MICROCAPITAL STORY: Charlie Rose’s conversation with Jacqueline Novogratz, founder and CEO of Acumen Fund and author of "The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World," with discussions on international development and the critical role that microfinance plays for developing nations.

Jacqueline Novogratz, founder and CEO of Acumen Fund, spoke with Charlie Rose on the “Charlie Rose” show, which aired on Wednesday, March 25, 2009. In the interview she discusses her book “The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World,” with discussions on international development and the critical role that microfinance plays for developing nations and the global arena. Ms. Novogratz has been hailed by “New York Times” columnist Nick Kristof as “one of the most interesting innovators in aid and development.”

Following her experience on Wall Street for Chase in international finance, she learned of the work of Muhammad Yunus and the Grameen Bank with microfinance, became inspired and decided to leave the banking industry to work in the microfinance industry. Her journey led her to Rwanda, Africa. After successfully building her practice with a group of women, Jacqueline returned to the states to complete her MBA at Stanford Business School. The intention was to apply real-world expertise with management experience/skill sets obtained from the business program. “While traditional aid worked, in many cases it was failing the poor and the markets alone were also not reaching the poor. What we needed was a way of understanding how to build markets and management systems from the perspective of low income people,” Ms. Novogratz states.

In 2001 she founded the Acumen Fund, which has recently approved and invested USD 40 million in 40 enterprises in South Asia, Pakistan, India, Kenya and Tanzania. The fund expects to invest USD 100 million over the next three to five years. Ms Novogratz believes that a standard of success is “in the short term, an enterprise that is delivering a critical service like clean water to low income people in a sustainable way in that the costs are covered by revenues, even if it requires subsidy.” In 2004, the Acumen Fund also invested USD 600,000 with a social entrepreneur (developing a for profit company) delivering an ultraviolet filtration system to low income rural communities for the purpose of accessible safe water to the 220 million underserved citizens in India.

Microfinance has become integral in helping to create sustainable economic assistance for developing nations for the purposes of productive and not consumption use. Ms. Novogratz believes that “the poor will pay for something that they value and that fundamentally changes their lives.” As in the case of the Acumen Fund, one of the core areas of funding and development is housing. Recently, the company has invested USD 250,000 into Jami Bora, a non-profit development organization that created a for-profit housing development company to build 2,000 houses for its community members. Most importantly, Jami Bora provides microloans to the developing regions that allow individuals the opportunity to purchase housing in safe areas. Currently the company works with 250,000 community members.

Point in case, Jami Bora recently provided a microloan to former prostitute and mother of two (in the Masari village in Africa) who was looking for an alternative/better life away from the slums and to start a sewing business and live in affordable housing. The organization provided USD 50 dollars with the requirement that she must match that figure with savings. While it took the Masari woman a year to build her savings, over the last seven years she has saved USD 400 dollars. According to Jacqueine Novogratz “that this idea of using philanthropic funds and investing, not just giving away handouts, investing in enterprises that reach low income people is a way of creating fundamental change.” Furthermore, with microfinance “if you can find a way to bring services in a way that allows that, we will see more scale and we will see a greater and more sustainable world.”

Ms. Novogratz may be right…

Jacqueine Novogratz is founder and CEO of Acumen Fund, a non-profit global venture fund that uses entrepreneurial approaches to solve the problems of global poverty. Acumen Fund seeks to prove that small amounts of philanthropic capital, combined with large doses of business acumen, can build thriving enterprises that serve vast numbers of the poor. Acumen Fund currently manages more than $30 million in investments in South Asia and East Africa, (focused on delivering affordable healthcare, water, housing and energy to the poor). The organization also includes the Acumen Fund Fellows Program, focused on building the next generation of business leaders with an understanding of global issues and poverty. The organization has offices in New York, Pakistan, India and Kenya.

By Zoran Stanisljevic

Additional Resources

The Charlie Rose Show, March 25, 2009: A conversation with Jacqueline Novogratz

New York Times, January 9, 2009: “Investing to fight poverty”

Jacqueine Novogratz, Founder and CEO of Acumen Fund

Muhammad Yunus, 2006 Nobel Peace Prize Recipient and Founder of Grameen Bank