There’s a story Jacqueline Novogratz has told many times but never seems to tire of recounting. Here’s the short version: Growing up, she had a favorite blue sweater with zebras on the front and Mount Kilimanjaro across the chest. She wore it every day. She eventually outgrew it in high school and dropped it off at a Goodwill store. Ten years later, while helping to launch the first microfinance bank in Rwanda, Novogratz spotted a young boy wearing her blue sweater. She ran up to him, checked the tag, and sure enough — there was her name.
It’s a story that Novogratz has said both illustrates the interconnectedness of our world and demonstrates how one small act of charity can impact another life thousands of miles away. She has also singled out that moment as the start of her decades-long quest to understand and address global poverty.
Novogratz founded Acumen Fund in 2001 based on a novel idea: help the poor by investing in social enterprises, emerging leaders and breakthrough ideas instead of donated goods and services. She says the results speak for themselves. The nonprofit global venture fund has invested more than $80 million in African and South Asian companies that provide affordable healthcare, water, housing and energy to the poor. The work has impacted more than 100 million people and created some 60,000 jobs.
“In some ways, $80 million isn’t a lot of money,” she adds, “but through investing it, we’ve brought more than $350 million additional dollars into those companies. Now you’re talking almost half a billion dollars here that, we believe, will be mostly repaid and create mechanisms that will last long after those initial funders have gotten bored and walked away, which is what we often see in traditional charity.”
A member of the Harvard Business School Social Enterprise Initiative’s advisory board and the State Department’s foreign affairs policy board, Novogratz spoke with us about her innovative approach to charity and answered the question she loves to ask others: What are you doing when you feel most beautiful?
Tell me about this idea you had to create a charity that would foster entrepreneurs, rather than a more traditional one that donates goods or services.
For me it goes way, way back. I was working in commercial banking, mostly in Latin America. I’d really had this urge to save the world. I moved to Africa and found out that people don’t want to be saved. That took me on this journey to Rwanda, where I started the country’s first microfinance bank. It was really there that I saw the power of markets, but I also started to understand that when it came to poor people, they lived and worked in a political economy, not a market economy. I also saw through and after the genocide how top-down aid too often creates dependence, which is the opposite of dignity, and at the end of the day, dignity is what we’re all about. It’s much more important to the spirit than wealth.
I’d seen markets create efficiencies and overlook the poor. I’d seen aid try to create greater equality and instead create dependency. The idea of patient capital went in the middle. We could think about our philanthropy as the most risk-oriented capital that we have and rather than give it away as handouts, we could invest it in these long-term ventures that would experiment and fail and ultimately figure out what low-income people needed to provide those services that allow them to make their own decisions, their own choices, and give them dignity.
And do you feel that’s what you’ve achieved?
I do. What I’ve learned through Acumen is that the market is indeed the best listening device we have. If you give people a water filter and ask them, ‘What do you think about it?’ they say, ‘Oh, it’s wonderful.’ Then you walk away and they’re like, ‘What the heck?’ Or they use it as a bathtub for their kids. Whereas if you say to them, ‘I want to figure out a way to sell this to you in a way that you can afford and value, will you be part of that process with me?’ They may not trust you at the beginning, but once you actually figure out what it will take for them to value it and be able to afford it, you actually have created a system that has a chance of working.
What do you consider Acumen’s greatest success so far?
We started Acumen to change the way the world tackles poverty. I’d say in many ways our greatest success is that we’re starting to help change the conversation and we’re also starting to help change the way people see the poor.
You’ve been doing this work for several decades. What keeps you so committed to it?
I deeply believe that to whom much is given much is expected. We are living in a time in history where the level of wealth and access and resources we have at our disposal is unprecedented. The privileged among us live better than kings and queens in history. And with new technologies we have the ability to understand problems within a much greater context. Therefore, I believe that if you can change things you must try to change things.
Groups like Acumen are starting to tap into a spirit that is emerging around the world. I used to think it was young — just the millennials — but I see it in all generations now. People want to do good. People want to be good. There’s a deep yearning for a new kind of leadership that is emerging across generations and across societies. I probably got five emails today from people who live in slums who want to, as one of them said, ‘be part of bridging the gap between rich and poor.’
What are some of the major trends you’re noticing in social innovation right now?
When it comes to the big picture, I’d say the most important trend is that every sector is starting to think more creatively and progressively about what their responsibility is beyond just the shareholder. All of us need to do it. You’re starting to see companies like Unilever and Dow come forth and think more long-term not only in terms of what charities they can support but how they can use their skills and talents to build sustainable solutions.
Connected to that, the business schools are now integrating social responsibility, social entrepreneurship, impact investing and patient capital — a new ecosystem, if you will, that I hope long-term influences all of business. I think you’re starting to see a whole group of business leaders that believe that the status quo, when it comes to business, is no longer an option. We have to do better as a world.
You’re part of the State Department’s foreign affairs policy board and the World Economic Forum Global Agenda Council for Social Innovators. Can you tell me about some of the themes and ideas you’re discussing there?
What you’re starting to hear is a real interest in entrepreneurship as a way of thinking about foreign policy, a way of engaging at the citizen level — entrepreneurship as a way of thinking about state and corporate leaders. Increasingly, we’re recognizing that neither the government nor the private sector alone can solve most of the tough problems that we face as individual nations or companies, and certainly as a world.
You told the New York Times that this is one of your favorite interview questions for job candidates, so I wanted to turn it back on you: What are you doing when you feel most beautiful?
I think I am connecting across divides with other human beings to solve problems and to venture into the territory that binds us. I think of a night in Nairobi when I was doing a book club with my book and a hundred slum dwellers were there. I was very intimidated when it started that I’d be talking to quote-unquote poor people who live in the slums about my book, which was written about poor people who lived in their particular slum. I thought, Would they hate it? Would they call me out on saying things they didn’t think were true? Instead, by the end of the evening I felt like I was standing on sacred ground. I felt like all the walls were gone. It seemed like every time they would ask or answer a question they would say, ‘I’m just like you, but…’ There was all this laughter and lots of tears. It came from this place of daring to go, for all of us, where we are most human.
I give you an example of when I was with the poor, but I’ve had similar experiences when I’m in board rooms with the incredibly privileged and they’re finally given permission to have an honest conversation about what’s going on in the world and they want to go there. It’s those moments of breakthrough and shared recognition that we could really do this that I feel most alive and most effective and inspired.
Who’s the most creative person you know?
I know so many creative people. I’m married to Chris Anderson, who runs TED, and he’s got this breathtaking level of courage to believe in radical openness — that if you give ideas and you give things away, incredible things can happen. To be able to be inspired by that every day allows a level of courage that is connected to imagining the world that we want to create and then going out and doing something about it.
On that note, what’s your favorite TED talk?
As anybody who knows me really well would tell you, I’m very present. If I’m sitting in front of the person giving me that talk, I think it’s the best thing I’ve ever heard. Chris always teases me; he says, ‘Wherever you’re visiting, that’s where you think we should live.’
Photo by Joyce Ravid