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Jacqueline Novogratz on impact investing, social entrepreneurship and moral imagination
00:27:34
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- [00:04]
A
The opposite of poverty isn't income. The opposite of poverty is dignity. And what I meant by that was the ability to have choice, opportunity, the freedom to decide how you can live your life.
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A warm welcome to Philanthropy Bites, where you get to deep dive into the lives of inspiring and visionary leaders, all of whom are working to change minds and move money to address some of the most critical issues of our time. I'm Cheryl Fafaria from JP Morgan's Philanthropy Centre and this podcast is brought to you by us and the Marshall Institute at the London School of Economics, whose director, Professor Stefan Chambers, is our host. Today I'm super excited to introduce Jacqueline Novogratz as our guest. Jacqueline is widely known as a pioneer of impact investing and social entrepreneurship, having founded Acumen 20 years ago. She's been featured on countless lists of top 100 global thinkers, smartest people of the decade, and greatest living business minds. And she's a New York Times best selling author of the Blue Sweater and Manifesto for a Moral Revolution. Let's dive right in and hear from Stefan and Jacqueline for more.
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C
Welcome, Jacqueline. It's very, very nice to see you. Can we start a little bit with where the book starts, which is how you got to be the person you are and how that led to you, as it were, not following the normal trajectory of a banker, but founding acumen, I think 20 years ago now.
- [01:45]
A
It's good to see you, Stefan. It's interesting in speaking to David Borenstein, the journalist who has talked to so many such social entrepreneurs, he told me that people often start with when they were six and he doesn't know why. It's a magic year. But I do think there's something about being a child and the context in which you're raised and the people around you. And so I was raised in a military family, immigrant family, a Catholic family. When I was six, my father was in Vietnam and I think from very early, almost the guide rails, if you will, of those three influences had enormous impact. Thinking of my father overseas made me curious about the world. The immigrant family was certainly about duty and the importance of showing up a family of community. And then my first grade nun, Sister Mary Theophane, had a real focus on to whom much is given, much is expected. And I think as a child those forces continued to swirl through me and surround me and very much made me want to love the world, to know it and have a real sense of duty to something bigger than myself.
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C
I wanted to ask if you could just unpack a little bit the kind of Acumen manifesto that I always take to beheaded with this notion of it starts by standing with the poor. Can you tell us a little bit about that?
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A
Absolutely. Particularly as an investor, Stefan, what we learned is that it is so tempting in the systems as we have them that incentivize us around being the best, being the wealthiest, having the highest returns, being the most famous, to focus on self, to focus on the abundance that is there for us. And it's only when you start the design by focusing on including those who've been excluded, overlooked, underestimated, that you actually build the structures that allow for problem solving and inclusivity.
- [04:04]
C
I wonder if we're on a. There's a kind of trajectory here as well that says it may be that we should move from standing with the poor, which is clearly an advance on the old way of doing investment, or the old way of doing development, or the old way of doing aid or philanthropy. There are some people who would argue we should get out of their way now and just remove ourselves from the conversation. Do you have any sympathy with that view?
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A
I have sympathy with all views, but I don't agree with it. I've also learned that we truly are each other's destiny and that it is. We are so interdependent and there is a lot of knowledge to be shared. There are a lot of resources to be utilized in smart ways. And at the end of the day, we really need each other. And so I sometimes even worry when I hear the phrase check your privilege. Because what I see often is very privileged people who have so much to give the world diminish themselves, opt out of the conversation because it's easier. And instead I wish that we could start with how are you going to extend the platform of your privilege to those who do not have access? And I think that's been very much a part of my own life journey, particularly as I've come to reckon with and acknowledge not only that I've always had privilege, but that I've gained an unprecedented level of privilege over the course of my lifetime. That the more I have, I feel a greater responsibility to not hide it, but rather use it on behalf of people who want to be part of the conversation. They want to be part of the opportunities.
- [05:57]
C
Yeah. So use it carefully and use it well. Rather than checking it.
