Jacqueline Novogratz: A third way to think about aid

TED Talk presents … Jaqueline Novagratz.

A debate over foreign aid often pits those who mistrust “charity” against those who mistrust reliance on the markets.

Jacqueline Novogratz proposes a middle way she calls patient capital, with promising examples of entrepreneurial innovation driving social change.

Jacqueline Novogratz founded and leads Acumen Fund, a nonprofit that takes a businesslike approach to improving the lives of the poor. In her new book, The Blue Sweater, she tells stories from the new philanthropy, which emphasizes sustainable bottom-up solutions over traditional top-down aid.

Acumen Fund – February 2014 (Letter from Jacqueline Novogratz)

Dear Reader,

This entry is based on a personal email I receive from Jacqueline Novagratz, a personal hero of mine and the Founder and CEO of Acumen Fund – a non-profit that raises charitable donations to invest in companies, leaders, and ideas that are changing the way the world tackles poverty.

Should you wish to find out more about Jacqueline Novagratz and/or Acumen Fund, I would encourage you to read the New York Times bestseller ‘The Blue Sweater‘. The book is a firsthand account of Jacqueline’s journey from international banker to social entrepreneur and founder of Acumen Fund. You may also want to check out one of Jacqueline’s TED Talk.

If you share an interest in social enterprise and want to make a real difference in this world, perhaps you can sign up to receive your own personal newsletter. Read on and enjoy …

Acumen: Changing the way the world tackles poverty                                                                                           
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Dear Salim, 

During Chinese New Year celebrations just a few weeks ago, I walked through the streets of New York as colorful confetti mingled with white snowflakes: beautiful fragments, a fluttering, harmonious welcome to the Year of the Galloping Horse. Indeed, Acumen is moving apace. January brought a trip to India; February, Pakistan. Both experiences have reinforced a sense of optimism amidst global challenges.

India’s trip focused on diving deep into a few investments, some new, some old, including Ziqitza Healthcare Limited (ZHL), an ambulance company that has served more than 2 million people across India. When we first invested, the company had 9 ambulances with a purely private business model based on a sliding scale pricing structure. Over the past 7 years, partnership with government has driven the company’s growth. Scale and sustainability are possible – and so is a commitment to ethics. At the nexus of both is the constancy of moral leadership.



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An interview with Jacqueline about the marriage of love & power in Origin Magazine

Jacqueline’s piece remembering Nelson Mandela in Huffington Post

Before ZHL, a state like Odisha, India’s fourth poorest, provided little in the way of emergency services.  On my recent visit to Bhubaneswar, the state’s capital, I met numerous people who shared horror stories of trying to get loved ones to hospitals using rickshaws, taxis, even bullock carts. Now, by dialing 108, any person with an emergency can expect a quick pick-up and delivery to a public hospital. What is most surprising to users is that the 108 services are actually effective. Average delivery times are less than 25 minutes, despite the fact that 80% of users live in rural, underserved areas with inadequate infrastructure. Prashant, a fish farmer who lost an uncle while trying desperately to get to hospital said that this new ambulance company was like “the gods coming to help the poor people.”

If free, quality services are a surprise, so too is the absence of corruption: bribes are not tolerated.  To ensure this, a quality team is tasked with calling users regularly to inquire: 1) whether the driver has asked them to pay; 2) whether they’ve paid something, even voluntarily; and 3) how they would rate the quality and speed of service. The group also monitors daily calls, currently coming in at 10,000 a day. By year’s end, ZHL in Odisha alone will transport more than a million people to hospitals, proving the potential of a public-private venture to serve the very poor.

The company’s leaders focus vigilantly on re-enforcing its values-based culture.  Sumit Basu, Regional Head for East India, tells the story of the Emergency Medical Technician, Pratap Kumar Sethi, who noticed a wallet containing 21,000 rupees (about $350) beside a roadside accident’s unconscious victim. The driver insisted on bringing the wallet to the hospital and holding it until the man regained consciousness, not trusting doctors to be honest. ZHL ensured the local newspaper covered this act of integrity. The driver earned respect. The idea that good service is possible was reinforced. Everyone gained in dignity. If scaled and buttressed by transparency and ethics, a single company can impact an industry.

This is the idea: patient capital is vital for early-stage investing when the company must confront significant challenges to disrupt an industry. At this stage, few other than philanthropy-based patient capital will take the financial risk the company needs for experimentation. As new standards and practices are established over time, the company serves as a model for others. If all goes well, it moves to profitability and sustainability, so that the company can raise more traditional capital. The poor thus have greater access to freedom, to dignity. How this translates into lives impacted is something we are studying along with the Grameen Foundation, so stay tuned.

