Another face of Pakistan

I had the chance to spend last week in Karachi for the final round selection for the inaugural class of Acumen’s new Pakistan Fellows program.  From more than 500 applicants from all corners of this country of 175 million people, we had winnowed the group down to just 40 finalists and had, in the course of a day, to select 20 people as our first Acumen Pakistan Fellows.  The program begins in early 2013.

The images the world (and Americans in particular) sees of Pakistan are difficult ones.  Just yesterday a very troubling article came out in the New York Times about Quetta, the capital of Balochistan, where there have been increasing numbers of open attacks on members of the Hazara community.  The article suggests that the police and security forces are at best ambivalent about stemming the violence that has resulted in the deaths of 100 Hazaras this year alone.

This is one reality in Pakistan, and it is daunting to say the least.

Last week I saw another story, perhaps a quieter one and one that doesn’t scream for headlines.  These are the stories of the applicants to our Pakistan Fellows program: a woman from rural Punjab, the first in her family to get a formal education, who is working on extending credit and education to those who are still excluded from all formal systems; a woman with a Masters in Economics who left her teaching job at Fatima Jinnah Women University in Rawalpindi and is now creating a speed English literacy program for kids in the slums; another young man, a born entrepreneur from a very humble background, who somehow found his way to a quiet section of the library and began reading Harvard Business Review articles and then watching TED talks, and whose startup business Hometown (the website will blow you away) aims to have local artisans and leather-workers provide world-class quality shoes to the world; and finally, a man with a Master’s in Computer Science who is working in Quetta, Balochistan – the same city profiled in the NY Times piece – who is helping build a university from scratch to bring education to some of the most tough-to-reach, downtrodden populations, and is paying for it by creating small businesses ranging from biomass power generation to cut flowers.

These were just four of the 40 amazing people I met last Friday, each one with a story of hope, each one committing themselves fully to making positive change from the bottom up in Pakistan, each one leaving our panelists – all prominent business and social sector leaders – humbled at their spirit of service and commitment.

These are just four stories that never make the front pages – but they should.

Investing in leaders and ideas

At the start of this year, I took on a new role at Acumen as our Chief Innovation Officer.

Acumen’s mission is to change the way the world tackles poverty by investing in companies, leaders and ideas.  The Chief Innovation Officer role is about scaling Acumen’s impact: building out from our core investing work to create the ecosystem of leaders the world needs to do this work; and investing in the spread of ideas by digging in to measure and understand the direct impact we are having through our investing work and sharing these learnings with the world – so we can all get smarter about what it really takes to tackle poverty at scale.

The impact piece is the most challenging and potentially the most exciting part of this work.  Challenging because deciphering and quantifying impact is the 10 zillion dollar question in any social change work.  And exciting because I firmly believe that the day we can clearly and succinctly explain and quantify impact is the day that everyone stops pretending that financial returns are the closest proxy for success for impact investors.

I dug into these issues in my recent talk at Acumen’s Investor Gathering last week.  The talk just went live on YouTube (see below or link here), so I thought I’d share it here first.

(Special thanks to Niklas Peters at Acumen who helped with the presentation and, while juggling a million other things, found the image for my favorite slide – the one from Brazil.)

Your chance to shape a sector

Kevin Starr, who among other things runs the Mulago Foundation, penned a provocative, must-read series of posts on Stanford Social Innovation Review titled “The Problem with Impact investing (Pt. 1, Pt. 2, and Pt. 3).

He leads off his last post in the series with the sub-header “Real impact investing is not for the timid” and focuses most of his screed on the fact that our sector is horrendous at articulating and measuring impact.

This is hard stuff, these are long and rocky roads, and it is certainly not for the faint of heart.

At a minimum impact investors diverge radically in articulating what we mean by impact.  At our most timid, we claim that nearly any enterprise operating in the developing world by definition is creating impact (really?).  At the other end of the spectrum, even the most impact-focused investors are likely to screen heavily for impact but then have limited capacity (financial resources, time and attention) post-investment to really understand or accelerate impact.  At the recent ANDE metrics conference there was deep appreciation for the strong foundation we’ve created in our sector – the Pulse platform, IRIS standards and GIIRS ratings – as well as a generalized acknowledgment that these tools alone are not enough to bring the clarity and insights we need to create large-scale, lasting change.

As Kevin states, both clearly and provocatively:

While the philanthropy world is still pretty bad about measuring impact, the impacting investing world is worse. Real impact measurement is a drag on the financial bottom line and investors are usually willing to assume it’s there, so few feel compelled to do it. What’s weird to me is that while all impact investors know that you could never maximize profit without measuring it, they often fail to recognize that the same is true of impact.

If impact investing itself isn’t for the faint of heart, forging the way forward on the next chapter of understanding and accelerating impact in our space is for the bravest of the brave.  Yet we know that better answers are out there; we know that there is increased appetite to dig deeper and to find real lessons about what is and isn’t working and why; we know that both funders and entrepreneurs are looking for better measures so they can deliver real change.

