The Blue Sweater

We made the grant and a year or so later, I visited again to see what had happened. Dr. V. walked me into one of the teaching classrooms in the hospital. The brightly lit room with wooden floors was filled with eager young medical students who stood when their revered teacher walked in. On the wide screen at the front of the room were live video feeds of four other classrooms in different parts of India, and in each of those rooms, the students stood for Dr. Venkataswamy, as well. Another doctor then took the floor, showing how to operate on an eye. Students in all four cities could see exactly what he was doing as if they were all in the same room.

Later that afternoon, I watched the doctors at Aravind diagnose the damage a swipe from a stick of sugar cane had done to the eye of a farmer who was sitting 300 kilometers away. The weathered farmer was terrified that he had lost sight in both eyes, which was tantamount to a death sentence: Blindness meant loss of the ability to produce income. The good doctors at Aravind could see that his healthy eye was having a “sympathetic reaction” and would return to normal after the wounded one was properly treated.

The cost to the farmer for this consultancy with some of the country’s best doctors was an affordable few rupees: This could indeed be revolutionary. By 2008, telemedicine would be part of Aravind’s normal business. It had been integrated into 16 vision centers in rural villages, each providing about 50,000 people with access in places where individuals previously had no access to high-quality eye care—and Aravind was treating about 150,000 patients a year. But 7 years previously, it had been only an idea—with a powerful team of entrepreneurial, results-oriented people behind it.

By the fall of 2001, we had identified other social entrepreneurs and were feeling more confident that a pipeline of talent existed and that there was power in our model. We’d also found new offices across the street from Trinity Church at the end of Wall Street. I loved the symbolism of the new location, for Acumen Fund would be built with both a hard head and a soft heart. I loved that church bells rang every 15 minutes, which would remind me of time passing and call me to be more present with the work we did. I liked that we would be right next to the World Trade Center, for our dream would be about all of humanity and our collective future.

We were set to move in on September 11, 2001.
 

During the first year of Acumen Fund’s existence, we looked specifically for health care technologies, thinking technology was a key driver of innovation for issues of poverty, an approach Dr. V. understood. For the first 30 years of Aravind’s existence, the surgeons would simply remove patients’ cataracts and give them thick glasses to enable them to see again. When the intraocular lens, which is inserted right into the patient’s eye, was invented, Dr. V. knew this could revolutionize eye care. But the price, at about $140 in 1990, was prohibitive—and he’d learned that systems requiring the poor to wait for charity or government services would leave most of them waiting for a very long time.

The question for Aravind, then, was how to manufacture an intraocular lens that was priced to make eye surgery affordable to the greatest number of people, and ultimately, the organization developed a lens as good as any on the market at a $10 price point. Though the very poor still would be unable to afford this, a business model could be developed to make intraocular lens transplants accessible to huge numbers of people without depending on great amounts of charity or government support.

Early in the development of Aravind’s lens (through its for-profit technology company, Aurolab), Dr. V. was approached by a pharmaceutical company that offered to purchase it with the intent of selling the lenses for $60 each, which would cut the existing market price by more than half. Though the sale would have provided major revenues to Aravind, Dr. Venkataswamy refused the offer, for his goal was to ensure affordability not to the middle class, but to the very poor. He knew the poor would never be able to afford anything near $60 and wanted to find a way to manufacture the lens for less than $10. Today, Aurolab is one of the world’s largest manufacturers of intraocular lenses, exporting to more than 120 countries and selling the lenses for less than $2 apiece.

Aravind’s simple business model was based on a sliding-scale pricing system whereby wealthier people paid the full cost of an operation and the poor paid a token amount or nothing if they were truly destitute. No one was turned away. …

When we asked how Acumen Fund and Aravind might work together, Dr. Venkataswamy’s team … suggested we provide a grant for an experiment in establishing a telemedicine unit so that farmers in the field could have their eyes examined without traveling hundreds of miles to the main hospital. Aravind also wanted to use telemedicine as a teaching tool because it worked through five hospitals and wanted all of its students to learn from the best doctors, wherever they resided.

Telemedicine was a fairly new innovation at the time, especially in low-income areas. Essentially, it was a means of connecting doctors at a distance to patients through a computer with video capability. Given how far most rural villages are from high-quality hospitals, we intuitively understood the power of providing low-income people with access to talented doctors; however, we were unsure of how to build a business model that would enable Aravind to cover its expenses.

“Let us try and that part will come,” Dr. V. assured us.
 

I met Dr. Venkataswamy on a hot afternoon in the tiny Madurai airport in the state of Tamil Nadu, in South India. He was about 80 then, and I’d heard he suffered from rheumatoid arthritis. What I hadn’t expected was the spirited lightness of this fine-boned, white-haired man with leathered skin. As he stood, a baseball cap on his head, he clutched a wooden cane with his mangled hand and I saw that he’d adorned one finger with a gold ring above the knuckle. This detail, in combination with his broad smile, reminded me of John Gardner: Dr. Venkataswamy was also full of sparkle, a walking example of integrity, and he saw beauty everywhere.

