Acumen Fund's 10 Lessons Learned About Getting Beyond Poverty

Jacqueline Novogratz of Acumen Fund

Five years ago I sat down with Jacqueline Novogratz to talk about Acumen Fund. She was just about to leave for a trip to Africa and I was just beginning to think about leaving The Nature Conservancy.

To my mind at the time the Conservancy had moved away from its core strength of supporting work on-the-ground and in-the-water -- we were more focused on large-scale global planning.

We had moved to the side of the "Planners" versus the "Searchers," to use William Easterly's nomenclature from his critique of Western efforts to "Aid the Rest," White Man's Burden. 

"Planners determine what to supply; Searchers find out what is in demand," Easterly wrote. "Planners apply global blueprints [emphasis mine]; Searchers adapt to local conditions. Planners at the top lack knowledge of the bottom; Searchers find out what the reality is at the bottom. Planners never hear whether the planned got what it needed; Searchers find out if the customer is satisfied..."

Acumen Fund was on the side of the Searchers, the entrepreneurs. I wanted to get back to working with entrepreneurs who were doing real work.

There were three things I really liked about Acumen Fund:

1.) They were investing not donating -- and they were all about results.
2.) They thought like a Venture Fund, only with a more patient, long-term view.
3.) Jacqueline. She was direct and didn't beat around the bush.

I need to explain that last bullet.

I was coming from a big, non-profit corporation, which operated in many ways like a Fortune 500 company.  Five years into its life Acumen was still more like a small and nimble start-up fund.

As entrepreneurial as I was -- I'd started several print and online media ventures over the years -- and despite how intrapraneurial I had been in my time with the Conservancy, Jacqueline saw that I wouldn't fit into Acumen at that time.

"Have you thought about starting something on your own?" Jacqueline asked.

(I ended up going to Ashoka as their vice president for global development before moving on to start my own endeavors.)

I continue to follow, support, and be impressed by Acumen's progress.  They have an impressive record of success.

Tonight and tomorrow Jacqueline and Acumen Fund are celebrating 10 years of creating a world beyond poverty by investing patient capital in social enterprises, emerging leaders, and breakthrough ideas.

Since 2001, the fund has invested more than $65 million in enterprises providing access to water, health, alternative energy, housing and agricultural services to low-income customers in South Asia and Africa. Their global community of emerging leaders combines the tools of business and philanthropy, making the world a better place.

Here are 10 Things Acumen Fund has learned over the past 10 years:

1. Dignity is more important to the human spirit than wealth.

2. Neither grants nor markets alone will solve the problems of poverty.

3. Poverty is a description of someone’s economic situation, it does not describe who someone is.

4. We won’t succeed in the long term without cultivating local leaders, local money, and strong local communities.

5. Great people, every time, no exceptions.

6. Great technology alone is not the answer.

7. If failing is not an option, you’ve ruled out success as well.

8. Governments rarely invent solutions, but they can scale what works.

9. There is no currency like trust, and there are no shortcuts to earning it.

10. Patient capital investing is built upon a system of values; it is not a series of steps to be followed.

You can learn more about Acumen Fund here and download their Lessons Learned here.

Congratulations Jacqueline and Acumen Fund on ten years of success -- and here's to the next ten years!

Venture Fair Wraps Up GoodCompany Ventures' Inaugural Class

Tomorrow the summer comes to an end for the ten companies to be graduated from the inaugural class of GoodCompany Ventures, the social business incubator.

The session wraps with a Gala Venture Fair. The Venture Fair, sponsored by Blank Rome LLP, Investors' Circle, and RSF Social Finance, features Karen Randal of the Philadelphia Department of Commerce as a key note speaker.

For the last few months, ten companies in the social business sector have been participating in GoodCompany Ventures’ incubator program. The curriculum has included expert speaker panels, strategic and industry advisers, and information sessions aimed at providing the companies with the resources they need to maximize growth.

One of the entrepreneurs, Emily Landsburg, co-founder of BlackGold Biofuels, credits the incubator with providing BlackGold "the structure and space to think more strategically." For Landsburg, the incubator's expert speaker panels offered "new insights and approaches to business planning."

