When talking with people inside the “base of the pyramid” (BoP) community, I often hear strong opinions about how BoP ventures should be set up. Some people strongly support registering these ventures as for-profit entities, while others maintain that BoP activities can start out as non-profits and transition into formal businesses later.
There is no one answer, and this is not a straightforward discussion. The legal and financial implications of a for-profit vs. non-profit organization are myriad, and I don’t claim to understand them all by any means.
Thankfully, a new article in the Stanford Social Innovation Review explores the tension between for-profit, non-profit and hybrid structures. The Funding Gap - written by Jeff Hammaoui, Eliot Jamison and Michael Chertok...
Housing portfolio manager Helen Ng is part of the CGAP Working Group on Housing Finance for the Poor, a group of donors and practitioners who share learnings and best practices in the sector. As part of that shared learning, Helen authored a working paper on housing finance and guarantees for base-of-the-pyramid markets, which you can see here....
At Acumen Fund, our focus on metrics has become an integral part of everything we do. Understanding the social impact and financial performance of our investments is critical to informing our portfolio decision-making process and providing support to our investment enterprises. Over the past few years, building on other established approaches, we have worked to develop a methodology for assessing our investments that is practical, understandable and useful to our ongoing work.
This concept paper outlines an analytical tool we affectionately refer to as BACO (for best available charitable option) that helps us to understand the social impact and cost-effectiveness of our investment, as compared to other charitable options that address the same issue. It continues to be a work in...
A few weeks ago, I wrote a post entitled “Lacking urgency” that discussed the importance of waking up individuals to tough global issues - and presenting constructive solutions, not simply overwhelming. Roshaneh Zafar, President of Kashf Foundation and an Acumen Fund investee, recently sent out the following letter and study, demonstrating the kind of leadership that we need. This is an important paper - a frank accounting of lessons learned in delivering banking products to the poor. Roshaneh’s is also an important voice for encouraging open and honest knowledge sharing and we’re proud to be working with her.
Dear Colleague,
As you are aware, Kashf is always geared towards enhancing understanding and improving information in the microfinance sector in Pakistan....
This past May, two members of the Water Portfolio Team visited Kenya, Uganda and South Africa, to explore investment opportunities and learn more about the major water challenges. During the trip, we gained important insights into the context for water and sanitation issues. On the one hand, in the face of significant unmet need, we constantly saw potential for entrepreneurial models. On the other, due to significant dependence on donor funds and systemic challenges such as corruption and lack of infrastructure, we witnessed major hurdles that could easily limit investment opportunities. Through a series of meetings with a cross-section of entrepreneurs, banks, not-for-profits or NGOs, foundations, donor organizations and community-based organizations (CBOs), it became increasingly clear...
Yasmina Zaidman, our Water Portfolio manager, was recently in Delhi during the bombings. Here she shares her immediate reaction and reflections…
Within the last few hours news began streaming in that seven bomb blasts had gone off in Mumbai, killing more than a hundred people and injuring many times that number. As I sit in the Delhi airport waiting for my flight home, the numbers are being updated. Now it’s eight bomb blasts and 146 killed. Some of my fellow travelers are glued to the screen, and trying to get calls through to loved ones or colleagues, while others seem indifferent, as though this is business as usual. As far as I know, this is the biggest bombing since a series of blasts in 1993. I have been reading about the previous attacks in a current bestseller,...
Yasmina Zaidman, our Water Portfolio manager, was recently in Mumbai during the bombings. Here she shares her immediate reaction and reflections…
Within the last few hours news began streaming in that seven bomb blasts had gone off in Mumbai, killing more than a hundred people and injuring many times that number. As I sit in the Delhi airport waiting for my flight home, the numbers are being updated. Now it’s eight bomb blasts and 146 killed. Some of my fellow travelers are glued to the screen, and trying to get calls through to loved ones or colleagues, while others seem indifferent, as though this is business as usual. As far as I know, this is the biggest bombing since a series of blasts in 1993. I have been reading about the previous attacks in a current bestseller, Maximum...
This past May, two members of the Water Portfolio Team visited Kenya, Uganda and South Africa, to explore investment opportunities and learn more about the major water challenges. During the trip, we gained important insights into the context for water and sanitation issues. On the one hand, in the face of significant unmet need, we constantly saw potential for entrepreneurial models. On the other, due to significant dependence on donor funds and systemic challenges such as corruption and lack of infrastructure, we witnessed major hurdles that could easily limit investment opportunities. Through a series of meetings with a cross-section of entrepreneurs, banks, not-for-profits or NGOs, foundations, donor organizations and community-based organizations (CBOs), it became increasingly...