“You didn’t have to come and get me yourself,” I laughed upon introducing myself.

“Why not?” he asked. “You are our guest and I am happy to know you.”

Dr. V.—as he was usually called—surprised me again by getting behind the wheel to drive me to the guesthouse. He swerved in and out of the traffic like a teenager, beeping the horn at least 15 times per minute as he talked incessantly about his model for change. I listened with amazement, trying to soak in the scene, feeling a sense of openness just by being near him.

“We run Aravind like McDonald’s,” he explained, “clean and organized, with every process known and understood so that we get maximum efficiency. Two-thirds of the patients pay nothing or nearly nothing, and yet the hospital is consistently profitable—and growing.”

“How do you do that?” I asked, focusing my eyes on him, trying not to be distracted by the animals and the trucks and the children running in the dusty streets.

“We have these systems that I was explaining to you,” he said, “and we simply don’t turn anyone away. You will see how it works.”

First we drove to the organization’s guesthouse on a quiet street a few blocks from the hospital. It was a pristine building with cool white marble floors, a small eating area, and individual rooms upstairs. Mine had a bed and a ceiling fan, a small closet, and its own tiny bathroom. Pictures of Sri Aurobindo, the spiritual leader Dr. Venkataswamy followed, hung on the wall. Everywhere you could feel a sense of quiet, respect, discipline, and grace.

The hospital itself was a lot busier, though a sense of groundedness and calm was pervasive. The 1,700 young women workers all wore saris in different colors, depending on the function they performed. I saw one doctor gently help a disheveled woman settle her sari more modestly on her frail, thin body. The pure grace in the doctor’s interaction with the woman made me want to cry—this was the kind of compassionate care that is too often missing in US hospitals. For Dr. Venkataswamy, how you did things was as important as what you did, and he believed that great strength and spiritual fulfillment can come from the divine nature of work done well.
 

The biggest early challenge our new little team faced was finding the entrepreneurs and ideas in which to invest. We had decided to start in health technologies with a focus on India and East Africa. I assumed that with our connections to foundations and the United Nations we would have no problem identifying social entrepreneurs in whom we could invest. We were looking for ventures with visionary leaders who were using business approaches to solve big social problems. Their enterprises were to demonstrate the likelihood of financial sustainability and hold the promise of reaching a million customers over time. We figured that in an area like health care and a geography that encompassed more than a billion people, we’d have no problem identifying “pipeline opportunities.”

We were wrong. We talked to countless people, asking for advice and connections. Many pointed to wonderful innovators who were working at the community level but didn’t give us confidence their ideas would actually grow, or scale in our language of business. We hired two summer interns who spent long days surfing the Internet, trying to identify possible candidates. Ultimately, we reviewed more than 700 enterprises, and none fit our three criteria of leadership, sustainability, and scale in part because we limited ourselves to the nonprofit sector that first summer, where we had greater contacts.

By the end of the summer, we were in a bit of a panic, and a wise CEO of a health care company gave me advice I will never forget. “Just start,” he said. “Don’t wait for perfection. Just start and let the work teach you. No one expects you to get it right in the very beginning, and you’ll learn more from your mistakes than you will from your early successes anyway. So stop worrying so much and just look at your best bets and go.”

Still, I argued, our vision depended on finding the right social entrepreneurs.

“So find the best entrepreneur you know and start from there.”

A leader who represented our ideal was Dr. Govindappa Venkataswamy, who founded the Aravind Eye Hospital in Madurai, India. When this extraordinary man retired in 1976 at age 58 from India’s Civil Service as one of the country’s most lauded eye surgeons, he decided to found an eye hospital to help rid the country and then the world of unnecessary blindness. Indians suffer blindness disproportionately because of the higher incidence of diabetes among both adults and children, a result most probably of genetics and diet. The fact that millions in India are blind did not intimidate Dr. V. from starting an 11-bed hospital in a simple house.

Today, Aravind Eye Care System examines more than 2.3 million patients a year, performing more than 280,000 cataract surgeries that restore sight to people regardless of their capacity to pay. Each doctor performs, on average, 80 surgeries a day. The US average, in comparison, is six. If ever there were a social entrepreneur who fused tough discipline with powerful compassion, it was Dr. Venkataswamy. We decided to meet with him and see what innovation he might be undertaking.
 