Similarly, for Angela McIver, founder and CEO of Math Foundations, "GCV's support has been key in positioning our company to become a major player in the education industry."

GoodCompany Ventures' Gala Venture Fair brings together investors, entrepreneurs, and colleagues who seek to promote good business in Philadelphia.

The graduation is a two-part event that formally begins with company pitches to accredited investors at 2:00pm, followed by speakers including Bart Houlahan of B Corporation.

The Venture Fair will provide a showcase for some of the region’s most promising early and expansion-stage triple bottom line businesses, and will also mark the launch of Investors' Circle's Philadelphia chapter.

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A Year on the Path: Some thoughts on what I do next and what I am looking for

So it's been a year since I left the social venture capital organization Ashoka to embark on developing a business idea, which I've written about here and here on The Green Skeptic. The collapse of the market and downwardly spiraling oil prices conspired to make timing for that idea -- an alternative energy investing business -- um, to say the least, problematic.

As I've said before, I was too small to fail, hadn't taken anyone's money and hadn't hired anyone, so it was fairly easy to downshift and slow it down. The idea is still a good one, even with the SEC challenges raised early on by the venerable Steve Goodman and Morgan Lewis. But it is time for me to face reality: I'm not going to be able to pursue this right now.

So, I've spent the better part of this year consulting for various organizations and companies, co-founding the Mid-Atlantic's Renewable Energy Business Network chapter, having fun being a part of the StockTwits community as it builds and grows into a viable business, and advising and connecting people with great new ideas like GoodCompany Ventures, Radical Inclusion, and Humanity Calls. Along the way, I've spun out a few new ideas of my own, but haven't focused on one particular direction -- not yet.

I've even toyed with going back to my old, long-time employer The Nature Conservancy or joining its rival/partners WWF or Conservation International but have dragged my feet on that too.

The other day I had a pointed conversation with my leadership coach, Joni Daniels. If you don't know Joni or her work, you should, she is phenomenal. She's also tough on her clients who hem-and-haw and, well, drag their feet.

She's pushing me to put things in perspective, decide what's important to me and to decide what option makes the most sense to me in achieving my goals and what I want.

Throughout this year, I've also learned a lot about myself and what I want in a working environment. Here's the top five things I am looking for in what I do next, not necessarily in order of importance:

1.) A place where I am part of a results-oriented leadership/management team.
2.) A place where I can build a team of highly motivated talented people.
3.) An entrepreneurial enterprise with global impact.
4.) An enterprise with international reach/travel opportunities, especially in the developing world.
5.) A social business enterprise that is either for profit or at least not afraid of profit.

I'll be exploring this in several posts over the next week or so. Happy to have your thoughts on the matter.

Microfinance: The 2008 Penn Microfinance Conference in Philadelphia

The Penn Microfinance Club is hosting the Second Annual Microfinance Conference: Global Assets: Local Access today (Friday, April 18th) at the University of Pennsylvania Museum of Archaeology and Anthropology.

Speakers include Overstocks CEO Patrick Byrne, Sam Daley-Harris (Director of the Microcredit Summit Campaign), Nicola Armacost (founder of Arc Finance), and kiva.org's Matthew Flannery and Premal Shah will be the keynote speakers.

Will try to live blog from the conference or microblog via twitter ("greenskeptic").


(Disclosure: I am on the advisory board of Green Microfinance, LLC, a panelist on "Social Indicators and Sustainability: Environment, Gender, Poverty.")

The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, a Review

Social entrepreneurs. They have been variously defined as people with game-changing models to address the world's most pressing social problems or individuals who address market failures by using new business models to affect change globally by acting locally. Or just crazy people.

Whatever your definition, social entrepreneurs can be pretty unreasonable people: tenacious, stubborn, and focused on pursuing their ideas to the fullest.

Judging by The Power of Unreasonable People, the new book by SustainAbility's John Elkington and Pamela Hartigan, until recently managing director of the Schwab Foundation for Social Entrepreneurship, which takes its title from a quote by George Bernard Shaw, there are plenty of them out there ready to take on the world or at least disrupt its equilibrium.