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A
Use it with humility. But don't throw audacity out either. See each other as equals, neither above nor below. It doesn't matter where you sit within the world. Some of my greatest teachers who are part of our community are truly by Many material measures, some of the least advantaged, lowest income people on the planet. And yet what they have taught me is immeasurable. And I don't say that in a romantic way.
- [06:35]
C
I love this idea that you have to combine humility and audacity. And that leads very nicely to Acumen. Can you tell us a little bit about the original thinking at Acumen and the last 20 years of its development?
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A
I had already created four different organizations prior to Acumen and so I'd learned a lot. I'd also worked in the private sector. I'd learned in the private sector how markets often can overlook or exploit low income people. And I'd seen the perils of top down aid and development through my history. I'd also gone through in Rwanda. I'd seen the genocide and the impact that it had on people I knew and loved in an institution I had helped build. And my conclusion was that even focusing only on income as our metric for poverty is a false conceit. And that the opposite of poverty isn't income. The opposite of poverty is dignity. And what I meant by that was the ability to have choice, opportunity, the freedom to decide how you can live your life. To do that, we needed a mix of markets and of a humanitarian ethos, if you will. And so Acumen was born. Like you said, by flipping the model. We would start with philanthropy. We would Invest patient capital, 10 to 15 year equity and debt entrepreneurs who were going where others wouldn't, to build markets that in many cases did not exist. We would support them with management assistance, with the use of our networks. And we would measure the impact, the social impact, not just the financial returns and any money that we made. We would reinvest in innovation for the poor. And that model, of course, like all of the models that we invested, has maintained many parts of its essence and it also has expanded since then. But that was the beginning.
- [08:51]
C
You must follow the rise and rise of impact investing as an idea. How much of what you see do you think is inspired by the work you did at Acumen and how much of it do you think is heading in a, in a different direction?
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I think we're probably as a sector in that messy, chaotic period of growth where I think a lot of people were inspired by the ideas of using markets to do good things. And then often we stick with the instrument that we have and forget the starting point. And so we started really to revolutionize philanthropy and use it to build companies that longer term would bring in more traditional forms of capital. What ended up happening was A lot of that more traditional capital started to search for these opportunities. And where it went haywire and still does sometimes is when I'll sit with people who want to end hunger for the extremely the extreme poor and make a 20% financial return. And I think, or say more likely think about what you've just said. Does that really make sense? So I think we're at a point right now where you see a whole spectrum. There are certainly many well intended impact investors that may be looking at esg, often forget the S, the social impact, but are taking a step toward doing better. There's a whole middle ground with impact investors who use impact as a screen and yet don't want to take a risk unless they're looking at already proven commercially viable opportunities. And then quite frankly, there's still a too small part of the spectrum that is more akin to acumen taking outsized risks in early stage ventures that are deliberately and specifically focused on solving problems of poverty and are willing to actually measure our own accountability. And that sector has to grow, Stefan, because the other sectors won't have pipeline if we don't find this early stage patient investing, particularly at this moment where our systems are so broken open and we see what the world looks like when we don't include the poor.
- [11:48]
C
Yeah, I couldn't agree more. You're also well known for believing in the power of partnerships and cooperation. What does it take to do that? Well, because it's famously difficult. I mean everyone says it should be done and very few people do it well. And you are well known for doing it well. So tell us a little bit about that.
- [12:15]
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What I have learned along the way and I feel that increasingly our problems are not too big, they're too complex for any one individual or organization to solve them. We will only solve them through collective leadership. And as you said, collective leadership is hard. It is incredibly messy and it in some ways asks us to go against many of our own ego driven traits which we all have. And in a way it requires that same level of humility and audacity that we were talking about before.
- [12:53]
C
I wanted to turn to the future now and just to anchor your younger self. When reading about Muhammad Yunus and reading about Grameen and how that as it were reoriented your view about your own future when you were doing that, there weren't many people like you around. Do you think it's easier for a young person now to find models to follow or to admire or to inspire this kind of change making career?