Changing the lexicon was the next hurdle. Traditional charity speaks of donors and grantees, but this passive language creates a power dynamic that might as well call the two groups the givers and the takers. I had seen so many dysfunctional conversations where a grantee would give a would-be or existing donor misleading and evasive answers because they feared losing funding if they told the truth about the difficulties of their work. And I’d seen those same grantees agree to do things the donors thought they should, even if it made no sense for the mission of the organization. It is hard to say no to someone who has the power to finance your dreams—or more to the point, your payroll.

I also took issue with the practice of donors typically funding only programs instead of institutions. “I want to be certain that all of the money goes directly to the people who need it most,” prospective donors would tell me. That is a fine strategy for providing alms or direct charity. At the same time, no one would invest in a company and not expect it to pay for hiring great people, paying the rent, and keeping the lights on. We needed philanthropists to build powerful institutions in the social sector, too.

We committed ourselves to changing the traditional donor-grantee relationship. Our donors would be called investors. They were still giving us charitable gifts, of course, but we wanted them to think of themselves as investing in change, of taking seriously how their money was spent. We wanted to build incentives for more honest conversations; in fact, we would ask for big gifts to help build a real organization and then promise to tell them about failures as well as successes. After all, as investors, they were betting on long-term results and should feel like owners who would go through the ups and downs with us, just as they would with a company. I would tell them, “You don’t get any money back from your investment. You get change."

While we had the luxury of starting Acumen Fund with significant institutional funding, we felt it would also be critical to build a community of individual investors from the start, people who would commit not only money but also their time and connections to the work. …Finding the first 20 [“Founding Partners”] was, of course, much harder than we’d imagined. More than a few Wall Streeters explained that they kept a strict division between the way they made money and the way they gave it away.

“You are trying to do both at the same time, and it will never work. Businesses operate for profit alone, and that is how they make good decisions,” an investment banker told me one summer afternoon. “Your idea of combining business and philanthropy not only won’t work, it is misguided.” Needless to say, he didn’t contribute.…

With practice, as the message became clearer, I could discern more quickly which individuals would help and which ones were more focused on finding excuses rather than working on solutions. I also relied on my good friends to make me laugh and keep the big picture in mind after too many days in a row of hearing nothing but “no, thanks, but good luck.”

Ultimately, the money came, at least as much as we needed in the early years. It is only now that I realize the true debt of gratitude I owe to each of the early adopters of this innovation, those first 20 founding partners, along with the Rockefeller, Cisco, and W. K. Kellogg Foundations, for they took big bets on what may have seemed—at least to some—an unlikely dream, but one which, if brought to fruition, could actually contribute to changing the face of philanthropy.
 

I began to think of what we were launching as a venture capital fund for the poor. We would raise charitable funds, then invest equity, loans, and grants—whatever was needed—in organizations led by visionary entrepreneurs who were delivering to low-income communities services such as safe water, health care, housing, and alternative energy sources. In addition, we would provide them with wide-ranging support on everything from basic business planning, to hiring managers, to helping them connect to markets. We would measure the results of our investment not only in the capital flowing back to the fund, but also—and more importantly—in the investment’s social impact. Any money returned would then be reinvested into other enterprises that served the poor.

In the beginning, many people thought we were talking about microfinance, but the organization would be very different. We would not make tiny loans to women, but would invest hundreds of thousands or even millions of dollars in enterprises that aspired to reach at least a million customers. My passion was using business models to create effective, sustainable systems where government or charity alone had failed poor people. By investing in private innovation, we hoped to understand how best to make essential services accessible to all and to help lead the way to better models for solving public problems. …

By early 2001, we had a business plan in hand and had raised more than $8 million, but hadn’t yet named the organization. One of my favorite lines in literature is from a work by Tillie Olsen: “Better immersion than to live untouched . . . Yet how will you sustain?” I’d considered naming the organization Immersion. After all, doing this kind of work would require using all parts of ourselves—our heads and our hearts. And we would need moral imagination to put ourselves in the shoes of other people. It would mean having the courage as well to fall down and get back up and try to make progress all over again.

Though most women were comfortable with the name Immersion, men’s reactions were typically to reject it, thinking it sounded too soft and murky. So I invited a group of friends and colleagues to a “naming dinner” at the Rockefeller Foundation, where we generated a long list of names for this new entity that would bridge different worlds, all with a focus on smart, strategic, targeted philanthropy.

My brother Michael, with whom I’d been in conversation since childhood about how to change the world, worked on Wall Street. He matched my sincerity with an edgy humor, suggesting that the name should be something like “Ain’t Your Grandma’s Philanthropy.” As the wine flowed, the names became sillier. By the end of the evening, our group had amassed more than 400 names, most implausible, all creative and full of life. Something in this new idea was capturing people’s imagination. Finally, with the help of my friend Antonia, who worked with a fledgling Internet company, we decided on Acumen Fund, a label we hoped would signify thoughtful, insightful, smart, and focused change—precisely what we were after.
 

