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.

Emily Smith is a second year MBA student at the Haas School of Business, interested in using social enterprise solutions to address poverty on a global scale. After receiving her degree in Electrical and Computer Engineering from Cornell University, Emily worked as a corporate consultant in New York City. She then spent time consulting with a nonprofit organization in Africa, where she discovered her passion for international development. After her time in Africa, Emily came to Haas to study market based approaches to poverty alleviation. Emily is President of Global Initiatives at Haas and head of Marketing for the Global Social Venture Competition. In addition, Emily has worked for a number of social enterprises in industries including microfinance, international health and fair trade.

Jacqueline Novogratz, Founder and CEO of Acumen Fund, and Tim Brown, CEO of renowned innovation and design firm IDEO, are old friends with a world-changing business partnership. Last week at the University of California at Berkeley, they united on stage for the first time to discuss human-centered poverty alleviation.  Another close friend (and Acumen Fund board member), Stuart Davidson of Labrador Ventures, moderated the discussion. The intimate and engaging conversation addressed the intersection between design and development, which has made a partnership between two seemingly different organizations so profoundly impactful.

Jacqueline and Tim’s friendship began at a TED conference, where Jacqueline was discussing water issues in the developing world, and IDEO had just recently been involved in a design project with KickStart aimed at increasing access to water. They immediately realized that they were both working towards a very similar goal: helping people innovate in order to grow. Jacqueline explained that “we were putting ourselves in other people’s shoes to better understand what they want, and that’s design thinking; that was a whole new lexicon for Acumen Fund.”

According to Tim, IDEO’s questioning process is about “drilling down and spending enough time to get beneath the surface. Making people notice things they might not have noticed themselves.” The challenge with bringing this method into development is being aware of cultural context. For that reason, he emphasized the importance of getting design thinking out into the world.

To support this effort, IDEO has developed an incredible guide, called the Human Centered Design Toolkit, to help organizations and entrepreneurs use design thinking in their work with impoverished communities. The aim, as Tim explained, is for people in need to be co-collaborators, for design thinking to be a co-owned process. This approach, in these extreme markets, will lead to innovations never dreamed of in the developed world.

Stuart brought up a common question in discussions about social entrepreneurship and innovation: how does this scale? “It’s not about the insight scaling, it’s about the ideas scaling,” Tim explained. The process is about getting ideas; then you develop the ideas which are truly scalable. Jacqueline noted that many top down approaches are scalable in theory, but they don’t work effectively and lose traction quickly if locals are not involved from the start.

The discussion shifted to how the language of the industry has changed over time. In Jacqueline’s opinion, “language precedes change.” She recalled that eight years ago, when Acumen Fund started, she had to argue with individuals who refused to be called “investors” because they weren’t getting any financial return. Now the concept of social return on investment is becoming widely accepted. The lexicon of the industry is shifting and acknowledging the power of an investment-oriented approach.

At the core of the investment approach is a full respect for all human beings, a sentiment that continually surfaced throughout the conversation. Market-based approaches aim to treat people as consumers, who despite their income level, desire all the things we desire. Jacqueline explained that instead of telling people what they “should” do, it’s about asking what people want as consumers and truly listening. In forcing accountability and investing in growth, we are able to actionably demonstrate a belief that all people are capable of achieving success.

The sessions closing sentiment related to each firms contribution to change in the developing world. Tim explained IDEO is about enabling choice; creating new choices that didn’t exist, so that people can make them if they desire. At the core of what both firms seek to produce, Jacqueline concluded, “real dignity ultimately comes from choice and opportunity.”

The event was hosted by Global Initiatives, a student run organization at UC Berkeley’s Haas School of Business, focused on exploring market-based approaches to international development. The discussion was part of a Haas class called Market Based Approaches to Poverty Alleviation taught by former Acumen Fund Fellows Jocelyn Wyatt and David Lehr. Not your average business school course, this is one of the many opportunities offered by Haas, bringing innovative market-based approaches to students with a passion for social change.

The event was sponsored by The Center for Nonprofit and Public Leadership, The Lester Center for Entrepreneurship and Innovation and the Blum Center for Developing Economies.

