August 19, 2010

KRISTA TIPPETT, HOST: I’m Krista Tippett. Today, “A Different Kind of Capitalism — Jacqueline Novogratz and the Reinvention of Aid.” She runs the Acumen Fund, which has an increasingly influential profile charting a third way between investment for profit and aid for free. We explored in this moment as a prospect of rebuilding Haiti intensified scrutiny of the way aid and development have been practiced for the last half century.

MS. JACQUELINE NOVOGRATZ: If I give you a gift, you would be highly unlikely to tell me what was wrong with it. That same thing happens with traditional charity. If I ask you to buy something from me, you suddenly become a customer with a big attitude as to what’s right about it and what’s wrong about it. And suddenly, that conversation that we’re having becomes much more real.

TIPPETT: This is On Being. Stay with us.

[Announcements]

TIPPETT: I’m Krista Tippett. The aftermath of the Haiti earthquake has deepened an ongoing debate about aid, development, and the poorest of the world’s poor. Traditional top-down aid has been effective in the global eradication of disease such as small pox, and few would argue with the necessity of aid as relief in the face of a disaster like that now unfolding in Haiti.

But there is also growing scrutiny of the fact that Haiti has remained desperately undeveloped in spite of one of the world’s largest populations of NGOs per capita. Similarly, $500 billion of Western aid to the African continent since 1970 has not yielded a commensurate overall rise in well-being.

My guest this hour, Jacqueline Novogratz, has helped bring a new term, patient capitalism, to the global economic table. She runs the Acumen Fund, which is charting a third way between investment for profit and aid for free. It has a strong moral, even spiritual, core and its investors’ returns come not in money, but in social change.

From American Public Media, this is On Being, public radio’s conversation about religion, meaning, ethics, and ideas. Today, in our ongoing series on the ethics of aid, “A Different Kind of Capitalism — Jacqueline Novogratz and the Reinvention of Aid.”

Jacqueline Novogratz founded the Acumen Fund in 2001. It is a young, still experimental enterprise, but it is increasingly singled out as a star in a new generation of social entrepreneurialism. Acumen has grown into a multi-million dollar organization with the support of a heavy-hitting and diverse array of donor investors, from the charitable arm of Google to hedge fund managers and the Gates Foundation.

The Acumen Fund is building a new paradigm, philanthropic venture capital, working with entrepreneurs on the ground in places like Kenya, Tanzania, Pakistan and India. It invests in for-profit projects that bring basic services such as clean water, maternal health care, and ambulance services to people who make less than $4 a day.

I wanted to draw Jacqueline Novogratz out to understand not only how this works, but the vision that drives it. Her credentials include several TED talks and a stint at the Rockefeller Foundation, but she grew up a military kid in a big Catholic family and put herself through college. Her moral imagination was shaped, she says, by nuns who schooled her and by the public policy legend John Gardner, who taught her at Stanford Business School. Jacqueline Novogratz says she was deeply imprinted by Gardner’s counsel that it is far more important to be interested in the world than to be an interesting person.

MS. NOVOGRATZ: I started off my career as an international banker during the early 1980s when the world was going through another banking crisis, this one concentrated in Latin America. So I was spending a lot of time in Chile, Brazil, Peru, and I fell madly in love with Brazil and was really intrigued by the favelas, where the low-income people were living and by how much work was being done in the streets. And then my day job was at the bank, essentially writing off millions and millions of dollars of loans that were not going to be repaid, all of them given to the elites.

It dawned on me that the low-income people not only didn’t have access to loans, but they didn’t even have the ability or the courage, call it whatever you want, to walk through the doors of the banks. And so learned at an early age that the market by itself was not going to reach low-income people, was not going to solve problems of poverty. In many ways, didn’t even see low-income people as potential participants or consumers.

TIPPETT: Right. And you also say that you did love banking.

MS. NOVOGRATZ: I loved it. I loved the intellectual challenge. I loved understanding the power of money to invest in an innovative person and her or his idea, to understand why do we need working capital to enable a company to build processes and inventories so that they can provide services and build jobs.