The solution lay between the market and the traditional philanthropic model. For 20 years, I had been apprenticing, gathering tools while watching extraordinary individuals like Muhammad Yunus of Grameen Bank, Mary Houghton and Ron Grzywinski of ShoreBank, and Bill Drayton of Ashoka, learning to recognize other entrepreneurs and build networks of people who were capable of bringing about change. Now was the moment to stand on their shoulders and move.

I had been working on several concepts with a small group of committed philanthropists, most of whom had been members of the Philanthropy Workshop, the organization I’d founded at the Rockefeller Foundation. Cate Muther, former vice president of marketing for Cisco Systems, had conceived a technology portal to help change and facilitate philanthropy. To pursue the idea, she held regular meetings with Stuart Davidson, a venture capitalist interested in the role of business in social change; Roberta Katz, former general counsel for Netscape; Tom Reiss of the Kellogg Foundation; and Tae Yoo, who had recently been appointed to lead Cisco’s philanthropic work. It was an honor to be a part of this group who gave so much of themselves and were never short of new ideas.

Then an appealing alternative arose. The chief operating officer of a major financial institution approached me about building a philanthropic program for their clients worth at least $100 million. In the era of the dot-com boom, the circle of extremely wealthy people was expanding, and many were looking to do something im-portant with their philanthropy. Here was a chance to help them. Moreover, the salary on the table was seven times what I’d been earning at the Rockefeller Foundation.

I was torn between the freedom to build exactly what I wanted on the one hand and the certainty of access to power and a real level of financial resources on the other. I had no money, no organi-zation, and was facing a world of risk in striking out on my own. Having the backing of a prestigious institution with all the trap-pings—salary, title, and access—was very appealing. Though I had never made a decision based on income or title before, this was a new level of each.

Though either choice was good, one was truer to myself. Recently, a 71-year-old entrepreneur defined his breed as “the most stubborn and persistent people in the world. Entrepreneurs see possibility, an idea, and won’t stop, regardless of the obstacles, until they make it happen. They aren’t necessarily the smartest people in the world, but they are the ones who have the guts and the heart to do whatever it takes to make dreams come real.” Then he added with a knowing smile, “They aren’t always the easiest people to work with, either.”

Seeing many of these qualities in myself, I knew I was more suited to trying to build something from a place of freedom and innovation. I thought of Aristotle’s reminder not to confuse means with ends: If title and money could be conferred on me, they could also be taken away. ...Ultimately, I reflected on Goethe’s invocation to “make a commitment and the forces of the universe will conspire to make it happen” and chose the uncharted path.
 

“In the course of history, there comes a time when humanity is called to shift to a new level of consciousness, to reach a higher moral ground. A time when we have to shed our fear and give hope to each other. That time is now.”
—WANGARI MAATHAI

In the final years of the 20th century, the dot-com boom was in full swing, 20-something-year-old millionaires were being minted on a daily basis, and interest in philanthropy was on the rise. At the end of 1999, I was sitting with the new president of the Rockefeller Foundation, Sir Gordon Conway, in his 22nd-floor office overlooking Manhattan, sharing my frustrations about traditional philanthropy, remarking that it often lacked clear measures and accountability and seemed at times more focused on making donors feel good than on effecting change.

The world needed a new kind of institution, I said, one built on the best lessons and precepts of philanthropy but also utilizing business approaches and concepts. I’d seen the rise of socially oriented companies and felt that deep changes were under way in both business and philanthropy. Leaning back in his chair, he looked at me as I spoke, listening intently, one eyebrow raised in a way that communicated either interest or skepticism, or perhaps a little of each.

I was breathless with excitement, dreaming about a different kind of “fund,” one that would amass philanthropic money, have the flexibility to make grants or investments in both nonprofit and for-profit organizations, take a few big bets on enterprises that delivered critical services to the poor, so to ensure low-income communities could actually be part of the solution. We would build more transparency and greater accountability into the work at all levels and treat the poor as customers with a real voice, not as passive recipients of charity.

“How different is it from the work of foundations today?” he asked.

“The biggest difference,” I said, “is that we wouldn’t simply make grants, but we would invest in entrepreneurs who have vision and the ability to solve local problems with market-driven ideas and approaches. We would hire creative people with the ability to read financial statements and balance sheets, not just budgets. We wouldn’t focus on specific ‘projects,’ but instead direct our efforts toward building strong organizations that we would gradually help bring to financial sustainability.”
The philanthropic sector was already changing—the very word “philanthropy” felt outdated. The lines between the private and philanthropic sectors were beginning to blur: As more companies integrated a charitable mission into the very way they did their work, more nonprofits would become more businesslike, and more individuals would pursue second careers in giving back. The Rockefeller Foundation had been at the forefront of inventing philanthropy in its early days, and now it had a chance to help reinvent it.