Acumen

My dream…

If you asked me at this very moment what my dream job is, I would tell you that apart from starting my own nonprofit, my dream job would be to work for Acumen.  

But, it’s not all about me…

Acumen is an organization that is addressing social injustice and systemic oppression in a way that encourages dignity, not dependence, and leads to choice, not charity.  It embodies the type of creative approach that I believe to be necessary in addressing, and someday possibly even eradicating, poverty in our world.

Acumen invests in “entrepreneurs who have the capability to bring sustainable solutions to big problems of poverty.”  It is an incredibly innovative nonprofit that is dedicated to tackling poverty in a way that empowers and ultimately leads to organic, sustainable leadership in impoverished communities as well as in the world as a whole.  The entire foundation of the organization is based on the idea that every human being should have the opportunity to live with choice and not charity and that every person should have the dignity to be able to dream, work, achieve, and provide.  This model challenges the age-old status quo of giving handouts to the poor, of putting bandaids on the gaping wounds of systemic oppression and marginalization that have yielded generations of poverty across our world.  Acumen’s manifesto sums up perfectly what their ultimate vision truly is.

A manifesto..

It starts by standing with the poor, listening to voices

unheard, and recognizing potential where others see

despair.

It demands investing as a means, not an end, daring to go

where markets have failed and aid has fallen short. It makes

capital work for us, not control us.

It thrives on moral imagination: the humility to see the world

as it is, and the audacity to imagine the world as it could be.

It’s having the ambition to learn at the edge, the wisdom to

admit failure, and the courage to start again.

It requires patience and kindness, resilience and grit: a

hard-edged hope. It’s leadership that rejects complacency,

breaks through bureaucracy, and challenges corruption.

Doing what’s right, not what’s easy.

How it all began…

One of the most inspiring parts of Acumen is its history.  It can be traced back to as early as the 1970s when Jacqueline Novogratz, founder and CEO, was just a young girl, a “do-gooder” who yearned to do something to positively impact the world.  After getting her MBA from Stanford, Novogratz dabbled in the for-profit finance world for several years before following her passion of making a bigger difference–a move that led her to the World Bank, UNICEF, and ultimately to the Rockefeller Foundation.  While working with the Rockefeller Foundation, Novogratz began to focus on how to more effectively use donor’s dollars. And while she didn’t know it at the time, the Rockefeller Foundation was serving as an incubator for what would ultimately become the Acumen Fund. 

In the early days, Acumen was not a fully formed idea, and even those most intimately involved in its creation were unsure of exactly what they were doing.  They wanted to change the conversation, connect philanthropists with innovation, but they were unsure if a balance between the nonprofit world and the hard-nosed business of finance could truly come to fruition.  I have watched interviews where Novogratz honestly talks about the first reactions that she got when she pitched her ideas to her male colleagues in the banking world.  Let’s just say there were a lot of blank stares.  There were additionally many roadblocks and difficulties which were endearingly referred to as “discoveries,” but no matter how unsure the founding team of Acumen was, they would make a move, make a decision, and just go with it.  This style of thinking is still extremely evident in the current culture of their organization with a lead quote on their website stating “Just start.  Don’t wait for perfection. Just start and let the work teach you”.  

As mentioned above, the beginning of Acumen was riddled with trials and failures and there were many times that it felt like the venture would not be possible.  Every time, however, that the team would confront these feelings of disillusionment, they would meet a new entrepreneur or hear a new business plan and become re-inspired and re-motivated to continue moving forward.  This persistence paid off on April 1, 2001, when The Acumen Fund, based out of New York City, was incorporated as a 501(c)(3) nonprofit.  The start-up of the organization was made possible by seed money from the Rockefeller Foundation, Cisco Systems Foundation, and the generous donations of three individual philanthropists.

How it works…

Acumen’s Investment Model is focused on the goal of not seeking high-returns, but rather on jump-starting enterprises.  Their four-pronged approach contains the elements of receiving the charitable donation from a partner, making a debt or equity investment, scaling game-changing companies creating social impact, and ultimately recycling returns to make new investments.  It is important to note that Acumen rarely invests in start-up companies, but rather in early-mid stage enterprises providing low-income consumers with access to healthcare, water, housing, and other services. The typical debt or equity investment made by Acumen ranges from $250,000 to $3,000,000 with payback (or exit) in approximately 7-10 years.  Scaling, the third step in the Investment Model, consists of management support services that “nurture” the enterprise and assist it in achieving its full potential.  The final step of recycling returns is fairly self-explanatory–returns are funneled back into Acumen, funding new investments.

There are several fields of criteria that need to be met when requesting an investment from Acumen.  This criteria includes geography (the enterprise must be located in East or West Africa, India, Pakistan, or Latin America), sectors (agriculture, education, health, housing, or water), stage (see previous paragraph regarding early-mid stage companies), investment size, potential for significant social impact/financial sustainability, and potential to achieve scale. The Investment Application Process consists of reviewing the investment criteria, creating an Executive Summary, and submitting the application form.  The Executive Summary should include aspects of the business such as what is the product, who are the customers, what is the impact, and what are the risks.   Acumen lays out the Application Process in great detail, even including a FAQs section because they are unable to answer individual questions and inquiries due to the high volume of submissions that they receive.

So, what does it actually look like?

acumen 2
Photo Source

An example of an enterprise that Acumen has successfully invested in is Husk Power Systems.  Located in Bihar, India, Husk Power Systems provides affordable rural electricity through Bioenergy.  It was originally estimated that between 80-90% of households in Bihar lacked access to electricity.  This resulted in the expensive and destructive use of kerosene lamps and diesel generators.  Husk Power Systems is working to alleviate this issue, taking waste and converting it to gas which powers turbines to generate electricity.  Acumen has invested $1,880,000 in this company since 2009 and has seen over 180,000 lives impacted. There are currently 75 operational Husk Power Plants improving the quality of life of people all across Bihar–this improvement is seen in better health, in less detrimental impact on the environment, in greater accessibility to light for students to study, and in the extension of social activities (and thus the enrichment of relationships and social capital).  For other examples of enterprises that Acumen has invested in, please click here.

To sum it up…

Acumen has made an incredible impact in tackling poverty in countries across the globe.They have invested over $101,000,000 in breakthrough innovations, helping 92 companies, and creating and supporting over 58,000 jobs.  They estimate that they have impacted 189,000,000 lives–a rough number that does not even begin to include the indigenous leaders whom they have empowered to raise up in their communities, perpetuating cycles of dignity, choice, and hope. And perhaps more important than all of these things, is the way that Acumen has broken the mold in how we look at addressing poverty.  They have changed the conversation.  They have shown time and time again that the poor are dedicated, gifted, able, passionate, intelligent, incredible–and that sometimes all that the poor need is someone to invest in them.

What do you think?
What do you think about this approach to poverty?  Do you think that such an organization would work on a large scale in our country?  Please share your thoughts and opinions below.

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