I’m hiring someone who wants to lead this charge.  Full details here for new Acumen’s Head of Impact role.

The application process is unorthodox because we need someone unorthodox.  As you’ll see in the job description, the ideal candidate has lived and breathed the reality of building an operating company / social business in the developing world; she has the analytical background and curiosity to translate these experiences into broader conclusions; she is a natural at building relationships within and outside of Acumen; and she’s excited by a lot of travel because she knows to do this right she’ll need to get her hands dirty.

I truly believe this is one of the most exciting opportunities out there for the right person.  Can’t wait to see who applies.

Deadline is August 5th.

(Happy to answer questions in the comments if you have them)

Today – livestream of Acumen Fund Investor Gathering

Each year at Acumen Fund we bring together our top supporters from around the world for our Investor Gathering, a day to share our successes (and failures) with those who make our work possible.

This year, to mark our 10th anniversary, for the first time we are live-streaming one hour of today’s event.  You can watch the live video feed today at 1pm Eastern on our Community site http://community.acumenfund.org.

This is a chance to hear from our global team about the work they have been doing and what they are learning, including closing reflections about the future by our founder and CEO Jacqueline Novogratz.

We’re proud of what we’re building, and excited to share it with you.

Enjoy.

Fast Company Interview

I was excited to be profiled by Lydia Dishman in her Innovation Agents column in Fast Company. Here’s the full copy of the piece.

Innovation Agents – Sasha Dichter, Director of Business Development, Acumen Fund

BY Lydia Dishman  Fri Aug 26, 2011

Sasha Dichter wants you to know that social impact investing is anything but a crock. He talks to Fast Company about making a difference for global social good.

The economy may be slumping and the markets fluctuating wildly, but Giving USA recently reported that over $290 billion in charitable funds was raised in the U.S. last year, an increase of nearly 4 percent. What’s more remarkable is that the majority of those dollars came from individuals, accounting for a whopping 73 percent of overall giving.

Talking with Fast Company, Sasha Dichter asserts that we aren’t running out of money for worthy causes, we just need “a different mechanism that will outlast an individual philanthropic funding system.” As the director of business development at the nonprofit Acumen Fund, Dichter understands there are huge, public problems such as clean water, sanitation, and affordable, preventative health care that can be solved by social impact investing.

“At Acumen Fund we’ve been asking ourselves this question since 2001: How can we combine the best investing and philanthropy for the 3 billion people living on less than $2 per day?”

Dichter rattles off statistics and outcomes such as how Acumen Fund’s already invested $60 million in more than 44 enterprises and touched 40 million lives, that illustrate how well-versed he is in the decade-old world of impact investing. Or, as he explains it, that space “somewhere between pure philanthropy and pure investing where there’s a class of capital that’s willing to get a lower expected economic return for a higher expected social return.”

As a graduate of both Harvard’s business school and its Kennedy school as well as doing stints as global manager of Corporate Citizenship at GE Money and as a senior program manager at IBM, Dichter has spent longer than that raising both philanthropic and sub-market return capital. He’ll be the first to tell you that social impact investing is far from “a crock.

Challenge – Talent

It’s also why, when he talks about how maximizing every philanthropic dollar should be a profit seeking, not necessarily profit maximizing, endeavor, he doesn’t try to sidestep the challenges. For instance, he points out how funding is not the biggest issue in giving people safe drinking water. “When the model starts to work the money will find its way there. The challenge is finding people willing to slog it out. The scarce resource is talent on the ground, not just in leadership but teams,” he explains.

This was in evidence when Acumen Fund invested in A to Z Textile Mills in Tanzania, a manufacturer of low-cost bednets treated with long-lasting insecticide (LLINs) which are effective for up to five years to prevent malaria, a disease that kills nearly one million people in Africa every year.

Acumen Fund’s initial investment in 2002 catalyzed a public-private partnership between A to Z, Sumitomo Chemical, ExxonMobil, the World Health Organization (WHO), and the United Nations Children’s Fund (UNICEF)–all heavy hitters. So no one expected to have difficulty getting the nets sold.

But they did–at least through traditional sales methods such as “Tupperware” parties, church and hospital sales, and door to door. Even corporations invested in having healthy workers refused to purchase nets for their employees.

By listening to the community and experimenting with different retail venues, A to Z became an Acumen Fund success story. The company is now the largest manufacturer of LLINs in Africa, producing 29 million bednets each year, protecting millions of people from malaria, and providing jobs for more than 7,000 people, primarily women.

Challenge – Storytelling

Even with those numbers, it’s likely that you haven’t ever heard of A to Z or any of the other businesses focused on social good that Acumen Fund investments are supporting in Africa, India, and Pakistan. Which brings up another challenge: communicating the cause and “making the ask” for funding.