I liked everything about banking except for the fact that it wasn’t open to all. It was a kind of a deep line — we used to call it red-lining — across which a whole group of society was excluded. And so — you know, at that time, I was starting to explore whether there were any options out there and learned about microfinance, this idea that Muhammad Yunus had come up with in 1976. So it was still very early, considered very fringe, but I thought it was a great idea and wanted to somehow get involved.

Long story, but moved to Rwanda to help a group of women start the first microfinance bank in the country. At that time, there were even big arguments as to whether it was ethical to charge interest and a really interesting time. Through it, I saw the power of using a different kind of capitalism to reach women through providing them access to credit, but I also saw the destructive capabilities of aid.

This was pre-genocide and already saw so much waste on the ground, but certainly seeing what had happened to Rwanda through genocide and seeing how money channeled to groups who then controlled who got access to those resources — not based on any sort of merit, but based on who they were, whether they were insiders or outsiders — really convinced me that this top-down approach to aid was also not going to solve problems of poverty and that there had to be a middle way.

TIPPETT: So where did the term “patient capital” or “patient capitalism” come from? Do you remember?

MS. NOVOGRATZ: A number of people lately have been giving me and Acumen all the credit for it. I’m not sure if we coined it or I coined it or who coined it, but I remember when I first started Acumen Fund talking a lot about the problem of capitalism is that it gave no time for entrepreneurs really to innovate and experiment in the lowest-income sectors of the economy because: One, no one with real resources saw those lowest-income sectors as real markets, so there was no real R&D put into the markets. And two, you were really looking at markets where there were terrible distribution, no roads or very muddy roads, no electricity often, individuals that had obstacles in front of them, whether it was clean water and thinking that, you know, water comes from God, so why would I ever pay for something like this? Lots of fatalism, no experience and no money, people making $1, $2 a day or less.

So to expect that an enterprise was going to get started and flourish in one to three or even a five-year period was naive, but that if we could use the tools of capitalism and have the patience to invest, expect at or below market returns and combine it with a lot of management assistance because we see all over the world that the biggest issue is talent. We don’t have the management systems, that over time, you actually could create a viable entity with sustainability.

I suppose it was in those kind of conversations where the word patience kept coming up. And then people would say, well, maybe it should be “slow capital.” And I thought, well, “slow” feels lethargic and it feels too connected to the Slow Food movement, which has been more for the privileged. We need something that is really a word that exemplifies what we need to be even though we’re impatient people, so we started playing with this idea of patient capital for impatient people.

TIPPETT: You know, Jacqueline, I have to say, as I was immersed in all this, I don’t think patient is one of the words I would use to describe you [laughter].

MS. NOVOGRATZ: You would not be alone in that. My team teases me about that [laughter]. Very interesting. For Novogratz’s sake, we have to be patient.

TIPPETT: Well, OK. So I think, rather than talk about it, what might be most helpful is to illustrate this. Take me through the process of one of your longest running projects. I thought maybe WaterHealth International would be a good example. Because here’s one question that occurs to me: How do you avoid some of the same pitfalls of knowing what low-income, poor people need better than they know themselves, right? I mean, that’s the criticism that I’ve heard and that you write about. So what’s built in to your process that makes the people who are being served also your partners? Does the initiative come from them?

MS. NOVOGRATZ: The initiative typically comes from an entrepreneur, in this case, in India. Actually, in this case, it was even more complex. It was an Ghanaian entrepreneur who found himself in Los Angeles with the technology built by an Indian scientist at Berkeley who had tested a — this is where the whole global, right, is it’s so interesting. They had tested a UV filtration system for purifying water in the Philippines and really wanted to see whether this could work in India.

We invested $600,000 in equity. We bought shares in this new for-profit company knowing that it was going to be a while because we were going against every odd. People thought water came from God, why should they ever pay for it? They had never paid for it before. The villages were very far away. People made $1, $2 maybe a day. You know, very little cash in the overall community. The government people felt that it was going against government policy, which was free water for everyone, despite the fact that so few people were actually getting it. Many of the elites with whom we spoke said that it was unethical for us to be making money off the backs of poor people.

