SEATTLE, Washington – The terms “capitalism” and “global development” seem to step on each other’s toes when paired on the dance floor, especially with capitalism often associated with corporate America and notions of neo-imperialism. But to the founder and CEO of Acumen Fund, the partnering of the two schools is a paradox necessary to the goal of fighting world poverty.
Patient capitalism is what Jacqueline Novogratz calls her proposal for a reformation of global development strategies. In a 2007 Ted Talk, which was recently featured on NPR.org, she highlighted the need to apply market sensibilities to how organizations fight global poverty.
In other words, non-profits should aggressively pursue sustainable revenue and invest it in small private companies working for the dual purpose of making profit and serving benefits to the poor. “Patient capitalism” bridges investment for profit-making with the actualization of free humanitarian aid to those in need.
Notable Acumen investments include several small companies established within the targeted developing countries. For example, Acumen invests in LifeSpring, which runs low-cost maternity hospitals in rural India.
In 2003, an early and successful business venture embarked upon by Acumen can be found in Tanzania, which started out with the broad problem of malaria. Rampant malaria is caused by ineffective bed nets with short shelf life. Acumen looked to A to Z Textiles to develop a better product. Acumen’s investments in A to Z Textile Mills helped develop the company into one of the country’s largest employers.
The returns in terms of global development were numerous: Acumen’s philanthropy into A to Z put thousands of jobs into Tanzania’s economy, gave both parties sustainable profit, as well as led to the development of a better malaria-fighting measure. The company now produces low-cost mosquito bed nets that last up to five years instead of the usual six months. Acumen exited the investment in A to Z in 2006 and in turn invested the returns towards similar ventures in Africa and South Asia.
Jacqueline Novogratz’s unique and left-of-center approach to humanitarian efforts is an encouraging one. Acumen subsists on donations (that are expanded with the company’s subsequent investment ventures) whose net value amounts to a mere shard of the billions spent by governments on aid that does not get handed out properly to those most in need. The approach promises a modest win-win model of business that shows a kinder and humanitarian facet of capitalism.
– Malika Gumpangkum