Ethics Speaker Jacqueline Novogratz: How Acumen Addresses Poverty, Promotes Dignity

In a clear-eyed and inspiring talk, Jacqueline Novogratz, CEO and founder of Acumen, a nonprofit global impact investment fund, described her company’s philosophy and approach to solving problems of poverty and building a world of dignity. Novogratz spoke from Kenya via Zoom to students, faculty, and staff of the Samuel Curtis Johnson Graduate School of Management as the David J. BenDaniel Lecturer in Business Ethics and featured guest in Johnson’s Profiles in Leadership class on May 2.

Novogratz spoke about moral leadership and changing the world by reimagining the outdated and inequitable systems it has operated on. She spoke about selecting entrepreneurs for their character, grit, resilience, and hard work and about “accompanying” them on their journeys to help them navigate problems. She spoke about “patient” or philanthropic capital, attracting investors willing to wait 10 to 15 years for a return on their investment.

And she spoke about her closely held belief that the opposite of poverty is not wealth; the opposite of poverty is dignity.

Prioritizing humanity and the earth over individuals and profits

Novogratz told a compelling story of how she arrived at this cornerstone of her philosophy through her life experiences in international banking, in philanthropy, in cofounding Rwanda’s first microfinance organization after women there were granted the right to have bank accounts, and, years later, in listening to women who had played every role of the genocide there.

Acting on her determination to help underrepresented, impoverished people achieve dignity, Novogratz founded Acumen in 2001. “I started Acumen after apprenticing through all of these different experiences—finding the best of Wall Street, the best of microfinance and development,” said Novogratz. “And [I came to] this deepening philosophy of what it means to be human and how our systems could be so much better structured if we put our humanity and the earth at the center, and not just the individual and profit.”

Acumen’s strategy is to support entrepreneurs with groundbreaking ideas for addressing challenges in healthcare, education, energy, and agriculture. In the two decades since its founding, Acumen has “invested about $150 million on our pioneering patient capital side into 150 companies that have moved a billion dollars into their markets,” Novogratz said. “And hopefully by the end of this year, we will mark having impacted half a billion low-income people around the world, which is a really important milestone for us.”

Replacing kerosene with solar lighting and energy

Novogratz described several companies in Acumen’s portfolio that became incredible success stories. One shining example is d.light, a solar energy solutions company. “In 2007, 1.5 billion people in the world had no access to electricity,” Novogratz said. “Two coeds still in business school came to us with a $30 solar lantern and a dream to eradicate kerosene, which is the dominant energy fuel that people use if they don’t have electricity. It’s dirty. It’s dangerous. It’s terrible for health, and it’s very expensive.

“The truth is, they didn’t know how to price it,” Novogratz continued. “They didn’t know how to finance it. The customers didn’t want it. That’s why we needed that patient capital. What they had was that moral imagination to see very poor people who had been fully overlooked and underestimated as customers. They understood their buying habits; they figured out how they might be able to finance—on a daily basis, if that’s what it took—so people could actually get access to it.

“It’s a long story; I would say for the first seven years, we sort of wandered through the desert together,” said Novogratz. “But today, d.light has brought 135 million very low-income people access to off-grid solar light and electricity. And I daresay pioneered what’s become an energy revolution that we’ve been lucky and increasingly more deliberate to be a leader in, to be a part of.”

Bringing healthcare to rural women in Pakistan

Novogratz also told a story about Sara Saeed Khurram, a Pakistani doctor whose culture strongly discourages women from working after they marry and have children. “She realized that more than 70 percent of Pakistani women doctors, though they are the large majority of graduates from medical schools, stop working after marriage, and she decided to do something about it,” Novogratz said.

Khurram connected unemployed Pakistani women doctors to poor, rural women who had almost no access to health care. She started a company that built 26 clinics and, when the pandemic hit, perfected an app they’d been building to reach patients via telemedicine. She ended up partnering with government, scaling up, and now brings healthcare services “to over two million of the poorest rural Pakistani women, employing or using almost 1,000 women doctors not only in Pakistan but, with the government’s permission, in the diaspora of the nation,” said Novogratz. “Now, she sits with government working on developing policy for telehealth as part of Pakistan’s government.”