So fighting all of those barriers decided, but nobody’s even trying. Nobody’s experimenting. So we put the $600,000 in and then started working as partners. The first thing that came up — and, again, it’s a differentiation between a charity and a for-profit — was the recognition that the original plant in the village, which was a huge blue diamond and was mostly made from materials that were not from the village; they were not locally sourced.

We brought in a Acumen Fellow for about four months, a guy named Ankur Shah, who was a McKinsey consultant with an architecture background. And he worked with the company and did a redesign of the plant to make it modularized, so that we could then move these across many, many villages in time. In a typical nonprofit, it would have been easy for me to come and take you there and show you this beautiful blue diamond, and you would say, oh, my goodness, it’s so wonderful, but we wouldn’t really be talking about whether it was scaleable, whether we could really grow it in a cost-effective way.

The second thing we did was realize that the banks had no tradition or history of lending for the delivery of water in rural areas, so no banks would lend to the local entrepreneurs who were going to be buying these plants. So we put up a first-loss guarantee with a major commercial bank in India, again using patient capital. We could take the risks that traditional investors and capitalists would not take.

TIPPETT: So, again, the money is going to entrepreneurs there on the ground who are going to be implementing and managing this?

MS. NOVOGRATZ: Exactly.

TIPPETT: But you’re helping make that loan possible.

MS. NOVOGRATZ: We make the loan possible to the banks so that they can lend to local entrepreneurs.

TIPPETT: OK.

MS. NOVOGRATZ: We invest in the local company and then we have a locally based office that provides management assistance to the company. A couple of weeks ago, I was at the opening of the 285th plant, so now there are over 400,000 customers. And government has noticed, obviously, so the state of Andhra Pradesh, which is the state in which it’s operating, a state of 65 million people, has just contracted with the water company, WHI, to build 300 more plants.

So in the next couple of years, we’re going to see over a million customers of this water company. So for me, what’s been so amazing is that now, with one investment in one company, over now five and a half years, we’re seeing an industry rise that is specifically focused on bringing water to low-income rural villages for the first time in India.

TIPPETT: This gets at an interesting observation you’ve made that markets can act as listening devices. I mean, I think you mean that on many levels, not just this one.

MS. NOVOGRATZ: Oh, yeah. What I’ve learned over the last 25 years of working in slums and working with low-income people is that, if I give you a gift, even if I gave you, Krista, a Christmas gift, you would be highly unlikely to tell me what was wrong with it. And in fact, when I visited, you might even put it out on the mantelpiece to make me feel good.

That same thing happens with traditional charity. If I ask you to buy something from me, you suddenly become a customer with a big attitude as to what’s right about it and what’s wrong about it, and suddenly that conversation that we’re having becomes much more real. So in that way, the market is a listening device. The market has huge limitations and we have to recognize and deal with that, but it also is one of the best listening devices we have on the planet.

TIPPETT: I’m Krista Tippett, and this is Speaking of Faith from American Public Media. Today, “A Different Kind of Capitalism.” I’m in conversation with Jacqueline Novogratz, whose Acumen Fund is helping redefine the controversial landscape of global aid and development. The Zambian economist Dambisa Moyo has called for an end to Western aid that she and others argue keeps leaders of developing countries focused on courting foreign donors and breeds corruption.

She insists that a future beyond poverty demands instead that governments become accountable exclusively to their own people. And on this program last year, the Kenyan writer Binyavanga Wainaina spoke of the debilitating effect of growing up surrounded by well-intentioned Western projects that defined him in terms of his poverty and his deficits. In her memoir, “The Blue Sweater,” my guest Jacqueline Novogratz writes this: “As a young woman, I dreamed of changing the world. In my 20s, I went to Africa to try and save the continent only to learn that Africans neither wanted nor needed saving.”

TIPPETT: So one of the points that someone like Binyavanga Wainaina will make — and that is made in a more pointed way by an economist like Dambisa Moyo — is that places like India and countries like Kenya, these are young nations, right? I mean, old cultures, right? Long histories, but young democracies, and that these countries must evolve to places like the West where the government picks up these basic services and has accountability to its own people. Do you worry that you’re preempting that?

