Interview: Gina Murdock
Gina Murdock: What is it about your approach to philanthropy that is different?
Jacqueline Novogratz: At Acumen, we start with the supposition that dignity is more important to the human spirit than wealth. If indeed we can create systems that allow individuals to access goods and services like health and housing and energy and water, in a way that they can afford, they’ll all have greater choice, greater opportunity, greater dignity. We believe that entrepreneurs are the seekers of solutions, and that they will go into these places where both market and traditional aid has failed or traditional charity has failed. We take philanthropy and rather than give it away as handouts, we invest it using what we call “patient capital” in those entrepreneurs—allow them to experiment, fail, fight bureaucracy and the status quo and corruption, and build real solutions. Any money that comes back to Acumen, we reinvest in innovation for the poor. We’ve been able to invest about $90 million in seventy-five companies in India and East and West Africa. In turn, those companies have been able to raise additional funds and bring 100 million people services and create 60,000 jobs. It’s this kind of business approach to social problems that differentiates us. It’s a very powerful way to create real change in the world.
GM: You started out in the traditional banking world. Why did you decide to move from a relatively cushy job into this type of work that hadn’t really been done before in this way?
JN: On the one hand, I loved being a banker. I loved how numbers could tell a story and how you can invest in ideas and see them translate into products and services and create jobs. What I didn’t like, particularly where I was working in Brazil during the debt crisis of the early ‘80s, was how the poor were excluded from the banking system. I made the decision to try and experiment with whether we could use the tools of banking to extend the benefits of the economy to the poor. That really set me off on this trajectory to Africa, which not a lot of people thought was a good idea. Certainly not my parents or my friends or my boss. But it opened up this whole world and reinforced this notion that to whom much is given, much is expected. We have all these tools at our disposal; if only we would take the opportunity to experiment with them and use them.
GM: Was there a model that you used to work with before you started Acumen?
JN: I apprenticed for fifteen years, including in commercial banking. I moved to Rwanda and I created the country’s first microfinance bank with a number of Rwandan women. I worked in more traditional development, at the World Bank at the Rockefeller Foundation. While there were no specific models that we were copying, Acumen stands on the shoulders of all those innovators, the banks of the world and the social venture network people. I was encouraged to break all the rules but to take the best of philanthropy, the best of investing, and the best of development finance, and experiment with new ways to create this venture capital model of using philanthropy to back patient capital investments, and then build solutions that were measured in terms of the kind of impact and change they were making on people’s lives and in the world, not just on the financial return.
GM: What has changed, in your mind, about this idea of saving the world?
JN: When I first went to Africa, I thought that I was personally going to save the continent, if not the world. The only way we really create change is to enter any situation with the humility to listen and to recognize the world as it is, and then the audacity to dream what it could be, to have the patience to start and let the work teach you, to be willing to lead when you need to lead, and to listen. To have a sense of generosity and empathy, but not over-empathy, because accountability is so critical to building solutions that work. If there’s one value that is immutable, it’s integrity or respect, for others and for yourself. The best change that comes to the world is when all parties are seeing each other as equal, and all parties have the opportunity to be transformed. That really goes back to the idea of dignity.
GM: What has surprised you the most since you started the Fund?
JN: Oh, everything surprises me, Gina. One of the first things that surprised me in a positive, wonderfully positive way, is that this works—patient capital works. When we first made an investment in a malaria bed net factory in Tanzania, there was one factory and one line of bed net spinners. These machines created threads out of polyethylene-based plastic, but it was impregnated with insecticide, and then it would weave it into the fabric that the women would cut and turn into bed nets. I remember seeing one machine and then four machines. Before you knew it, there were 8,000 women working in a 75,000 square-foot factory, producing 15% of the world’s bed nets.
The final thing I would say that was really surprising to me, which is more of a negative, is that by going from the bottom-up again, we see where successes work, and you can also see where the status quo can be the biggest obstacle or roadblock to success. The kind of entrepreneurs in whom we need to invest are the kind who are willing to fight that status quo, bureaucracy, complacency, and corruption. If you’re looking at distributing alternative energy in Nigeria, for instance, what gets in your way is not people’s ability to pay, not people’s desire for a clean solar lamps or biomass opportunities. But there is a strong status quo that really depends on selling diesel. There are 60 million generators in Nigeria. The generator owners and distributors have a strong incentive to not encourage the distribution of solar and other alternative energies, even though it’s better for the country, it’s better for people. As a world, we’ve got to get more serious about confronting those obstacles. This knows no culture, no race, no ethnicity. This is about fear of change and vested interest, not wanting innovation. How do we finance innovation, research, and development for those communities that have the least resources? That’s why philanthropy is so critical.
GM: Are you still getting out quite a bit to visit these customers?
JN: I think I would die if I wasn’t connecting to the customers in the field. Now that we’re in eleven countries, I have more opportunity to not only visit the companies, but spend time with our team. I can run Acumen whether I am in New York or Karachi. I still feel that the kind of leader I want to be is one that spends time understanding our work in a way that allows me to translate it for policymakers and people who have real access to resources.
GM: Would you characterize yourself as a warrior?
JN: No one’s ever asked me that question before. I feel like I’m a relentless, pragmatic, determined optimist. I’m relentless in that I deeply believe in people. My whole life has been spent with people who have taken every knock in the world. No advantages. Yet they greet you with a big smile, they give you what they have, and they keep coming back. They are the fighters. The more I see them, the more I feel that we can do better. We actually know how to build larger systems that would enable them to fly. The older I get, the more determined I feel to do whatever I can to help release that human potential somehow. Not in a fluffy way nor in a hardcore way. But in that middle ground, that marriage of love and power. I’m not afraid of either.
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