Microfinance and the Cost of Not Doing Anything…

The concept of microfinance, which provides financial services in the form of small business loans to those without access to traditional banking, has changed fundamental approaches to philanthropic programming around the world, with business enterprises sprouting up annually. Some of the more well-known and successful programs include Kiva, The Hunger Project, and Acumen Fund. These projects lead back to ground-breaking programs launched in Bangladesh in the 1970s by Muhammad Yunus, head of the Grameen Foundation and winner of the 2006 Nobel Peace Prize. Here is an excerpt from NobelPrize.org:

Muhammad Yunus has shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh, but also in many other countries. Loans to poor people without any financial security had appeared to be an impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty.

Matthew Bishop, an editor at The Economist and author Michael Green, recently published a book titled Philanthrocapitalism, which proposes a fundamental shift in global business practices to ensure long-term sustainability.

Jacqueline Novogratz is a visionary and extraordinarily inspiring speaker who founded the microfinance entity, The Acumen Fund, which espouses “patient capital” as a sustainable business plan. Here is the story that inspired her book, The Blue Sweater.

The themes of interconnectivity explored in Tiffany Shlain’s recent personal documentary, “Connected,” find another, practical, effective, boots-on-the-ground resonance in the work of Novogratz and The Acumen Fund, as summarized by TED:

The Acumen Fund, which she founded in 2001, has an ambitious plan: to create a blueprint for alleviating poverty using market-oriented approaches. Indeed, Acumen has more in common with a venture capital fund than a typical nonprofit. Rather than handing out grants, Acumen invests in fledgling companies and organizations that bring critical — often life-altering — products and services to the world’s poor. Like VCs, Acumen offers not just money, but also infrastructure and management expertise. From drip-irrigation systems in India to malaria-preventing bed nets in Tanzania to a low-cost mortgage program in Pakistan, Acumen’s portfolio offers important case studies for entrepreneurial efforts aimed at the vastly underserved market of those making less than $4/day.

It’s a fascinating model that’s shaken up philanthropy and investment communities alike. Acumen Fund manages more than $20 million in investments aimed at serving the poor. And most of their projects deliver stunning, inspiring results. Their success can be traced back to Novogratz herself, who possesses that rarest combination of business savvy and cultural sensitivity. In addition to seeking out sound business models, she places great importance on identifying solutions from within communities rather than imposing them from the outside. “People don’t want handouts,” Novogratz said at TEDGlobal 2005. “They want to make their own decisions, to solve their own problems.”

In this more recent TedTalks, Jacqueline Novogratz explores the life of immersion and asks, “what is the cost of not daring, what is the cost of not trying?” Her exploration of new ways to define “success” in terms of resource use and allocation echoes the 99% rallying cry of #OccupyWallStreet:

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