MS. NOVOGRATZ: Krista, I don’t worry, and the reason is that I believe that today in the 21st century a lot if not most of our public innovation will start with private innovation, just as with WaterHealth began purely as a private-sector play and is now in a major partnership with government in India. We have another private-public partnership in Nairobi where Binyavanga is from for toilets. When I lived there in the ’80s, the public toilets ostensibly run by government were dangerous dirty places that nobody would ever go.

TIPPETT: Right.

MS. NOVOGRATZ: Ecotact now has 30,000 people a day going to these toilets, paying five shillings to use the toilets. They see them as government toilets and they are public-private partnerships. Ultimately, they may be fully run by government. We don’t know. But this goes back to this draconian all aid is bad, all subsidy is bad. We can’t start there if we’re actually going to build the kinds of models that will grow to reach millions of people and sustain themselves over time.

TIPPETT: When you finished at Stanford Business School, I think you wanted to go back abroad, but John Gardner encouraged you first to look at microfinance in this country. Is that right? I mean, you quote him saying “What happens overseas is profoundly influenced by what happens here especially now and the reverse is true as well.” I don’t know when he said that to you, but I think that becomes more true every day.

Here’s the bald question, right? If we can’t solve poverty, if we can’t ensure health care for every pregnant woman in New Orleans, you know, or the Bronx or parts of Washington, D.C., who do we think we are, going to solve these things for people in other countries, and how can we think that we have that knowledge, do you know what I’m saying?

MS. NOVOGRATZ: From my perspective, it’s not, oh, look at America. We’re great. Let’s go over. I actually see myself as part of a single world that is becoming more divided not nation to nation, but rich to poor. And so I say it in the book, but I really believe that the elites are becoming more like each other across national borders than they are to low-income people in their own countries. And I definitely feel, you know, I’ll meet someone in Karachi, Pakistan, but we went to the same schools, we eat at the same restaurants and very different experience than a conversation with someone from Appalachia or a migrant worker in Southern California.

So I don’t see it as we’re here to solve your problems. I see it as where can we find innovation in the world that is doing the best job at reaching the most people possible at the lowest cost and then can we take those innovations and can we take those business models and can we start exporting them to other countries, to other communities so that we start building blueprints for what it ultimately takes to extend the economy to every person on the planet.

And quite frankly, my dream is that we will find innovations that are serving poor people in the developing world that will come back to the United States. And I think we’re already starting to see where we could learn so much from some of the innovations that we’ve invested in in India, Pakistan, Kenya, Tanzania.

TIPPETT: I actually watched some of the presentations you made at your annual meeting with your investors. I was very intrigued with some of the language you use. You talk about sharpened financial edges with spiritual underpinnings [laughter]. I’m not sure that’s an exact quote, but that’s the gist of it.

MS. NOVOGRATZ: Close enough.

TIPPETT: So is that language compelling for your investors? Is it uncomfortable for any of them?

MS. NOVOGRATZ: You know, it’s uncomfortable for some of them, and I think that, as patient capital starts to take hold — and I believe it ultimately will become a new asset class — there will be lots of conversation about what kind of financial returns versus social impact? Are there tradeoffs? I find these to be some of the most intellectually challenging and inspiring conversations imaginable. But for some people, they’re so gray that I’ve had investors say, “Jacqueline, just get the returns and that will bring the magic and spirituality you’re seeking.”

TIPPETT: OK [laughter].

MS. NOVOGRATZ: I just don’t believe it. I believe we want to be inspired. I believe we want to be more connected as a world. I believe we all have that feeling inside that, if we don’t start grounding are actions in a basis of spirituality, whether you want to define it from a religious context or from this idea that we’re all connected to each other, we really won’t solve the problems that are so big in front of us and, at the same time, we have that opportunity to do so. So we are trying to hold that balance at Acumen Fund of a hard head and a soft heart, of really demanding excellence of ourselves and of the entrepreneurs in whom we invest and, at the same time, working from a place where in many ways we bring divinity into the work, that we listen.

