Designing Change
Limited thinking would view the poor as a burden to society, but if you buy C.K. Prahalad's bottom-of-the-pyramid theory, the 4-plus billion impoverished people in the world are a vast untapped market. If you're motivated solely by profits, you may limit your understanding of Prahalad's theory to bringing consumerism to the poor -- but if your aspirations are to close the inequalities that exist between those that have, and those that have don't, then this vast untapped market represents an opportunity to make a difference, even while eking out profits. The poster child for tapping into those at the bottom is Grameen Bank, with their micro-financing to aid those in developing nations towards self-sustainment.
Helping the poor help themselves is a novel idea that is taking off in philanthropy. It's not just about throwing endless sums of money at the vacuum of need -- but about wisely investing in the poor, so they can create an economic environment where the cycle of poverty can be slowed and even stopped. I've just found out about an organization, like Grameen Bank, that is investing in the poor, for a profit. Jacqueline Novogratz's Acumen Fund takes the micro-financing approach with venture funds, looking for businesses, business models and designing solutions to tap into the unmet needs of the poor -- and along the way, sometimes bringing home a small profit for their efforts that is then reinvested. What a virtuous cycle.
Acumen's $20 million investment portfolio is focused on health, water and housing, with seed money coming from some well known philanthropic organizations. Its website boasts some great success stories, such as a $325,000 loan to A to Z Textile in Tanzania, in which it lost $32,500, but got 5,000,000 Tanzanians mosquito nets to protect against malaria infection. A to Z Textile expects production to ramp up to 7 million nets. That impact, for a $325,000 investment. BusinessWeek tells the story of Acumen's equity investment in Drishtee, a startup in India, that rolls out information kiosks in rural India, complete with a computer, internet access, digital camera and fax machine. Drishtee offers the kiosks as franchise operations, allowing locals to own the kiosks that provide village access to health information, government resources and other necessities of modern India. Women it turned out made better franchise owners than men, as they open earlier and close later, but lacked skills and most banks in India do not lend to women. Acumen has invested in training village women in the basics of business and is working with an Indian bank to offer a guarantee to the bank's loans to women franchise owners -- aiming to prove to the bank that women are safe investment bets.
Jacqueline Novogratz, an American woman, making a difference to the lives of the poor women of India -- I like the female symmetry in this story -- noteworthy, since today is International Women's Day.
Helping the poor help themselves is a novel idea that is taking off in philanthropy. It's not just about throwing endless sums of money at the vacuum of need -- but about wisely investing in the poor, so they can create an economic environment where the cycle of poverty can be slowed and even stopped. I've just found out about an organization, like Grameen Bank, that is investing in the poor, for a profit. Jacqueline Novogratz's Acumen Fund takes the micro-financing approach with venture funds, looking for businesses, business models and designing solutions to tap into the unmet needs of the poor -- and along the way, sometimes bringing home a small profit for their efforts that is then reinvested. What a virtuous cycle.
Acumen's $20 million investment portfolio is focused on health, water and housing, with seed money coming from some well known philanthropic organizations. Its website boasts some great success stories, such as a $325,000 loan to A to Z Textile in Tanzania, in which it lost $32,500, but got 5,000,000 Tanzanians mosquito nets to protect against malaria infection. A to Z Textile expects production to ramp up to 7 million nets. That impact, for a $325,000 investment. BusinessWeek tells the story of Acumen's equity investment in Drishtee, a startup in India, that rolls out information kiosks in rural India, complete with a computer, internet access, digital camera and fax machine. Drishtee offers the kiosks as franchise operations, allowing locals to own the kiosks that provide village access to health information, government resources and other necessities of modern India. Women it turned out made better franchise owners than men, as they open earlier and close later, but lacked skills and most banks in India do not lend to women. Acumen has invested in training village women in the basics of business and is working with an Indian bank to offer a guarantee to the bank's loans to women franchise owners -- aiming to prove to the bank that women are safe investment bets.
Jacqueline Novogratz, an American woman, making a difference to the lives of the poor women of India -- I like the female symmetry in this story -- noteworthy, since today is International Women's Day.
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