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A
Oh, absolutely. When you and I were growing up. The role models we had were far and few between certainly these kinds of role models, and for the most part, they were historic figures. But today we have access not only to the famous individuals who've gained real reputation for doing the work that we've been doing, but in almost every community, we can find people who can serve as role models. And one of the great opportunities for the media and for all of us is to find more creative ways to share with young people these role models. Because so often we still show Bill Gates and Steve Jobs and thank God they exist, but they're too far away from a young person growing up in northern Pakistan who really wants to change her country. And so I've been thinking a lot about what if every school taught our children that you don't just have to grow up to be a doctor, an engineer, a fireman, or a policeman or woman, but that there are these other people out there that have made a commitment in their lives to things bigger than themselves in a more entrepreneurial way that's highly localized, and how do we continue to release that energy?
- [15:06]
C
Yeah. You and I have spoken before about COVID I wonder if you have a view, and you must have been asked this a hundred times, about whether Covid will usher in a positive resetting or legitimize, as it were, a negative reaction or some complicated mixture of both.
- [15:32]
A
I feel and say a lot to the team that we are sitting in a moment almost balanced on a precipice between peril and possibility. And in this moment, we are seeing a pulling inward by too many of our leaders, not just of our nations, but also of our institutions. And Covid is an example of that, where this is a global problem and there was too much hoarding by the wealthy nation nations for themselves. Rather than thinking right from the beginning, if we were designing the manufacturing processes, the patent processes, the distribution processes, recognizing that we had to get the whole world vaccinated, what would we have designed? On the other hand, never have I felt more possibility in my entire lifetime. And what. What I saw during COVID and still see is a level of collaboration, creativity, coordination that gives me incredible hope for the future. I feel like I'm watching real, in real time, new models of capitalism that are more sustainable and more inclusive unfold.
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C
Jacqueline, your latest book, Manifesto for a Moral Revolution, covers a number of the things that we've been talking about. But I wonder if you could tell our listeners a little bit about the manifesto, why you think it's necessary and quite what you imagine this moral Revolution.
- [17:21]
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To be Stefan When I was first sitting down to write a book, given that many people associate our work with pioneering impact investing, I focused a lot on the technicalities of it. And what I realized as I was writing was, number one, the technicalities are really about tools. What's needed are those individuals who are willing to reimagine and use a set of practices or principles by which they will build. What I mean by that is I began to recognize, like so many of us have, that almost all of the institutions we've taken for granted are broken. They've served their time, they need reimagining, and yet we have not yet figured out with what to reimagine them. And there isn't a roadmap for doing that. There isn't an easy how to guide. At this stage in my life, I felt because I've learned so much from thousands of change makers around the world, what I could offer was a compass. But it decidedly had to be a moral compass. Because if we want to move the world away from systems that have put money, power and fame, the individual and profit at the center of all of our systems, and replace them with systems that put our shared humanity and the sustainability of the earth, then we need a new set of institutions. They may be the current set, reimagined and rebuilt, but that will require a lot of hard work, a new set of skills that we build within ourselves, and a North Star from which we are all unwavering. Ultimately, I realized I was writing a book. Not for impact investors, but I was writing a book for anyone who wants to build a world in which we truly move away from simply being consumers to being citizens. Where we see workers and low income people as full human beings, equal of dignity and respect, where we build institutions that do more than they take. And so I finally would end by saying if there's one golden rule I think sits and goes through this book, it is that the revolution is neither above nor below. It comes from inside. And if all of us gave more to the world than we took from it, the world would be a very different place.
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C
Sign me up. I completely agree. Thank you so much.
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A
You've been in it, you've been a leader, not just a footstep soldier.
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C
We're all of us working the fields we're in, but we're all working in the direction that you're manifesto suggests. You know, we at the Marshall Institute, you at acumen and all the other work you do. So thank you so much, Jacqueline.
- [20:34]
A
Thank you, Stefan.
- [20:37]
B
So there we have it, folks, a story of moral revolutions of audacity and humility. Join us next time to hear from Professor Johann Rockstrom, leading climate scientist and the force behind the new Netflix documentary Breaking Boundaries.
- [20:55]
C
SA.