Fighting Poverty with Acumen

05/13/2009 05:12 am ET | Updated May 25, 2011

Jacqueline Novogratz was out for her customary morning jog on the streets of Kigali, Rwanda, when she noticed a young boy wearing a blue wool sweater decorated with zebras and mountains. This was 1987, and Novogratz was an idealistic 25-year-old aid worker, helping local women to start a microfinance bank. The sweater looked very much like one she had given away to Goodwill back when she was in high school in Virginia, and she startled the boy by asking to see the label. Sure enough, there was her name.

The anecdote is the perfect opening for Novogratz's new book, The Blue Sweater: Bridging the Gap Between Rich and Poor in An Interconnected World, which is part memoir, part meditation on the 1994 genocide in Rwanda and part manifesto about how to attack (and how not to attack) the problem of global poverty. "The story of the blue sweater has always reminded me of how we are all connected," Novogratz writes.


Novogratz is the founder and CEO of the Acumen Fund, a really impressive global nonprofit that provides "patient capital" to for-profit businesses around the world that help people climb out of poverty. She's spoken at several FORTUNE conferences, I interviewed her for Net Impact and we had lunch a few years ago in Washington. (See this from HuffPost.) Novogratz is passionate and idealistic and yet hard-headed in her approach to global poverty. This book explains why.

Trained as a banker -- she worked for Chase Manhattan in Latin America after college sh e spent the late 1980s in Africa, particularly in Rwanda where she helped women start both Duterimbere, the microfinance institution, and a local bakery. These are among the most fascinating stories in the book -- she arrives as a well-meaning do-gooder, bursting with ideas, and runs up against indifferent bureaucrats, petty corruption and women so conditioned to be passive that it's a struggle to get them to believe in themselves. Just before heading to business school at Stanford, she climbs a volcano in Zaire and is beaten up by altitude sickness and hypothermia. She writes:

I came to Africa similarly unprepared, with no road map, no tools, insufficient gear and no protective layering...Like the volcano, Africa can stun you in an instant. It can throw floods and drought and disease at you, sometimes all at the same time. In the next moment, it will tease you with its magnificent beauty, so even if you don't forget, you can find a way to forgive. Ultimately, it keeps you coming back for more.

Fast forward to 2001. After Stanford and a stint at the Rockefeller Foundation, Novogratz raised about $8 million from Rockefeller, the Cisco Foundation and wealthy individuals to start Acumen (which her brother suggested she call 'Ain't Your Grandma's Philanthropy'). Acumen tackles old problems -- malaria, children's health, housing -- in new ways.

For example, Acumen invested $600,000 in a for-profit company called Water Health International that treats water as a business, not as a human right. WHI was started by Tralance Addy, a Ghanian entrepreneur who after working at Johnson & Johnson, developed a system to deliver safe drinking water to rural poor people, mostly in India, at prices they can afford. In the last four years, WHI has grown to serve more than 350,000 customers in 200 villages and it has raised $12 million in additional capital.

Early on, Acumen also invested in A to Z Textile Mills, which manufacturers bednets with long-lasting insecticides that are sold across Africa to prevent malaria. If I heard her right during a podcast with Dan Gross on Slate, Novogratz said that the company now employs 7,000 people, mostly women, and produces more than 10 million bednets a year. Again, Acumen took a charity model and turned it into a sustainable, purpose-driven business.

More recently, Acumen has expanded into the energy business, trying to bring electricity to some of the 1.6 billion people in the world whose lives do not include an on-off switch. Acumen Fund is investing in a startup company called D.light Design that makes low-cost LED lights. The company's first product, called the Nova, is an all-purpose portable LED lamp that is both AC-rechargeable and solar-rechargeable, and can provide up to 40 hours of light on a full charge. Fascinating idea.

Near the end of The Blue Sweater, Novogratz writes:

After more than 20 years of working in Africa, India and Pakistan, I've learned that solutions to poverty must be driven by discipline, accountability and market strength, not easy sentimentality. I've learned that many of the answers to poverty lie in the space between the market and charity and that what is needed most of all is moral leadership willing to build solutions from the perspectives of poor people themselves rather than imposing grand theories and plans upon them.

You can read more about Acumen's work at its excellent website.