Editor’s note: Video of the event can be seen on YouTube.

On Tuesday, September 8, the Blum Center for Developing Economies at UC-Berkeley will be hosting Tim Brown, the CEO of IDEO and Jacqueline Novogratz, CEO of Acumen Fund, in a session called Putting the People First: Human-Centered Poverty Alleviation.

In a discussion moderated by Acumen Fund board member Stuart Davidson, Tim and Jacqueline will discuss innovative approaches to global development and the ways that IDEO and Acumen Fund have worked together to find solutions that start with the poor as people.

The event is free and open to all but reservations are recommended. For more info and to RSVP, go here.

Patient capital around the world: The need for patient capital is increasingly being written about, as in this article from DAWN, Pakistan’s leading English-language publication, or this post on the Harvard Business Review blog.

Friends in the news: Our friend Liz Ellers was cited in Main Line Media News for her creation of and work with the collaborative funding partnership globalislocal, which has supported some Acumen Fund investments.

“The Boss”: The Sunday New York Times included a feature on Acumen Fund CEO Jacqueline Novogratz.

Summer spotlighted in the FT: Abhay Nihalani, one of our summer associates in Kenya, has been writing about his work there for the Financial Times’ MBA blog, as well as in an article in the FT’s print publication.

India investees in the news: Two of our investees were featured recently in Outlook India: D.Light and LifeSpring.

As a venture philanthropist, Acumen Fund’s Jacqueline Novogratz leads entrepreneurial projects across the globe—many of which put women at the helm of emerging local businesses. In this video interview, she discusses her experience developing other women leaders, the way they have shaped her own approach to leadership, and the different leadership cultures she sees at play in the public and private sectors.

This interview was conducted by Bill Javetski, an editor with the McKinsey Quarterly, in February 2009. It was recorded in the New York office of Acumen Fund.

Click below to watch the video:

As Chair of Acumen Fund’s board, I couldn’t be more proud to announce that Jacqueline’s book launches TODAY! This book has been a genuine labor of love, and her clear, distinct voice can be heard on every page. Jacqueline started writing it in 1996 after the Rwandan genocide. The colorful, funny and painful stories mark her personal journey from arriving in Africa in 1986 and continue through the founding of Acumen Fund. Through the stories, we learn important lessons about building entrepreneurial solutions to poverty, about listening, and about creating a life of meaning. For anyone interested in the work and approach of Acumen Fund, or in how we might shape our collective future, this truly is a must-read. I also believe that this book could be very beneficial to Acumen Fund.

Many have already asked how they can help. Just to name a few ways, you can:

• Write a short review on Amazon and/or comment on the reviews already there
• Send this message to all of your friends
• Become a fan of The Blue Sweater on Facebook (and stay up to date on media, events, etc.)
• Email the website address (www.thebluesweater.com) to friends and colleagues 
• Blog about it
• Mention it on Twitter
• Buy copies for your friends!

You can purchase books at Amazon, Barnes & Noble or at your local bookseller.

The world has never needed all of us working for the common good more than it does today. Thanks for being part of our community of friends - and thanks for helping us spread the word!

Sincerely,

Margo Alexander

P.S. A good friend has generously committed to give Acumen Fund $15 for each of the first 5,000 books sold! We are grateful for this pledge and hope you will help us by buying early!

With Pakistan often among the top headlines on The New York Times front page (and usually not in a flattering way) – we are heartened to see the most recent issue [Dec – Jan 2009] of Blue Chip Magazine, a leading business magazine in Pakistan, carry a cover story on our very own Jacqueline Novogratz and the investments Acumen Fund has made in Pakistan.

Our most recent intra-office debates revolve around the question of how to support and encourage social entrepreneurship - let alone find the solid business ideas that are providing services at the BoP - so we at Acumen Fund are excited to see positive news of on-the-ground initiatives and social businesses that often operate in the most challenging environments and landscapes. The story really is around social entrepreneurs like Roshaneh Zafar, Tasneem Siddiqui, and Dr. Sono Khangharani who “have seen possibilities where other people see hopelessness.”