We try to put ourselves in the shoes of the others so that we understand that, if we’re the investors with the money, there is a power dynamic that’s underway and that we might have to listen differently and use different language with the entrepreneur with whom we’re working depending on whether they’re from a slum in Nairobi or they’re a very sophisticated entrepreneur from Los Angeles that wants to work in India. Different kinds of conversations, and we need to develop the moral imagination and the more nuanced emotional skill set that cannot compromise the financial skill set that must absolutely complement it.

TIPPETT: Acumen Fund founder and CEO, Jacqueline Novogratz.

As we were producing this program, we found ourselves trying to sort out and make sense of the many terms used in her universe of social entrepreneurialism. Words like donor and investor are sometimes differentiated, sometimes used interchangeably, and what does it mean to be a venture capitalist who is also a social investor? So I sat down as I occasionally do with Chris Farrell, American Public Media’s chief economics correspondent, to get a sense of what questions this raises in the wider world of finance and investment.

You can watch my conversation with Chris on our Web site, speakingoffaith.org. While there, I’d like to point you to some engaging discussions taking place on our blog and our Facebook fan page. In particular, read a recent interview we did with Patrick Bellegarde-Smith, a scholar and voodoo priest who grew up in Haiti. He offers a challenging perspective on current aid efforts, media coverage and the rebuilding of Port-au-Prince. Look for links on our home page, speakingoffaith.org.

After a short break, what Acumen investors get back from patient capital and how they’re changed by entrepreneurs half a world away. I’m Krista Tippett. Stay with us. On Beingcomes to you from American Public Media.

[Announcements]

TIPPETT: Welcome back to Speaking of Faith, public radio’s conversation about religion, meaning, ethics, and ideas. I’m Krista Tippett. Today, “A Different Kind of Capitalism.” As part of our ongoing series on the ethics of global aid, I’m exploring the work and vision of Jacqueline Novogratz. She has helped bring the notion of patient capitalism to the global economic table. Her Acumen Fund is gaining an increasingly influential place in the controversial landscape of international aid and development.

Working with entrepreneurs on the ground in places like Kenya, Tanzania, Pakistan, and India, it is charting a third way between aid for free and investment for profit. Its donor investors include Google’s charitable arm, hedge fund managers, and the Rockefeller Foundation. Expecting their return to come in social impact, they invest in for-profit projects that bring basic services such as clean water, maternal health care, and ambulance services to people who make less than $4 a day.

TIPPETT: So I know you have incredible testimonials of the effects of your work on people who are poor, on entrepreneurs who might not have had possibility, on people who’ve been Fellows in your program. I wonder what you hear about how this work changes investors.

MS. NOVOGRATZ: That’s a great question. Over the holidays, I actually got a number of letters from investors who shared lots of different stories with me. One that was really touching to me was from a man who went to El Salvador with me. Acumen doesn’t work in El Salvador, but we were just going to look at some of the potential work down there. We had to drive through the hills on a pouring down rainy day in the back of a pickup truck with a group of farmers and it was freezing.

These farmers were hard-bitten and hard scrabble, scruffy guys, and we sat in a circle together. My friend, the Acumen investor who is an unbelievable investor in his own right for a major financial gain was hammering these farmers with questions and, I dare say, showing off a little bit. And at one point, one of the farmers corrected his math [laughter]and said, “Excuse me, sir, but actually you’ve got that wrong. Let me explain.”

In the letter that he wrote to me, he said, “You know, the biggest gift that Acumen has given to me and this sounds — it’s almost embarrassing to say,” he said, “but the biggest gift that Acumen has given to me is that you’ve shown me how smart the poorest people in the world are, and they’re just as smart as I am. If we could only give them the opportunity to make change themselves.”

And so I think it’s that growth and awareness that it’s so much more comfortable in some ways to look at really low-income people as the other, in part because I think we know that they are us and, certainly in my case, I’m only two generations away from it. The women I see in Africa are very much like my grandmother was. So maybe there’s a fear there that encourages us to stay comfortable and not go close. Acumen says, you know, come, go close and see the explosion of human potential if we treat people as equals.

TIPPETT: I just want to really clarify this. So your investors, I mean, are they getting any financial return on their investment?

