Stanford Social Innovation Review

From Blue to Green

I just finished reading an advance copy of The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World, Jacqueline Novogratz’s book on social enterprise due out in March—and it’s terrific, an unusually candid and highly personal memoir about the deep and often painful complexities of trying to make lasting change in the world.

Novogratz, the CEO and founder of The Acumen Fund, which invests money in companies run by and for the developing world, is also generous with her storytelling: Early in the book, she shares the memory of first landing in Africa some 22 years ago, at the Abidjan airport on a sweaty Ivory Coast morning. She had just left Wall Street, had cut her hair (“to the point of resembling Margaret Mead,” she told Cause Global) and gave away most everything she’d owned, arriving with “all the essentials, from poetry to new clothes to, of course, a guitar. I was 25 and I was going to save the world—and I thought I would just start with the African continent.” Yet within days of arriving, she was told—and in no uncertain terms by a group of West African women—that “‘Africans didn’t want saving, thank you very much’—and least of all, not by me.” Recalls Novogratz: “I was too young, unmarried, had no children, didn’t really know Africa and my French was pitiful. It was an incredibly painful time of my life and yet it gave me enough humility to start listening.”

And learning: To this day, Novogratz—cited last fall by Portfolio magazine as one of the “73-Biggest Brains in Business”—has let her experiences as a pioneer in the still-evolving field of social enterprise continuously shape and check her unique blend of idealism and flat-out pragmatism; her Acumen Fund, founded in 2001, remains passionately focused on “changing the way the world sees the poor” by alleviating poverty in ways that make the poor the customers of—and workers at—self-sustaining businesses seeded by donors but run locally, over time, without hand-outs. From her experiences running a bakery in Rwanda in 1986 with 20 unwed mothers to starting the first microfinance institution in Kenya, Novogratz has seen first-hand “the power of markets to end poverty, the discipline that running a business provides, and the pride that results from ownership”—in other words, an end to charity. She has also seen what doesn’t work, and retells the story of revisiting Rwanda a few months after the 1994 genocide there.

Of all the inspiring stories in her memoir—[the blue sweater in the title comes from Novogratz’ experience of seeing her favorite childhood sweater, which her family had given 11 years earlier to Goodwill, being worn by a child she met on a hilly street in Kigali—her name, written on the collar, still intact]—one of my favorites is her hard-won lesson in the importance of listening, closely, to those in need. “...I could have listened better,” she says about the women she met in and around the markets of Kigali while helping them to create a “blue bakery” to sell samosas and doughnuts as a local enterprise, even painting the walls blue until one of the women dared to speak the truth to their enthusiastic benefactor. [“Our color,” one of them finally told Novogratz, “really is green.”] “...Listening is not just having the patience to wait,” Novogratz writes, “but is also about learning how to better ask the questions.” Her efforts eventually transformed the bakery, which had been run as a charity when she got there, into an enterprise that earned $2 a day for each of the women. “When you’ve lived on charity and been dependent your whole life long, it’s really hard to say what you mean,” Novogratz says. “The poor often think no one really wants to hear the truth.”

But perhaps the biggest lesson, both from the book and the life it profiles, is that investing in businesses run by and for the people they’re intended to serve can actually work, grow, and create change across a neighborhood or a region or a country. For those looking for the “ROI” of social enterprise, it doesn’t get much better than that.

Marcia Stepanek is Founding Editor-in-Chief and President, News and Information, for Contribute Media, a New York-based magazine, Web site, and conference series about the new people and ideas of giving. She is the publisher of Cause Global, an acclaimed new blog about the use of digital media for social change. She also serves as moderator and producer of New Conversations for Change, Contribute’s forum series highlighting social entrepreneurs and new trends in philanthropy.

Posted by Kelsey Walker

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Rural giving needs to grow

Rural America faces huge challenges, yet it seems to be off the radar of much of organized philanthropy.

While a 2005 study by the Forum of Regional Associations of Grantmakers reported a “rapid rise in rural philanthropy,” a study two years later by the National Committee for Responsive Philanthropy concluded grantmaking behavior and trends were “skewed heavily toward support for urban-based or urban-focused programs.”

And last summer, at a Council on Foundations conference on rural philanthropy, former President Bill Clinton said “foundation activity in rural American has been woefully inadequate.”

So depending on one’s perspective, the rural-philanthropy glass may be half full or half empty.

Either way, it is not nearly big enough.

While home to an estimated one-fourth of the U.S. population of over 300 million people, rural America lags urban and suburban America in investment in the infrastructure that is critical for success in a fiercely competitive global marketplace.

The good news is that efforts are underway to try to change that.

Rural America itself “needs to change the way we are viewed,” Sherece West, president of the Winthrop Rockefeller Foundation in Little Rock, Ark., told nearly 600 people attending the annual conference hosted in Raleigh last week by the North Carolina Rural Center.

“We need to dispel misconceptions among national funders about rural America,” West said.

Rural groups, for example, should push for more equitable distribution of charitable and taxpayer dollars so that rural America is not treated as an afterthought by lawmakers and grantmakers, she said.

She called on foundations to be stronger “advocates, activists and accelerants” for rural philanthropy.

And she urged rural groups and local and statewide foundations to push their national counterparts to better understand and support the needs of rural America, she said.

At last week’s conference, the Rural Center released a new study that says local communities themselves represent a “potent sources of funding that often goes unrecognized.”

