and again, I watched as pride splashed a smile across Scojo customers’ faces as they got the needle through the thread.  Talk about seeing is believing!

There was a particularly powerful moment when a customer at the camp showed us a paper prescription with his diagnosis from an ophthalmologist.  The doctor offered the man a 400 rupee pair of glasses (more than twice the price of Scojo’s glasses).  However, the Vision Camp prescription matched that of the ophthalmologist – a testament to the quality of a Scojo diagnosis.  The man happily bought the Scojo glasses for 160 rupees, boasting to everyone around him about his high-quality, low-cost deal.