The patient capitalist
Thursday, May 21, 2009
CHAMPIONS of market forces are a glum lot these days, for the most part. But not Jacqueline Novogratz, a market-minded development expert. The current crisis in capitalism, she believes, strengthens her call for a sweeping change in how the world tackles poverty. “The financial system is broken, yes, but so too is the aid system,” she observes. In her view, “a moment of great innovation” could be at hand.
In “The Blue Sweater”, her recently published autobiography, she describes her past frustrations working in such pillars of finance and development as Chase Manhattan bank, the African Development Bank and the Rockefeller Foundation. She found them bureaucratic, distant and condescending to those they sought to help. So in 2001 she set up Acumen Fund, a “social venture capital” outfit, to promote what she calls “patient capitalism”. Acumen is an odd mix of charity and traditional investment fund. It takes donations from philanthropists in the usual fashion, but then invests them in a businesslike way, by lending to or taking stakes in firms. The recipients—private ventures aiming for profits—must serve the poor in a way that brings broader social benefits. Acumen goes to great lengths to measure those benefits, and thus the efficiency of its work.