Jean-Baptiste Say, author of A Treatise on Political Economy (1803), is credited with coining the term "entrepreneur" as someone who "shifts economic resources out of an area of lower production into an area of higher yield and production."

Add the word "social" and you have someone applying that same principle to the concerns of civil society. Wherever there is a market failure that leads to a social or environmental ill, you're likely to find a social entrepreneur coming up with a solution.

Whether you're talking about Takao Furuno, whose ducks are used to protect rice crops; Fabio Rosa, who has pioneered systems to electrify rural Brazil; or Wangari Maathai, founder of Kenya's Green Belt Movement, who aims "to plant trees to provide sustainable sources of firewood and halt soil erosion," you're talking about people who will not rest until their idea is realized and the world is changed as a result.

These "unreasonable people" are making steady progress not by, "giving a man a fish or even teaching him to fish," to paraphrase Ashoka's founder Bill Drayton, who is credited with coining the term social entrepreneur, "but by revolutionizing the fishing industry."

As such, according to Elkington and Hartigan, social entrepreneurs are "highly sensitive barometers for detecting market risks and opportunities." The authors suggest it's an important reason that global corporations are scouting for high-impact social entrepreneurs.

But how to find them and where?

The social entrepreneurs I know say, "You know one when you see one." After my recent trip to India, where I met half a dozen or so in as many days, I kind of understand what they mean.

Elkington and Hartigan offer "Ten Characteristics of Successful Social Entrepreneurs" that may help to call them out, including "Try to shrug off the constraints of ideology or discipline"; "Identify and apply practical solutions to social problems, combining innovation, resourcefulness, and opportunity"; "Show a dogged determination that pushes them to take risks that others wouldn't dare"; and "Display a healthy impatience (e.g. they don't do well in bureaucracies...)." Describe anyone you know?

They also offer a useful framework of three models for the types of organizations social entrepreneurs set up: leveraged non-profit ventures, hybrids, and social business ventures, which try to put some parameters around some of the more classic types of ventures.

To date, most of the social entrepreneur ventures with which I am familiar are of the leveraged non-profit variety. But issues of sustainability and technological innovation seem poised to demand alternative approaches.

Much of this important book draws on the stories of social entrepreneurs from around the globe who are focusing on social value creation. And this is a good and useful thing. Where the authors stray a bit too far afield, in my view, is when they erect too large a tent.

While I appreciate GE's ecoimagination as great market innovation, it seems clear that a large multinational corporation such as GE can hardly be described as a social entrepreneur, even if they ditch the company's Six Sigma culture. Even with the disruptive nature of GE's marketing and product development, most social entrepreneurs would chafe at the bonds of their corporate culture.

Shedding light on social entrepreneurs who are bringing solutions and innovations to the "epochal challenges" we face is a timely exercise. David Bornstein did it well with How to Change the World, and Elkington and Hartigan have complemented that earlier work in the field.

The bottom line is: we need more celebrants of such agents of change and perhaps even need to cultivate the art of being unreasonable. For if Shaw was right that "all progress depends upon the unreasonable man," then we are at risk if we do not call them out and give them the resources they need. It may just save our assets.


(Disclosure: The author is a vice president of Ashoka, which seeks, invests in, and supports social entrepreneurs around the world.)

Social Entrepreneurs: Goonj, "One Person's Rags Are Another's Riches"

"What are the three basic human needs?" asks Anshu Gupta, an Ashoka Fellow and founder of Goonj. "Food, clothing, and shelter. Everyone talks about hunger and homelessness, but we don't talk about the second basic need."

Indeed, argues Gupta, the only time people think about clothing for the poor is after a natural disaster or when some charity has a clothing drive.



And what happens to those clothes? Typically, if they are not shipped right away, they are stockpiled for future disasters. Many times without quality control: resulting in torn or soiled clothing or single shoes from a pair being distributed. The usefulness is questionable.

Gupta wanted to change all that.

"Clothing is a symbol of dignity," he says, without a trace of sentimentality. "We're not promoting charity; we are adding value and professionalizing the collection of discarded materials."

