Non-profit Management

1 Non-Profit Management Non-profit organizations exists to meet a tangible need and solve societal problems for the common good of the community. Unlike for-profit organizations, their priority is to facilitate the wellbeing of the world and not to generate revenues and profits. They get funds to run their operations from donations, grants and sales. Non-profit organizations provide resources, goods and services to areas that would be unattractive from a profit perspective to businesses. Every day people such as Jacqueline Novograts, the founder of Acumen Fund, start non-profit organizations because they have decided to make a change by solving a problem that plagues society. This paper examines her autobiography, ‘The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World’ (Novogratz, 2010). It describes her story and the role of non-profits in helping to alleviate societal problems in developing nations. It also outlines whether non-profits are able to achieve their objectives and if not, the challenges and obstacles that hinder their success.

The Blue Sweater The autobiography begins with a story about the blue sweater which was a gift from her uncle. She loves wearing the sweater to school but when she is picked on by one of her classmates because of it, she decides to donate it to the Goodwill.

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2 Over a decade later, when she is in Rwanda to start a microfinance institution, she sees a boy wearing a similar blue sweater and on checking the collar, her name is written on the collar; it is her childhood sweater. This incident reminds her that everyone in the world is interconnected in one way or another and also renews her will to reduce the levels of poverty in less-developed countries.

Novogratz career journey begins as a high-flying Wall Street banker in the 1980s. She works at Chase Manhattan Bank where her role is to review the loans issued by the bank to troubled economies across the world. On a working trip to Rio de Janeiro she saw extremely poor people living next to extremely wealthy people and this made her realize the depth and impact of economic inequality. Touched by the predicament of the poor, Novogratz asked her boss at Chase to create a loan facility for poor people who, unlike the wealthy, do not have access to opportunities for economic empowerment. Her boss rejects her idea claiming that lending extremely poor people money is a high-risk venture that would affect the bank’s performance negatively. Despite her successful career in the banking industry, she feels convicted to help the poor and most vulnerable people in the world. She therefore resigns from her position at Chase and accepts a new role at a nonprofit of the African Development Bank where her work is to help poor communities in Cote d’Ivoire achieve economic development. Initially, her career in the nonprofit sector is made challenging by the fact that she is shunned by African women leaders who feel that it is unfair for the job to be offered to a young American woman instead who has little or no knowledge of African problems (Acumen Fund, 2018). Her career in the nonprofit sector takes her to various developing countries such as Kenya, Cote d’Ivoire, Rwanda, Gambia and Tanzania.

3 She recounts in vivid detail her work in Rwanda where she works alongside Rwandan women leaders to establish a microfinance organization whose aim it to empower Rwandans economically. She immerses herself fully in this role, evidenced by her attempts to teach the seemingly reserved Rwandan women how to become more aggressive at sales and making decisions pertaining the business. She also struggles with making borrowers realize that they have a responsibility to pay the money lent by the microfinance institution. However, after some months on the job, the Rwandan women become more prudent about financial matters.

Of her role in teaching women how to take control of the financial aspect of their lives, Novogratz says that it transformed them. It gave them freedom, confidence and choice. This ultimately translates to a more dignified life. From this experience, she learned that to lift poor communities out of poverty it was important to provide them with tools and for selfsufficiency.

Novogratz, in chapter 6, discusses the role of systemic corruption in the failure of women’s development projects in Kenya. Government officials often complicated the process of giving grants and when they did, they would require a hefty kickback. She also notes that several donor projects that initially seemed viable eventually collapsed because the local people did not have the knowledge and funds to sustain them. From this experience, Novogratz learned that a corrupt system deterred the progress of its poor communities.

After two years in Rwanda, she returns to the United States where she learns that she has been accepted for an MBA program by the Stanford Graduate School of Business (Novogratz, 2010). In the 9 months before the commencement of the MBA she secured a contract with the World Bank in Washington D.C. to run a project in Gambia. In this chapter, she describes the massive pilferage of resources and donations by state officials and civil

4 servants that she witnessed. Development agencies and nonprofit agencies would donate money to causes that needed funding in Gambia in the hope that it would help to alleviate poverty. However, this money would often end up in the pockets of a few corrupt individuals and as a result the development projects would often stagnate. She proposed that to truly help the poor communities, the financial grants should be given to social entrepreneurs to serve their fellow citizens. Government officials rejected her idea because they realized that it would work against their selfish interests.

After her short stint in Gambia, Novogratz went to graduate school where upon completing her studies, she became a fellow of Rockefeller Foundation Warren Weaver. In this role, she trained philanthropists how to identify causes that were worth assisting, and how to provide sustainable aid to complex problems. While on a trip to Cambodia for a philanthropy seminar, she meets a Buddhist monk who advises her that to gain wisdom, she needs to use be both compassionate and wise.