MS. NOVOGRATZ: Up until now, the answer is no. They give us money and we say back to them, “The money that we invest will come back to Acumen Fund. Any returns that are made to the fund go back and are invested into other enterprises serving the poor.” We’re typically seeing, you know, for every dollar that we invest, we see the companies raise an additional for. We give them metrics. We talk about successes and failures. So the pitch, if you will, to donors is that this is highly leveraged, more accountable money that will continue to recycle itself in time and they get change back. They don’t get financial returns.

TIPPETT: Right. The return is in social change rather than financial.

MS. NOVOGRATZ: That’s right.

TIPPETT: OK. Where do you find sustenance? How does your moral sensibility continue to evolve as you have these experiences? I mean, you’ve really started an innovative successful enterprise. The trajectory of your work has been dynamic. What do you keep learning that takes you deeper, that sustains you? You see a lot of suffering as well, right? You see a lot of places where it’s hard to imagine that human potential being realized.

MS. NOVOGRATZ: Yeah. You know, it’s so funny, Krista. First I think what feeds and drives me is I never feel successful [laughter]. I always feel that, OK, well we’ve gotten to here, but the questions just keep getting deeper and deeper and Rilke talks about the importance of asking …

TIPPETT: That’s something we have in common that we love Rilke.

MS. NOVOGRATZ: We both love Rilke. But, you know, asking deeper questions. So part of the sustenance comes from I really think I’m on one of the most intellectually exciting journeys of our generation. The more you learn, the more you realize you don’t know anything. So that’s one whole piece of just the pure intellectual inspiration.

The other are the kind of e-mails that come both from the wealthiest people in the world and the lowest-income people in the world. The joy that I get from those interactions gives me a feeling of being connected not just to rich and not just to poor, but across the spectrum. I would say, when you talk about seeing suffering, that is not what burns me out. In fact, I think I, for some reason, have a personality that, when I’m in a place, I tend to see the positives — the possibles.

What exhausts me is the lack of caring from too many elites where we see solutions that actually are not that hard to undertake. And whether it’s government bureaucracy or selfishness, we become unwilling to even experiment with it. I find those conversations are the ones that drain. Sitting in a slum, even with terrible conditions, even after lots of violence, can hurt at the deepest emotional level, but it also reminds you of just how alive we are. So it doesn’t drain me. It makes me angry or, you know, every other kind of emotion, but not draining.

TIPPETT: I don’t even know how to formulate this question because it’s tricky. About that exhilaration there is, I know this in my own life in very different contexts, but of going to an utterly new universe.

You wrote about being in Brazil, and I think many of us have experienced this in different places, but you said: “I couldn’t recall ever feeling so fully alive getting ready for a day, except in those first weeks in Brazil, there was a rawness and a beauty here that brought every emotion right to the surface. I love the feeling, loved being in this place where the best and worst of everything seemed to coexist.”

In my younger life, I spent time in Eastern Europe where there was a very different kind of human crisis going on, right? But I would say that same thing where you saw the best and worst and it can be full of despair and exhilaration at the same time. So what’s my question?

MS. NOVOGRATZ: I wonder if what you’re getting at is, you know, why do we feel that way? I think that there’s something about being much closer in a more raw way to the human experience. And there’s something about in our daily lives in the States often, you know, we hide death, we hide a lot of infirmity, we don’t even really see where our food is grown or how the animals are killed before we might eat them.

So there’s a veneer in many ways over a lot of what makes us very deeply human. When you’re living in a place undergoing change and turmoil like that, the veneer is just stripped and you are right there living in a way that is just deeply, deeply human.

TIPPETT: Right. The best and the worst of the human condition all out on the surface.

MS. NOVOGRATZ: All out on the surface.

TIPPETT: Mm-hmm. OK. So then here’s a more troubling question. Do we want other people in the world to be developed the way we’re developed, right? I mean, do you see what I’m saying? Are we giving them the tools to become like us?

MS. NOVOGRATZ: Well, to not give tools feels paternalistic and a different form of judgment, that we’re just giving them choice because it’s too easy and I’ve brought people into low-income rural areas and slums and they’ll say, “Well, look how happy everyone is.”