In particular, the study says, community foundations can “help lead the transformation of rural places to economic sustainability and cultural vibrancy.”

To do that, the study says, community foundations “will need to more aggressively build their assets and form partnerships with community development leaders.”

Also key to “capturing rural assets,” the study says, is “increasing knowledge about complex issues surrounding donations and bequests of real property, particularly land and timber resources.”

That, in turn, will involve “expanding the current professional education for financial and legal advisers to include rural-specific issues and increasing the number of qualified advisers available to rural donors.”

Community foundations in the state also “need to become increasingly inclusive and broad-based through their governance outreach to donors, community-engagement processes and programs.”

Private foundations can help, making grants to help community foundations, for example, increase their capacity to engage local givers and retain philanthropic assets in their communities.

To strengthen America overall, foundations need to wake up to the needs and economic potential of rural America and invest more time and attention to building its philanthropic capacity.

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Jason Chua

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Anti-poverty Engineers

If your height was proportional to your income, how tall would you be? And what does that have to do with reducing a host of ills like violence, teen pregnancy and more?

The likely answer appears further below. For now, though, consider a recent study which proposes that many social ills aren’t due just to the fact of low economic power in absolute terms, but the disparity in relative terms, the level of inequality. According to a profile in the current issue of Stanford Social Innovation Review, the University of Nottingham study posits that inequality – the relative distribution of wealth – is an important indicator of disparities in life outcomes across nations, not just of relative deprivation within them. As shown in one table, they find that the smaller the gap between the income of the top and bottom quintiles, the higher the average math and literacy scores of children. (Indeed, if inequality is in fact so important, it may help explain whey, for example, a nation as rich as the U.S. ranks last among 20 industrial societies in “amenable mortality” (preventable death before age 75), as shown in table from a recent study, also from England, highlighted by Paul Krugman.

Whether the ills are caused by low incomes themselves or by inequality, it should be clear that reducing poverty for people at the lower end of the scale would be more powerful than any other form of intervention. The question is how to do this. 

“You can win an increase in wages (for the working poor), but then they just lose all that and more on rising rents,” as a very experienced public interest lawyer in Los Angeles recently observed to a couple colleagues and me. This “whack a mole” quality means fighting poverty requires a comprehensive approach, one that reaches across all the different disciplines, and different institutions, from hospitals and clinics, to schools, to youth development programs, teen pregnancy, and outside the sector to include business and labor. 

Precisely because poverty has so many facets, however, calling for reducing it can sound hopelessly vague. In the same conversation, that public interest lawyer also observed, “When we came out of school in the 60s and 70s, we all thought we were poverty fighters first. Somewhere along the way we instead became experts in mental health, education, homelessness. We need to get back to having a common project. ” The same fragmentation is easy to see throughout the nonprofit, academic, and policy worlds. At a recent meeting of academics, foundation officers and nonprofit leaders in LA to think about ways to forecast and track progress in the region, the group was divided over whether to focus on actors and outcomes in a certain field, such as health or education, which seemed more practicable, or to try a more holistic approach. I and others suggested the group track poverty and outcomes related to it. Our reasoning was that the students who fail, the people who get sick and die for lack of health insurance or health care, the people who suffer homelessness or untreated mental illness, and so on, are, by and large, the poor. Indeed, it is often the very same people who get sick, drop out of school, can’t find work or adequate housing – they show multiple indicators of the sickness of poverty (there is a medical term for this that I can’t recall just now). 

Now raise your hand if at some point in reading this your mind touched on the old saw, “the poor you will always have with you.” ¹ This is often invoked to argue against efforts to reduce poverty. Even assuming that poverty cannot be eradicated, certainly it makes sense to try to lift as many people out of poverty as possible, doesn’t it? You would think so. But unfortunately, many public debates about reducing poverty in the U.S. get hung up on the related issue of reducing inequality, and quickly devolve into arguments over redistribution and the ethics and possibly counterproductive effects of inhibiting the otherwise free flow of wealth to the top, in our trickle-up economy.

Here’s where we get back to how tall we would be if measured by our incomes. The Nottingham study’s emphasis on inequality made me think of this graphic, from a terrific 2006 Atlantic Monthly article on rising inequality by Clive Crook [for the graphic alone; for the full article] is a stunning illustration of the distribution of economic power.

In his article, Crook described a very powerful thought experiment by Jan Ven in which he imagined a parade of people whose heights were determined by their incomes - at the beginning of the parade, people are so small they are hard to see, but by the end, the very rich, like Bill Gates, are so tall you can barely see the tops of their shoes. This illustration, to me, shows that not only would we want to increase incomes for those at the shorter end of the spectrum, but also that concerns about reducing the height of the gargantuan people in the top few percentiles shouldn’t hold much weight – they can easily stand to grow at a slower rate than they have in the past couple of decades. Most importantly, it simply presents a more accurate picture of the disparities than any recital of statistics could.

So how do we in all our diverse subfields and sectors move toward fighting poverty as our common project? And does the push for measurable results, ironically, undercut progress on this larger quest?

Peter Manzo is the director of strategic initiatives for the Advancement Project, a civil rights advocacy organization, and a senior research fellow with the Center for Civil Society in the UCLA School of Public Affairs. Previously, he was the executive director and general counsel of the Center for Nonprofit Management. 

Posted by Katie Harrington

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