This past quarter, our team has focused largely on enhancing the impact of existing investments. In Pakistan, our team just signed a $3.5M memorandum of understanding with the Punjab Board of Investment & Trade to partner with two companies, Pharmagen Healthcare Ltd and SRE Solutions to provide clean drinking water and solar systems to underserved communities. We are working with Bain & Company to gain insights into the factors which drive adoption of agricultural innovation by farmers. Our partner Dow Chemical and their Sustainability Corps are working to bring supply chain and operations expertise to 2 of our investees. Additionally, we’ve made 6 new investments globally in the last 6 months in our health, agriculture, education, sanitation and housing sectors.

As we invest in companies, we learn continually how leadership matters more than structures when it comes to making solutions to poverty work. We thus have doubled down on our leadership investments. This past week, I helped moderate three days of discussions with our 2014 class of Pakistan Fellows. The Fellows are an extraordinary representation of the country’s vast potential, a complex mix of class and religion, ethnicity and geography. We debated Plato, Rousseau and Hobbes, Aung Sun Suu Kyi, Lee Kwan Yew, Martin Luther King, Jr., Gandhi, Jinnah. Through every conversation, our Fellows confronted issues of identity, their own and one another’s. They honored one another by the acts of seeing, of listening, of practicing moral imagination.

Thrillingly, we are adding two more cohorts of Regional Fellows – our first from India and third from East Africa – to our community by next month. These 62 will join our 12 Global Fellows this year. All will become part of our larger ecosystem, helping one another, supporting Acumen’s companies, and strengthening our collective abilities to tackle poverty.

Our Fellows will hopefully bring forth the wisdom of both East and West. A soft-spoken, deeply thoughtful Fellow, a Pashtun from Pakistan’s FATA region shared his thoughts on prayer and peace in a violent world. When he bows his head gently to the ground, he said he is reminded to pause and feel gratitude for the earth, for all we are given. In this I heard echoes of an Indian teammate, a Jain who shared her family’s tradition of starting each day by feeding pigeons outside their home, offering a bowl of seeds, a reminder of our connection to all living things. We have the whole world to gain by honoring those practices that remind us of our shared humanity and connection to the planet itself.

Such cultivation is even more critical in this time of growing inequality. Acumen’s work and vision is one that insists on technical excellence to make good on our promise to build companies that serve the poor. This is our commitment to operational execution.  Equally, at our core is a philosophy and practice of leadership grounded in respect for all, starting by standing with the poor. It is only by fusing the two, by a willingness to embrace both love and power, that we can dare dream a world in which all of us can live with dignity.

Hoping the wind blows at your back and fills your days with possibilities in this year of the Galloping Horse,

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Jacqueline Novogratz



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Letter from Jacqueline Novogratz – September 2012

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Dear Salim,
September signals the end of summer and a sense of newness, of change, and of anticipation for the coming year.  I feel those stirrings more intensely this year, perhaps more now than at any time since starting Acumen. We’ve seen tectonic shifts in the world, in the impact investing industry, and in our companies. The world is swirling with violence ensuing from a misguided video, the Eurozone crisis, hiccups in India and China, a stalled US economy, and uncivil discourse.

Everywhere people are looking to new solutions and to new leadership, but where is it? In many ways, Acumen, as it grows, increasingly reflects the world around us. Our investee companies are, in a number of cases, reaching millions, and becoming more complex as they do. Global conversations around the roles of government, the private sector, and civil society are becoming more heated. Young people are looking to build careers that meld both public and private aspirations. All of this is good news. Yet it also poses challenges as organizations evolve.

Over the past six months, Acumen consequently has spent time reflecting not only on what the world needs, but on how we should respond to best meet those needs. We have focused on strengthening our operations and have added seasoned professionals with decades of private and public sector experience. We’ve also further globalized our Board and Advisory Council to reflect our work and values.

CNBC features Acumen Fund and Dow’s CGI commitment.
Jacqueline shares a personal story about leadership in a Washington Post video.

forbes 400Melinda Gates, Diane von Furstenburg, and Jacqueline speak on a panel at the Forbes 400 Summit on Philanthropy.

Our new leaders stand on the shoulders of Acumen’s extraordinary early builders, without whom we would not be here. I couldn’t feel more honored that Brian Trelstad, our former CIO, and our former country leaders Aun Rahman and Biju Mohandas have remained actively involved with us as Investment Committee members, board members of investee companies, and strategic advisors as they pursue exciting opportunities connected to Acumen’s work. This kind of continuity – one that allows for individual growth and organizational vibrancy – is something we hope to model. Indeed, I dream that over time we will see a legion of Acumen-inspired alumni working together in real ways across the world, both inside and outside Acumen; and I hope we also can be part of building new career paths that include moving among private, nonprofit, and public sector opportunities.