A few weeks ago, I wrote a post entitled “Lacking urgency” that discussed the importance of waking up individuals to tough global issues - and presenting constructive solutions, not simply overwhelming. Roshaneh Zafar, President of Kashf Foundation and an Acumen Fund investee, recently sent out the following letter and study, demonstrating the kind of leadership that we need. This is an important paper - a frank accounting of lessons learned in delivering banking products to the poor. Roshaneh’s is also an important voice for encouraging open and honest knowledge sharing and we’re proud to be working with her.
Dear Colleague,
As you are aware, Kashf is always geared towards enhancing understanding and improving information in the microfinance sector in...
I’ve been privileged to have been invited to the Fortune Brainstorm event this summer. One of the questions participants were asked to answer pertained to the world’s biggest problem and what we fear most. I was intrigued by this and asked the Acumen Fund team to discuss it as part of our weekly meeting.
All of us agreed that the biggest problem – and certainly what we most fear – is the lack of urgency, the numbness in too many leaders and individuals when it comes to recognizing – and doing something – about forces in the world that could lead to significant global instability. The world faces a rising and increasingly treacherous gap between rich and poor, terrorism, and a climate crisis that could literally be the endgame. In our lifetimes, it is not unlikely that...
At the TED conference, Peter Skillman of Palm spoke about the power of creativity and quick prototyping. He has given the following test to various groups, including groups of kindergarten students and also MBAs from top U.S. schools. The group is given spaghetti, string and tape and given the instruction to create a free-standing structure to hold a marshmallow on top. Over and over, the kindergarteners aced the game, and the MBAs scored on the lowest end of the spectrum. Why? The kindergarten kids didn’t worry about rules and hierarchy and procedures but just got down to the work. It was messy, and there were more mistakes but the children got it right. We need more experimentation, more just doing things on a small-scale level quickly, learning from mistakes and doing again to...
The challenge of structuring appropriate Acumen Fund housing investments is that they do not – cannot – look like traditional real estate development projects. The population we target does not have the disposable income needed for 15-20% equity down payments, and often the full family’s monthly income flow is insufficient to carry a very large mortgage. This means that we are looking for innovative financial structures, or small-scale projects that have primarily demonstration value. These features translate to higher lending risk, which causes most property lenders to step back from commitments. Acumen Fund’s strength in bringing commercial lenders to the table is that we have a higher threshold for risk then other institutions, and thus are in a position to leverage their...
Excitement around China and India were major themes of Davos. Who will be more successful most quickly? What will it mean for the US? For Europe? Does foreign investment have a direct correlation with economic success? These questions were raised in many sessions.
It is time to celebrate the enormous progress of both India and China. At the same time, while Africa is finally on the map of a greater collective conscience, it is still seen in a much more marginal way that smacks of despair rather than celebration.
Too many people are still talking in terms of teaching men to fish in Africa. I have never met a person who lives near water in Africa who doesn’t know how to fish. What is needed instead are better technologies and design innovations to make their fishing more...
Maybe because I was grouped with the “design” participants, another key learning from Davos was this: Innovate, design, and problem-solve based on the voices and concerns of the people you want to reach and serve. Boundaries are blurring, the divides are increasing (based on perception if not reality). So the road to workable solutions lies with starting with who you want to reach and not bringing a top-down solution to their problems. The world is readier than ever for new approaches that are created from the bottom-up. The high number of designers who were exploring such issues is a testament to how far the world has come. We are learning a lot about the poor. We now need to be more effective in building systems that allow them to make their own decisions and......
Perceptive reality was a theme that appeared over and over at the WEF meeting. People make decisions in their lives based on their own world view as well as their own sense of fairness. Whether economic disparity is truly increasing or decreasing is much less important than the perception that not only is it increasing more quickly than ever but that some people are being left entirely out of the global economy. This is what matters – whether people believe they have a chance at joining the global marketplace. If they don’t – but see their neighbors or fellow countrymen doing it, then unhappiness sets in. Whether talking about economic disparity or religious tensions, the same holds true, which has enormous implications for getting different religious groups to sit down and...
At Davos, more than ever before, I felt a sense that boundaries between government, the private sector and the nonprofit sector are blurring to much positive effect. If corporations used to think about Corporate Social Responsibility in terms of good brand marketing, they now are looking at it with a much stronger focus on metrics, a reminder of what they are trying to do. Nonprofits, on the other hand, are adopting better business practices, are speaking the language of markets and are searching for new capital formation strategies and partnerships to extend their reach and make their work more effective. If any sector was less evident at Davos, it was the public sector. However, we need government not only to scale different interventions, but more important, we need government to...
Happy New Year! A column about innovation in designing products for the poor appears in the International Herald Tribune. It’s very much in keeping with the Acumen Fund philosophy that the poor should be thought of and treated as consumers — solutions must be designed with their needs and constraints in mind. The article highlights the importance of the ruthless pursuit of affordability (sometimes forgoing fancy technology for simplicity) in designing technology to improve the lives of the poor.
Definitely worth thinking about as we move into 2006. ...