Also featured in the same issue of Blue Chip is Roshaneh Zafar , President of Kashf Foundation, who recently launched Kashf Microfinance Bank Limited (KMBL) in October 2008. KMBL is an investment of Kashf Holdings Private Limited, the parent holding company in which Acumen Fund has also invested.

In the five months since operations were launched, Kashf Microfinance Bank has set up 18 branches and is serving 20,000 microfinance clients. But with the microfinance industry facing a challenging period in Pakistan due to the macroeconomic environment and political instability, the innovation of the original group lending methodology is now facing a setback. There is a need to innovate in microfinance services beyond the group lending methodology commonly used by microfinance institutions in Pakistan.

With the launch of the new Kashf Microfinance Bank, Kashf has begun individual lending and savings mobilization and now provides savings products to women from low-income communities. Roshaneh discusses the pioneering work Kashf has been doing at the BoP and Acumen is proud to support Kashf and the microfinance sector in Pakistan.

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.

The post’s title says it all - almost. Yes, Acumen Fund founder and CEO Jacqueline Novogratz has written a book - it will be published in early March. Entitled The Blue Sweater, the book is part memoir, part manifesto - a personal history trafficking in the lessons of Jacqueline’s life. Those lessons inevitably include many of the core values on which she founded Acumen Fund: respect, generosity, accountability, humility, audacity.

Earlier this evening, New York Times syndicated columnist Nicholas Kristof posted a review of The Blue Sweater on his blog, On the Ground. His entry is entitled Investing to fight poverty:

One of the most interesting innovators in aid and development is Jacqueline Novogratz, a New Yorker, the CEO of the Acumen Fund. She is, what? An aid worker? A banker? A bleeding-heart venture capitalist? A tough-minded philanthropist? All of the above?

On my Southeast Asia swing, I read an advance copy of her memoir, “The Blue Sweater,” which will be published in February [actually, March 3], and it’s a terrific and sober-minded look at the complexities of doing good. She acknowledges that helping people is much harder than it looks, and that donors need to do more listening and less instructing – yet at the end of the day, she believes there are things we can do that really do make a powerful difference to the world’s neediest.

Browse to Kristof’s blog and check out the review: http://kristof.blogs.nytimes.com/2009/01/06/investing-to-fight-poverty/

You can learn more about The Blue Sweater at http://www.thebluesweater.com

In addition to holding the “billionaire title,” these three individuals share a commitment to a new movement of social change, according to Matthew Bishop and Michael Green, co-authors of Philanthrocapitalism: How the Rich Can Save the World.  Bishop and Green believe that Gates, Clinton and Jolie are part of a new generation of wealthy, powerful people who are changing the role of philanthropy by combining focused, charitable donations with “big-business-style” investment strategies. Their book profiles several of these new philanthropists, including those listed above and other influentials like George Soros and U2’s Bono.

Bishop, American Business Editor/New York Bureau Chief for The Economist, explained the basis for focusing on the super-rich as change agents in a recent interview with Alliance Magazine: “The point we’re making is that there are more super-rich people around than ever before and they have all sorts of problem-solving talents developed in their business lives that they are now looking to bring to bear on some of the world’s big problems.”

But while these philantrocapitalists may be willing to take greater risks with their checkbooks as compared to traditional philanthropic institutions, many of them have a deep interest in accountability and rigorous performance measurement. Bishop’s and Green’s Values blog recently published an entry on philanthrocapitalism’s need for robust impact measurement systems.  Acumen Fund’s new portfolio management system, called Pulse, was pointed to as one innovative “work-in-progress” solution aimed at addressing this challenge.

Bishop also recently interviewed Acumen Fund CEO Jacqueline Novogratz at the Clinton Global Initiative about Acumen Fund’s emphasis on market-based solutions to solving the problems of global poverty (the video can be viewed below or on The Economist’s website).

In reviewing the list of names and organizations included in Bishop’s and Green’s book, it is clear that philanthrocapitalism has as many distinctions in as it does similarities.  Though the movement is unlikely to settle on a precise spot along the scale of pure philanthropy to pure capitalism, an exciting, unifying theme emerges: there is great promise in connecting high net worth individuals with innovative intermediaries to move from social investment to long-term impact.