I am pleased to introduce our new leaders to you, starting with our global Chief Investment Officer, Robert van Zwieten, who comes to Acumen from the Asian Development Bank in Manila, where he oversaw the bank’s private sector investment activities in Asian frontier and emerging capital markets. Sachin Rudra now leads our India team, bringing more than 15 years of investment experience, first as a line manager in rural Bihar for Unilever, then as a McKinsey consultant, and most recently, as a successful private equity investor with Navis Capital, where he served as a Director for their India office. Our Pakistan team will be led by Farrukh Khan, who brings 30 years of experience as a highly respected investor in Pakistan and as founder and CEO of BMA Capital, one of the largest investment banks in the country.

In East Africa, we are excited that Duncan Onyango, a longtime supporter of Acumen in the region, has joined as Country Director. Duncan brings real knowledge of our work and extensive local experience, most recently leading Rift Valley Railways as Group Chief Finance Officer. These professionals join Godfrey Mwindaare, who leads our West Africa office after managing a private sector portfolio of about $4 billion at the African Development Bank. It’s thrilling to be building our future together with this dynamic global team.

I’m also excited to announce that Naveed Riaz, CEO of Citigroup Africa, has joined our Global Board of Directors. Paul Polman, CEO of Unilever, and Antony Jenkins, Group Chief Executive of Barclays, are now members of our Global Advisory Council. Each brings a track record of leadership in corporate citizenship and an understanding of the role that corporations can play in our interconnected world.

Obviously, people represent the heart of change. I’ve been inspired by the growth of the Acumen Fellows program. The seventh class of Global Fellows has just arrived in New York. The East Africa Regional Fellows program has just closed the call for applications after having received over 600 entries. And we are in the midst of calling for applications across Pakistan for our new Pakistan Fellows Program, so please join us in spreading the word.  I could not be more encouraged by this next generation, who are all so willing to work toward building new systems for change. I imagine adding hundreds of leaders that span geography, race, ethnicity, religion, and class every year, all bound by a shared commitment to a world where all people have greater choice and opportunity, where all individuals have dignity.

Of course, building profitable, scalable companies that serve the poor remains at the heart of all we do. It is the reason we invest heavily in people and ideas as well.

Acumen historically hasn’t invested in mobile technology as a sector – we felt others were more equipped to do so. However, a host of new applications building on the distributive power of mobile phones are providing low-income individuals with powerful tools for contributing to and benefiting from the global marketplace. Consequently, we are beginning to invest in these opportunities in a more deliberate way.

Sproxil, founded by Nigerian entrepreneur Ashifi Gogo, enables individuals to check whether pharmaceutical products are counterfeit or legitimate in markets like Nigeria, where up to 70 percent of all drugs are counterfeit or substandard. Using a scratch-off label on medicines, customers text numbers to a call center and immediately receive a reply confirming whether or not the drug is counterfeit. Already, Sproxil has enabled millions to verify the quality of essential products.

Virtual City has developed a mobile application that improves transparency and productivity along the agricultural supply chain in East Africa. Founded by Kenyan entrepreneur John Waibochi, this company promises to be a game-changer for smallholder farmers, co-operatives, and corporations interested in sustainable agriculture. Already, the company has reached more than 350,000 smallholder tea producers, increasing their incomes by an average of 9-13 percent in the first harvest.
So how does it work? To understand its significance, you have to imagine how things used to work. Prior to Virtual City, farmers would haul their tea to input centers. Co-op members would weigh the tea, typically under-counting by 10-20 percent. This widespread practice did little for trust. The tea would then be trucked to large storage facilities and another portion of tea would be lost along the way. Ultimately, up to 40% of all agricultural produce in Africa is lost due to a combination of factors, including poor storage, infrastructure, and corruption.

Virtual City is changing this with a simple technology. Farmers now weigh their tea leaves with a digital scale. The co-op member inputs the weight along with the farmer’s ID into a PDA, which immediately transmits the information to the trucking station so they know how much to expect upon the truck’s arrival. The member then hands the farmer a receipt for her tea, which she can use to verify her earnings when she collects them. John dreams that soon the farmers will hold virtual bank accounts that include receivables owed to the farmers for their tea, so that they could pay, for instance, school fees based on those receivables rather than have to borrow at usurious rates from the local moneylender.

The combination of transparency and traceability (connecting tea to where it is grown) has enabled the British retailer Marks & Spencer to complete a pilot project called “From Bush to Cup,” whereby a Kenyan co-op grows, processes, and even packages tea for retail sales in the UK. All of this has meant fewer losses at the time of weighing and in transport. Already, more than 350,000 farmers have seen an average 11 percent increase in their incomes. The advances in technology across East Africa are thrilling, so keep watching this space.

As for patient capital investing, we continue to learn on all levels. One focus in this next year will be better calibration of trade-offs and how we measure success. In the meantime, we welcome our new leaders, board members, and advisors with the knowledge that they will help push us to new levels in the fight to change the way the world tackles poverty.

Thank you for being part of the journey,
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Jacqueline Novogratz