This one comes to us from a Dartmouth lecture on Monday. The Acumen Fund does amazing work.
Martin Fox with the Center for Global Leadership – accelerating the global ripple
Acumen Fund’s Founder discusses nonprofit strategy
By Isha Flores at Dartmouth
Jacqueline Novogratz always knew that she wanted to change the world as an entrepreneur. As a Chase banker who traveled to dozens of countries, she realized that she wanted to lend money to low-income people and not just the rich elite. Now the founder and CEO of the Acumen Fund, a major nonprofit venture fund, Novogratz discussed changing strategies for approaching nonprofit businesses in a lecture in Filene Auditorium on Monday.
Part of an annual lecture series that commemorates Rabbi Marshall Meyer’s vision of helping others through social action, Novogratz’s lecture aimed to demonstrate the effectiveness of large-scale investment in the businesses of underdeveloped countries when investors care more about solving the problems of the poor then maximizing their shareholder value.
Novogratz recounted some of the difficulties in working across cultures, citing several experiences in which Acumen Fund fellows developed solutions that made the natives in the countries they served wary and skeptical. By acknowledging the importance of treating all people — especially the poor — with respect the fellows were able to gain the trust of the local farmers and entrepreneurs and prove to them that the solutions worked, Novogratz said.
Novogratz urged the audience to move away from “the paradigm that there are rich countries and poor countries,” and work toward an understanding that the global elite is very similar across national boundaries, while the disadvantaged parts of society vary across the world.
In a world were bribes and corruption are the norm, members of elite groups are “winning” while everyone in the rest of the country is suffering, Novogratz said. Many of the Acumen Fund’s efforts were originally delayed because so many people in power demanded bribes before they would allow Acumen Fund to move forward.
Novogratz’s organization invests money only in entrepreneurs who treat the poor not as passive recipients of aid or as seekers of handouts, but as people who want to solve their own problems, she said.
Novogratz explained that the path to extending social justice to the underprivileged calls for the reinvention of the way businesses approach philanthropy.
“What we need is a whole new set of skills,” Novogratz said. “What we need is not to just tweak our economic systems at the margins, do business a little differently, do government a little differently. We need to start imagining systems that really integrate our values into the way we do business and government and understand that they have to work together.”
Acumen Fund’s philanthropy differs from the typical microloan in the size of its initial investment, Novogratz said. While the typical microloan company gives $30 to $100, Acumen gives loans of $1 million to the companies in which it chooses to invest, according to Novogratz.
“We’ve invested $60 million in about 55 companies,” she said.
Acumen Fund’s method of using large-scale investments to help businesses that aid the poor relies on the understanding that the markets alone will not solve the problem of poverty, and that too often, markets are not specific enough in targeting the low-income population, according to Novogratz. Instead, Acumen Fund works with leaders in these developing countries to find innovative and practical solutions to widespread problems, Novogratz said.
Novogratz stressed the importance of the impact that investors’ actions may have on people they may never meet. To illustrate this point, Novogratz told the story that forms the basis for her book, “The Blue Sweater.” She recounted how, after having been humiliated in front of the football team when certain players made fun of her sweater, she donated the sweater — which is covered in images of zebras and Mount Kilimanjaro — to Goodwill. Approximately 10 years later, Novogratz encountered a young Rwandan boy wearing the very same sweater.
“I went up to the kid, grabbed his collar, turned it, and sure enough, there was my name on the collar of the sweater,” Novogratz said.
Novogratz also discussed her belief that the right to credit is comparable to the right to clean water. Although most people in developed countries use much more water than they need, 1.5 billion people have no access to clean water, Novogratz said. There must be a way to price water and distribute it so that everyone can get access to a portion of the world’s supply, she said.
“Credit is a human right,” Novogratz said. “We have to figure out a way to get a reasonably affordable credit to every person on this planet.”