A living wage for farmers

Novogratz told a story about commodities like coffee, tea, and chocolate that are in such high demand around the world but that barely support the impoverished farmers that grow them. “Our farmers, our smallholders, typically provide our food yet cannot feed themselves with the income that they make from it,” she said. “Take coffee: It’s a $200 billion industry powered by farmers, the majority of whom live in very deep poverty.

“I’m seeing a new generation of entrepreneurs who are asking, ‘Why do farmers have to be price takers? Why do we have to price what the farmers get based only on futures trading at the commodities level? Why couldn’t we start with the farmer, build companies that are centered with the farmer, and create a supply chain—with great transparency, we have the tools—so that different stakeholders along the chain are actually compensated.?’”

Novogratz described a Colombian company that works with farmers to determine their production costs, negotiates a minimum wage and a living wage, and gives the choice to buyers like Stumptown, Blue Bottle, and Revolution. “Thirty percent of them are choosing to pay a living wage now because they know their customers want quality and want to know that the people growing their coffee are being compensated fairly,” Novogratz said.

These are all examples of moral leadership that rejects working within the confines of existing systems and instead changes systems on behalf of people who’ve been left out. “It’s a mindset that’s not about ‘I can only win if you lose,’” Novogratz said, “but ‘We will only win if we are all winning together.’”

Scaling up to drive impact

As the companies Acumen invested in matured and gained ground, the company decided to add a new strategy. “We saw they had the capacity for scale that philanthropy wasn’t going to get them to,” she said. “We then moved into the more traditional impact investing space. So we also manage about $200 million in for-profit impact funds under a for-profit management company. That has reached another 150 million people through the scaling of our companies.”

In addition, Acumen launched Acumen Academy in order to cultivate and support more young leaders. “The privilege of riding shotgun, if you will, with not only these 200 entrepreneurs but then, through Acumen Academy, another 1300 younger leaders, has really given me a deeper understanding of what it actually takes to lead and, importantly, to solve some of the critical problems of our time,” Novogratz said.

Character and moral leadership as keys to success

“If I have one takeaway after 22 years, it’s that when you’re making a decision to invest in a company that is going into markets that are broken, often in wounded communities, what matters more than anything else is the character of the entrepreneur,” said Novogratz. “Those markets are hard. They often have high levels of bureaucracy, high levels of corruption, no infrastructure or very little, and very little trust, for good reasons.”

The ones who succeed, said Novogratz, possess moral imagination, which she defines as “the humility to see the world as it is and the audacity to imagine what it could be.

“They’re also listeners,” she said. “They immerse or get close to the problems they’re trying to solve. They’ve got grit and resilience to go the distance.

“In other words, they operate according to the principles of moral leadership that I feel so strongly are leadership skills we need to do a better job teaching and modeling. All of it is necessary if we’re truly going to change the status quo away from being fully profit-dominated.”

Towards the end of her lecture, Novogratz read what she called the company’s moral compass: Acumen’s succinct, 147-word manifesto.

Love for people and planet over thirst for profit and power

In closing, Novogratz offered a new definition of success:

“We’re so raised by a definition of success based on money, power, and fame. How different would our world be if we saw success as the amount of human energy we released in the world, the amount of beauty, the amount of goodness. It would truly be a fully different place.

“I believe we’re at a point in our history where our love for people and for the planet must prevail over our thirst for profit and for power. It’s a moment today in which all of us are called to ensure that our technological acceleration does not outpace our capacity for moral reasoning, for moral leadership, for moral courage. And that shift in mindset and consciousness is within our grasp. It will take all of us, but if I believe deeply in anything, it is that we don’t get dignity as a human race until all of us have dignity.”

Following her talk, Novogratz stayed on the Zoom call to respond to students’ questions, ranging from what business schools can do better to how Acumen holds its portfolio companies accountable and key takeaways from her books, The Blue Sweater and Manifesto for a Moral Revolution: Practices to Build a Better World.

The David J. BenDaniel Lecture in Business Ethics was established and endowed to emphasize Johnson’s strong interest in ethical business leadership and commitment to educate moral leaders.