Through Goonj, which means "echo," Gupta started a "clothes for work" initiative, designed to help poor people earn their clothes in exchange for work cleaning up and taking care of their villages. "This takes the charity out of it," Gupta shares. "They earn their clothes and help improve their surroundings at the same time."

Goonj is run like a business, a social business, and one gets the impression Anshu Gupta could easily be running a large manufacturing or distribution center in the private sector if he wasn't possessed by an idea that clothes are a basic human need that all need access to.

The journey starts at one of over 30 collection centers in India's major cities, where volunteers and employees of Goonj sort and process the materials and package it in jute bags, which are all coded according to contents and entered into their database.

It's a sophisticated process. One of the centers, in a series of warehouse-like buildings in a modest neighborhood in New Delhi, was a hub of activity on the day we visited. Women were sorting the incoming clothing according to whether it's a male or female garment, color, size, and condition. Other women were sewing articles of clothing in need of repair; if it's beyond repair, it will be used for something else.

Two women are sorting through a recently obtained bag of clothes, blue shirts, blouses, pants, and skirts.

"They are putting together school uniforms," Gupta says. "Of course they may be slightly mismatched, but the schools where this is going otherwise wouldn't have a uniform, the kids may not even have clothes to wear to school."

Goonj is having an impact on dignity, but also on health.

Gupta cites villages in Rajasthan, which is one of the areas on their distribution network. Rajasthan is mostly desert, and most people don't think of desert people needing warm clothes or blankets.


But temperatures drop precipitously at night and if you barely have clothes to cover your body, it can be a night of agony. Goonj is making sure that blankets and clothing get to those who need it.


Clothes are only an entry point for Anshu Gupta and Goonj. And one of their newest innovations is having tremendous impact on the health of poor women.

Sanitary napkins are ubiquitous in the west; a disposable product that most people take for granted. But countless women in rural villages use dirty, useless cloth during their five days of menses, leading to infection and disease. Gupta speaks of one woman who used a piece of an old blouse and died of tetanus because she was unaware there was a sharp metal hook inside.

Through its initiative "Not Just a Piece of Cloth," Goonj has developed a cloth sanitary napkin product made from selected scraps of cloth from the sorting process (25 percent of the cloth they receive is unusable as a garment, but can serve other purposes).

They provide clean cloth napkins to rural women and women living in slums and campaign in rural and urban India to generate awareness of the need for cleanliness in the monthly cycle.

Awareness-building is a big part of what Goonj does, especially where waste is concerned. And as India's economy accelerates so does consumerism and increased wastage. Goonj is concerned that the next generation of Indians understand the connection between consumerism, waste, and poverty.

So they have developed a program called School-to-School (S2S), Winner of an Ashoka's Changemakers Innovation Award, to turn the wastage of urban school children into a resource for thousands of rural and slum schools. It also serves the dual purpose of sensitizing urban students and their parents about the needs of the less fortunate.

"The urban kid has a fight with his parents between a Pokémon bag and a Spiderman bag," Gupta says. "They have no idea what it's like to fight for a bed."

Goonj's target is to support 30,000 children initially by channeling material like used books, uniforms, shoes, school bags, and even furniture to the rural and slum schools.

And each year, Goonj hosts an event called "Pratibimb," bringing together urban and rural school children and teachers from across the country who would otherwise never know each other.

Goonj sends out over 20,000 kgs of material every month in 19 Indian states. Their small staff is augmented by over 300 volunteers and a distributions network of over 100 grassroots organizations, Ashoka Fellows, social activists, and even units of Indian army in rural India.

Recycling is not a new phenomenon, even in India. Indeed, Anshu Gupta says that almost everything in India gets recycled, with the exception of food waste and some plastics. The true innovation here is in the distribution of the materials.


Goonj has figured out an elegant solution to ensure that materials get to those who need them all year-round, rather than waiting for disaster to strike.

In the end, Anshu Gupta and Goonj are proving the old adage that "one person's rags can indeed be someone else's riches."

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Postscript: At the India NGO Awards tonight, in New Delhi, Goonj was awarded the India NGO of the Year Award for 2007, sponsored by the Resource Alliance and the Nand and Jeet Khemka Foundation. It is another in a string of recognitions that this organization has garnered.