Novogratz traveled to Tanzania for a month to review a microfinance project where she learned that most of the donor programs implemented were unsuccessful and did not reduce the levels of poverty. She realized that traditional methods of providing aid did not work because women needed more than financial aid to start businesses, they also need healthcare and education. She returned to New York to continue her work at the Philanthropy Workshop determined to do a better job at ensuring that she developed methods of ensuring that the poverty-alleviation programs developed were effective in reducing the levels of poverty.

Novogratz began the Next Generation Fellows whose aim was to train young people on developing their leadership skills. During this period she also returns to Africa to help in

5 redeveloping Rwanda which was recovering from an atrocious genocide. The genocide took place over a period of three months in 1994 during which over a million people were killed.

She provides a heart-wrenching and sometimes uplifting account of the aftermath of the ethnic cleansing as she realizes that some of her colleagues and people she knew lost their lives in those horrific three months. She also finds out that one of the women she had worked with was in jail for playing a role in inciting and perpetrating violence against a certain ethnic community.

In 2007, she visits the Rwandan microfinance institution that she had helped to set up 20 years back and finds out that it had grown exponentially over the years and changed the lives of thousands of women through providing financial assistance. However, despite the success of the microfinance institution, she also realized that it takes more than financial aid to resolve poverty (Novogratz, 2010). In both developing and developed countries, poverty is a very complex problem that is systematically ingrained through corruption, inequality, lack of access to critical services such as education and healthcare and poor infrastructure (Drucker, 2012). To truly eradicate poverty, it is essential to view everyone whether rich or poor, educated or uneducated, as a person who deserves access to opportunities that will enable them to live a dignified life.

Having realized that traditional aid models did not work, Novogratz envisioned creating a fund that would utilize donations from philanthropists more effectively. She wanted to involve low-income individuals and communities in creating projects that were more suitable for them. With the assistance of the Rockefeller Foundation, she established Acumen Fund in 2001whose objective is to use business and economic empowerment as a tool of social change (Acumen Fund, 2018). Acumen Fund is a venture capital fund which raises

6 funds from philanthropists and provides funding to visionary social entrepreneurs through loans and grants seeking to provide funding to world’s poorest populations. Through Acumen, she has assisted social entrepreneurs in several countries and continents, and as a result has realized her dream to create change in the world.

Acumen Fund provides loans and grants that are used to deliver much-needed goods and services in developing economies such as safe water, education, healthcare, energy and business funding. Additionally, the fund also ensures that entrepreneurs are well supported to accomplish their goals through training, providing managers for their businesses and helping them to access markets. The success of its ventures is measured by the Return on Investment (ROI) as well as their social impact (Novogratz, 2010). Acumen refers to the recipients of its grants as investors to encourage them to consider themselves as people who invest in creating social change. Acumen has helped hundreds of thousands of people access critical services such as quality healthcare, education and low-cost housing which they otherwise would not have had access to.

Novogratz has over 20 years’ experience assisting communities in India, Pakistan and Africa develop and become self-sustaining. During this period, she has learned that while compassion is important in non-profit work, it is not enough to create effective non-profit organizations. Tackling poverty requires the creation of strong frameworks, discipline, accountability and a grassroots approach. Most charities lose money by implementing grand projects without prior consultation with the communities that are supposed to use the facilities. Novogratz has learned that to develop a suitable answer to people’s issues it is vital to listen to and understand them rather than creating huge projects that prove to be irrelevant.

7 In the course of her career in venture philanthropy, Novogratz has learned that civil wars and political instability in developing nations is fueled by economic inequality. The poor continue to become poorer as the rich become richer, usually at the expense of the rest of the society. The middle-class, on the other hand, struggle to stay afloat and rely heavily on their salaries. This creates a society that is frustrated and is easily triggered to fight against each other as evidenced by the 2007 post-election clashes in Kenya. By creating a realistic nonprofit organization model, Novogratz has facilitated the creation of sustainable businesses that suit the local contexts. Since its establishment, Acumen has supported hundreds of enterprises which in turn have created thousands of jobs (Acumen Fund, 2018). This has enabled individuals, families and communities to become financially empowered and access education, healthcare and proper housing.

Conclusion The recurrent themes in the Blue Sweater are poverty, social entrepreneurship, leadership, economic equality and the role of non-profit organizations in developing third world countries. Through the autobiography, Novogratz proves that poverty eradication is possible if governments, non-profits, social entrepreneurs and communities work together to design and implement sustainable change. ‘Blue Sweater’ gives a clear picture of the complexity of poverty/ It also proves that reducing poverty requires the commitment and integrity of leaders as well as the ability to put oneself in someone else’s shoes.

8 References Drucker, P. (2012). Managing the non-profit organization. Routledge.

Acumen Fund. (2018). The Blue Sweater Teaching Guide. Retrieved from http://ashokau.org/wp-content/uploads/2010/12/Blue-Sweater-Teaching-Guide.pdf Novogratz, J. (2010). The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World. New York: Rodale.