I say, “You weren’t here the day that her third child died before she was one year old.” “You know, you weren’t here when her husband and all of her brothers died of AIDS.” “You weren’t here walking beside her every single day for five hours to get her water.”

To give people choice is I also think fundamental to the human journey and the human spirit, and we don’t know where it will all go. My dream would be that we could actually slow down and learn from what people have, the joy of community, the time for each other. I have to say I sound somewhat hypocritical as someone who could not be busier.

TIPPETT: I’m Krista Tippett, and this is On Being from American Public Media. Today, “A Different Kind of Capitalism — Jacqueline Novogratz and the Reinvention of Aid.” The Acumen Fund has created a Fellows program at the heart of its operations observing that trained talent is as precious a commodity as capital among the poorest populations in the world that need it the most. Today this program has around 600 applicants per year from over 60 countries. In 2009, 59 applications came from Pakistan alone.

You said something at the annual meeting, which I watched. You said of the Fellows, you were sending them off and you said their job as leaders is to lead the company that is better for them, but not dependent on them. And that’s a very, very challenging order.

MS. NOVOGRATZ: It is, but I think that’s the job of all of us as leaders. You know, next week I’m going to Nairobi and I’m going to be visiting Jamii Bora, which is a nonprofit community development organization that started by a woman named Ingrid Munro with about 50 truly the poorest slum dwellers 10 or 12 years ago. Today they have 250,000 of these low-income slum dwellers who comprise the membership.

About five or six years ago, Jamii Bora decided that it wanted to create a for-profit housing development company largely for themselves, build 2,000 houses outside of Nairobi, and we put a quarter million dollars into it as a loan. Ingrid is one who wants to leave a legacy that will continue without her. I went back recently to see one of the women who was buying a house, named Jane — ex-prostitute, HIV positive, you know, really had nothing. Jamii Bora won’t give you a loan until you save up your $50 first. So she saved her $50, she got her $50 and it took her five years, but she then bought this $4,000 house.

When I asked her, you know, tell me about your dreams, tell me where you are today, she said, “You know, when I was little, I wanted to be a doctor and I wanted to marry a good man. You know, I married a bad one. But my children love me and I’m not a doctor, but I work with HIV patients. I volunteer and I serve them and I tell them, you know, you’re not dead. You’re still alive, so it’s your duty to serve.” She said, “Maybe I’m not a doctor, but in some ways I’m better because, me, I heal people.” I think about going back to see Jane next week because she hadn’t moved into the house when I last visited her, and she’s now running a very profitable kiosk in this community of 2,000 houses, so probably about 12,000 people.

I think it’s that kind of trajectory, it’s that kind of story that, if we move away from just the traditional charity — I’m going to give you a handout and hope that life gets a little better for you today — and invest in Jane, that we cannot just help her make herself a little bit wealthier, but actually walk with her as she moves out of poverty.

Because what happens immediately is that she starts bringing a community with her, not only her children, but in this case, the people that she volunteers with who are HIV positive so that the world then really becomes a world where each of us help each other release all of the energy that we have to give.

And so that’s I think the ultimate ethos of a kind of leadership based on moral imagination, but that’s not willing to compromise and essentially lower expectations because I definitely have learned that people live up or down to the expectations that are placed on them.

TIPPETT: The Acumen Fund is a young enterprise. I know that there has been wariness or criticism that, of course, you can tell beautiful stories like that, but you can’t affect the larger picture of poverty or maternal health or clean water, that these are huge global issues. Now I know that that’s something that’s very much on your mind, that scaling, this work, and changing the life of one person does mean more than changing the life of one person, right, in any context.

But how do you think about or what are you learning as you move through this about, you know, I don’t even like the word solutions. I bet you don’t either [laughter]. But how can you — can this model that you’re innovating, that other people are innovating with you, address these human crises in a large holistic way? Maybe even as we were talking about earlier, ricocheting back and helping people in New Orleans rebuild their lives?