(Disclosure: The author is a vice president of Ashoka, which selected Anshu Gupta as an Ashoka Fellow in 2004, preceding the author's employment.)

Creating a World Without Poverty: Social Business and the Future of Capitalism by Muhammad Yunus, a Review

Can we unleash the power of free markets to solve the problems of poverty, hunger, and climate change? This is a question we ask all the time at The Green Skeptic. We believe in the power of free markets and the most creative business models to address the most pressing problems of the day.

Muhammad Yunus, founder of Grameen Bank, with which he pioneered microcredit and later received the Nobel Peace Prize, has written an engaging book that examines a new approach to purpose-driven business models: he calls it "social business."

In Creating a World Without Poverty: Social Business and the Future of Capitalism Dr. Yunus sets out to map a new way of doing business and doing good.

The social business concept is an outgrowth of Dr. Yunus's thinking that led to such projects as Grameen Phone, which is now the largest phone service provider in Bangladesh, the eye care hospitals Grameen is investing in, and Grameen Danone, a joint venture to produce and distribute affordable, fortified yogurt to malnourished children.

Social business uses the value creation of profit-driven business models -- the business must meet genuine market needs and generate a profit -- but turns the profits back into further value creation or directly into the social purpose being addressed by the business. In Yunus's model, the original investors receive only an amount equal to their initial investment or even less.

"Social business is the missing piece of the capitalist system," Yunus writes. "Introduction of it into the system may save the system by empowering it to address the overwhelming global concerns that now remain outside of mainstream business thinking."

Driving profits back into the original purpose, where profits essentially stay with the company as opposed to being distributed to shareholders, allows for greater growth potential and expansion. This is where social businesses, as conceived by Yunus, differ from non-profits, which traditionally rely on philanthropic capital for growth and stability.

I agree with Dr. Yunus that the traditional non-profit is an unsustainable model. "The social business dollar is much more powerful than the charity dollar," Yunus writes. "Whereas the charity dollar can be used only once, the social-business dollar recycles itself again and again, ad infinitum, to deliver benefits to more and more people."

Where I differ with Yunus is in his assertion that a profit-maximizing company (PMC) can't also serve a social purpose. I understand the argument that PMCs are beholden to the shareholders first, and maximizing their return on investment is job one. This can clearly lead to some conflicts.

But what if you are selective about your shareholders and state upfront that investors are allowed to take a small percentage of profits (say, 1-3 percent), and that the overage would be plowed back into the business for future value creation?

Yes there may be pressure from shareholders to create maximum value for them, but is there a way to ensure that Values don't conflict with value? I'm not convinced it's as black and white as Yunus makes it; perhaps there's room for a little gray.

Yunus is a consummate storyteller, as I've mentioned elsewhere on this blog. And even in the brief retelling of the Grameen story (necessary for those who haven't read his earlier book, Banker to the Poor), he captivates the reader. The stories lend a charm to what is otherwise a prescriptive book. He wants us to embrace the social business model and even offers some suggestions for how to get started.

In the end, Yunus believes it "is possible to eliminate poverty from our world because it is not natural to human beings -- it is artificially imposed on them." He has dedicated himself to "putting poverty in the museums once and for all" and implores us to join him in the fight.

We need only think of alternative ways to tap into the human potential. As Dr. Yunus said in his acceptance speech for the Nobel Prize in December 2006 (and reprinted in its entirety as an Epilogue to this book):

"By defining 'entrepreneur' in a broader way we can change the character of capitalism radically, and solve many of the unresolved social and economic problems within the scope of the free market. Let us suppose an entrepreneur, instead of having a single source of motivation (such as maximizing profit), now has two sources of motivation, which are mutually exclusive, but equally compelling-- a) maximization of profit and b) doing good to people and the world."

What a wonderful idea whose time has come. In Creating a World Without Poverty, Muhammad Yunus shows one path to realizing that vision.


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(Disclosure: Muhammad Yunus is a member of Ashoka's Global Academy, a non-paid position; the views in this post are solely those of the author and do not reflect his current employer, Ashoka, or other organizations with which he is associated.)