Friday, May 29, 2009

World of Shoulds?

"Ms Novogratz dismisses those such as Jeffrey Sachs...who think the bottom billion are too poor to be treated as customers.'When Jeff Sachs says every poor person should receive a free bed net, I agree--but in reality many end up not receiving one...And I don't live in a world of shoulds.'"

"Face Value:Jacqueline Novogratz, Acumen Fund's Patient Capital," The Economist, May 23, 2009.

I suspect the most hardnosed of social investors still get motivated, if only on occasion, by the "world of shoulds." How could they not? They are just not waiting for the world to wake up and suddenly do the right thing while ignoring real opportunities in the here and now.

Yet market-based approaches like the Acumen Fund that invest in ventures that serve the poor face their own hurdles and skeptics. "It's improvised approaches...cannot be scaled up and are therefore not up to the task of tackling global poverty." Evoking "scale" is as bad as the "world of shoulds."

Of course these are not either/or options, but advocates and protectors tend to make it seem that way. What I like best about the Acumen Fund is its use of the investment approach and market forces to leverage change.

"...Acumen uses measures,however imperfect, that 'take the pulse of the patient' so that necessary strategic changes can be made on the fly rather than waiting for a 'thorough autopsy' when the venture fails."

Putting aside the forensic analogy,this is good advice for all nonprofit and social venture investing along with the caution that "performance indicators can provide a false sense of precision."

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