Acumen's New Model for Third-World Aid

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Villagers competed to sign up the highest number of new clients. Mishra offered franchise opportunities to the winners. It was critical that each entrepreneur was part-owner, according to the franchise model, rather than simply an employee. The goal was to generate successful local businesses in villages.

In Drishtee, Acumen saw potential for providing health-related services to villagers. Mishra had 1,000 kiosks up and running, but he needed more resources to increase the number of kiosks and provide new services in existing ones. Size was crucial to generating growth, revenues, jobs, and wealth in villages. Enter Acumen, which made a $1 million equity investment this year. In 2007, Acumen will loan $600,000 to Drishtee for new kiosks. It's now opening three daily, and plans to expand to 10,000 in two years. Mishra's eyes are full of resolve, his voice quiet, as he says: "That's less than one-tenth of my vision for this business."

Design for Change

It's the same unswerving vision that Novogratz brings to Acumen. She's a powerhouse with a gift for pulling together disparate people and subjects—financiers and aid workers, say—to come up with cohesive new ideas. During frequent trips to visit Acumen companies, she writes in her journal nightly, jogs daily, and makes time to have coffee with everyone from Goldman Sachs (GS) partners to Kenyan health-care workers.

Novogratz is the oldest of seven children in a close-knit family. She worked her way through the University of Virginia and then took a job with Chase Bank. By the time she reached her mid-20s, she had left Chase to go to Rwanda, where she worked with local women to start a bakery. When she later returned to the region, after the 1994 massacres, she found only a patch of green paint where the bakery had once stood.

Committed to learning more about how social change happens, Novogratz earned an MBA from Stanford University. At the Rockefeller Foundation, she launched The Philanthropy Workshop, a program to teach rich people how to put their charitable dollars to good use. In the mid-'90s, Novogratz spent two years distributing more than $100 million in New York City on behalf of an anonymous donor. It was harder than she had imagined to find programs that could use the money to make a real impact. That gave her the idea to start a nonprofit that would use design to shape new kinds of solutions, as well as capital markets to finance them. Eventually, Acumen was born. Several prominent philanthropists, along with the Rockefeller Foundation and Cisco Systems, agreed to seed the project.

Lending to Women

Acumen's most crucial contribution to companies isn't money. It's the ability to see old problems with fresh eyes and design new solutions that work. Drishtee has put those skills to great use. Last April, Novogratz paid a visit to Mishra's office near Delhi. She sat down at the table and asked him: "Where do you need help?"

"It's the women," he replied. "They make better kiosk owners because they open earlier and stay open longer." The problem was that many banks in India don't lend to women.

On returning to the U.S., Novogratz made a call to the Nike Foundation. She had already been in conversation with director Maria Eitel. Acumen received an immediate grant of $250,000. It gave $50,000 to Drishtee to train village women in basic business skills. Acumen is now in talks with an Indian bank to use the remaining $200,000 as a five-to-one guarantee toward a million dollars in loans. "We said: 'Look, we'll take the first 20% of your risk because we want to prove to you over the next three years that women are indeed bankable income,'" says Novogratz.

Searching for Incentives

It's a new solution to a complicated problem made more difficult by the complex government and business systems of India. But that's the benefit of design thinking. Rather than beginning with the structures at hand and making assumptions about what is possible, Acumen begins with the needs of the truly poor. And in Uttar Pradesh and other impoverished states, more women will follow Garima Devi's lead as she adds more services to her Drishtee Telekiosk, focusing on her own customers.

Hempel is BusinessWeek's Innovation editor in New York.