Even as the guy who wrote a manifesto for CEOs of nonprofits, an impassioned diatribe for them to grow a pair and not be ashamed to ask for money. Dichter acknowledges that paving the path for people to understand impact investing is key to the future of the sector.

In his blog, Dichter describes the potential philanthropist/investor as having two pockets for two types of capital. One is for investing for financial return, the other is for philanthropy. He writes, “Asking someone to make an impact investment isn’t a move along a rational economic scale, with each step proving marginally more attractive. It’s asking someone to do two things instead of one: create a new pocket and invest out of that pocket with us.”

He puts most of the onus on impact investors, though. “We as a sector have a responsibility to not be apologetic about what the [investment] story is. There is no tradeoff,” he explains, the way there was a generation ago with the screened investment funds of the 1990s that peddled various “vice-free” stocks. “A certain amount of results have to be proven,” he adds.

Challenge – Analysis

But not quite in the way most MBAs would think. Dichter’s not opposed to applying metrics and analysis to the warm fuzziness of investing funds for social good. In fact, the Acumen Fund uses something called the Best Available Charitable Option (BACO) model as an analytical tool created to help evaluate investments against other charitable options delivering comparable products and services. Donors always know where their dollars would be most effectively placed.

Instead, Dichter believes that when impact investing does what it should, ie: tackle poverty, metrics will be beside the point. And this is where impact investing takes a sharp turn away from traditional philanthropy. He writes, “What if we get to the point when it becomes pointless to ask if an intervention works because, like the cellphone, it will be ubiquitous, so the question will feel purely academic?”

Dichter maintains there is no skipping hard work and the way to affect change on global social issues is to get close to the problem. One impact investment at a time.

If investing = sexy…

If investing = sexy, and if sexy = better = innovative = how we’re going to solve all the world’s problems…well then, Houston, we have a problem.

There’s huge momentum around using investing capital to solve social problems.  The question isn’t whether this is a good thing (it is!); the question is, how do we do this in a way that doesn’t devalue grant funding, that doesn’t inexorably end up at the conclusion that if you’re getting your money back (and then some), you win, and if you’re the grantmaker, you’re doing something that’s not as important/innovative/worthwhile.

What a shame that would be.

What happens when we build large-scale enterprises that serve tens of millions of people, but the service still remains out of reach for many?  Is the grant funder who provides capital to makes the service more affordable doing anything less noble, less valuable, less impactful than the equity investor?  What about the person who put up the first $500,000 with no expectation of ANY return so that the whole thing could get off the ground?

The thing that’s in scarce supply isn’t investing capital – heck, there are trillions of dollars fleeing the European fixed income market and looking for a place to alight.  What’s scarce is risk capital that will take a bet on a person or an idea and help it scale; and high-impact capital, which will take a powerful, existing infrastructure and make it accessible to those who can’t afford it…all in a way that doesn’t distort the market.

In the US, there’s no notion that the person who puts up $15M to fund cancer care for the poor is somehow doing something less important or less impactful than the bondholders who financed the initial construction of the hospital itself.  If anything, the donor is MORE celebrated.  Different tranches of capital are all playing their roles in an attempt (not completely successful nor a complete failure) to provide high-quality heathcare.

We’re obsessed with “building the market” for investing in enterprises that solve large-scale social problems.  That’s good.  But let’s not confuse that with making the world safe for investors to get their money back.

We’ll know the market is functioning not by measuring how much money is swirling around, how many funds there are, and their total capital under management.  We’ll know it’s functioning by measuring how many new blueprints for social change we’ve created; how many people’s incomes have increased; how many people no longer need a permanent handout.

 

Moms matter

Happy (almost) Mothers Day!  (If you haven’t got your plans in place to celebrate Mom, you’d better get moving.  And sharing this video with your mom will be a great way to start.)

Search for the Obvious, a microsite run by Acumen (where I work) has just announced the winner of its latest challenge: Moms MatterThis is the winning video, and I challenge you to watch without shedding a tear and without instantly forwarding it on to mom.

The great news is that it’s going be featured on the YouTube homepage for Mother’s Day, so it’s pretty much guaranteed to be seen a million times.  (All the more reason to watch it now, first.  If it’s not showing up in your RSS reader click here.)

The Moms Matter challenge had winners in five categories:

–          Best Video: A World Without Moms

–          Best Tweets: #1, #2, and #3

–          Best Print Ad: Mothers Shape Identity

–          Best Essay: Putting Ourselves in the Problem: Thoughts from Ghana

–          Best Guerrilla Marketing Idea: Strollers

I’m awed by the quality of work this community produces, humbled by the grace and skill with which James Wu curates Search for the Obvious, and also thankful for my own mom and all the moms out there who make life make sense for all of us.

To quote the winning Tweet by @JasonBurke524: More than 1,000 mothers each day give their life while giving life.  8/10 deaths could be easily prevented.  http://j.mp/savemoms Pls RT!