MS. NOVOGRATZ: Yeah. I think about this all the time because that’s the end game. I think what do I have? Thirty-four years left? I don’t have a lot of time. We’re going to be, you know, seeing this large-scale systemic change. And so for us at Acumen Fund, we have about $40 million that we’ve invested. So as you said, compared to the world’s problems, it’s a drop in the bucket, although it’s brought in about another $180 million into these enterprises. And already, we’ve seen tens of millions of people get access to services and 22,000 jobs. So the numbers, as you said, pretty picture, not making enough systemic change yet.

But what’s starting to happen, and I think WaterHealth International is one example, is that by proving and demonstrating that you can deliver affordable safe water to low-income people at scale, not 10,000 people for five years, but, you know, a million people, suddenly sectors start building around that idea and that company, and we now see five companies that are in the water space in this one state reaching 1,000 villages.

Government is now looking at this as a model, so we’re starting to see patient capital invested in private-sector entrepreneurs both for profit and nonprofit, building companies or organizations that are reaching hundreds of thousands, if not millions of people, opening up a larger conversation about what is truly possible at a systemic level.

And that’s really my dream, Krista, is that Acumen itself needs to grow, to continue to prove and show these models, but it doesn’t have to solve every single problem by itself. Acumen can create models, but then we have to be even better storytellers at showing how these actually are effective, how they can cover their costs and how they can reach growing numbers of people so that others can replicate it, use the lessons from it, and ultimately change the whole nature of the game.

TIPPETT: And has patient capitalism entered the lexicon of business schools?

MS. NOVOGRATZ: Oh, yes. I would say that there’s a groundswell of young people in the business schools that want to craft lives of deeper meaning, and they’re looking for how they use their skills to work in social enterprise, work in environmental sustainability and patient capital is very much a part of the conversation. I was at a planning meeting for Davos and the term patient capital was used throughout the meeting, which was really thrilling to me.

TIPPETT: You quoted Oliver Wendell Holmes about “the simplicity on the other side of complexity.” I’ve heard that phrase, but I hadn’t — I didn’t know where it came from. You also have written and you are writing about one of the places about the beauty and possibility that you could always see on the other side of chaos. I wonder how that is alive for you know, how that runs through the work you do and the way you think about the future.

MS. NOVOGRATZ: Oh, my goodness. I think that the leadership that we need for the future is a leadership that’s willing to hold opposites in our hands and that in some ways, Krista, recognizes I think that we are going through a tumultuous time right now on our way to a more empathetic society, a more integrated society, clearly a more interconnected society.

I’m a real optimist and, you know, speaking of faith, that is ultimately what it’s about. I think the world is getting better. There are less wars today than there were in the last century, less people being killed. There’s still ugly, ugly things happening in many of the places that I work, and I’ve seen a lot of ugly in my life obviously. But right next to it, just right there, is some of the most extraordinary beauty and possibility imaginable.

And so I think you hold on to that vision and we keep walking forward, which isn’t to say that we’re not going to fall down along the way, but it’s the vision of what is possible. And that vision, which goes back to your question on sustenance, is continually inspired by the people themselves who are creating extraordinary lives out of what we would consider nothing.

TIPPETT: Jacqueline Novogratz is the founder and CEO of the Acumen Fund. She’s the author of The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World.

On our Web site, speakingoffaith.org, we’ve posted the striking reading list Jacqueline Novogratz recommends to foster empathy, self-awareness, and a business mindset in her Fellows who come from around the world. It includes economists as well as novelists, activists, and thinkers from an eclectic range of perspectives, from Martin Luther King to Bill Gates, from Simón Bolívar to Wendell Berry and Ursula Le Guin. Also on that list is the Kenyan writer Binyavanga Wainaina, whom I interviewed for our first program in this ongoing series on the ethics of aid.

And if you’d like to automatically download that conversation or this program or my complete unedited interview with Jacqueline Novogratz, be sure and subscribe to our podcast. It’s all free along with the many threads of conversation on our Facebook fan page and Twitter. Look for these links on our home page, speakingoffaith.org.

On Being is produced by Colleen Scheck, Chris Heagle, and Nancy Rosenbaum. Our producer and editor of all things online is Trent Gilliss, with Andrew Dayton. Kate Moos is the managing producer of Speaking of Faith, and I’m Krista Tippett.