a bold new way of tackling poverty - acumen · innovative products don’t make a difference if...

a bold new wayof TaCKlInGpoverTy

that works

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2 aCUMen FUnD ten-year report 1

acumen Fund’s mission is to create a world beyond poverty by investing in social enterprises, emerging leaders, and breakthrough ideas.

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This valley is in rural northern Pakistan, near one of Acumen Fund’s newest investments in small-scale hydropower plants.

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Ten years ago, we created Acumen Fund as a bold experiment to reinvent philanthropy. Aid and markets alone weren’t doing enough to solve the problems of poverty. The world needed a radically different approach – a way to foster innovation, scale solutions that meet critical needs, and support approaches that offer choice and dignity.

From the start, we’ve believed in investing in entrepreneurs who see the poor not as passive individuals waiting for handouts, but as agents who want to solve their own problems. We helped pioneer the idea that investing patient capital could help solve tough problems, provided it focused on long-term social impact rather than short-term financial gain. We understood that social entrepreneurs were creating market solutions in places where none had existed. They needed to fight government bureaucracy, corruption, and a lack of infrastructure while serving people earning very little income. These entrepreneurs would need the flexibility – and time – to experiment, fail, and quickly re-start efforts to innovate. So we developed a model of investing that is driven by impact, a model that looks to financial returns as a means of ensuring sustainability and scale. Because of the risks associated, philanthropy backs this capital. Because of the accountability required, we focus as well on seeing the capital returned.

Ten years later, we believe more strongly than ever that patient capital works.

Since 2001, Acumen Fund has invested $68.5 million in 63 companies. In places where low-income villagers in India had no access to safe drinking water, today more than half a million people are purchasing water at affordable prices. A decade ago, farmers in Kenya had limited access to quality seed varieties. Today, more than a quarter million of them are raising their farms’ productivity significantly with hybrid seeds. Our investments have helped provide high-quality hospital care to more than 200,000 mothers in urban India. Over 3.5 million low-income individuals now enjoy solar light in their homes. And we are just getting started.

In this past decade, we’ve learned that capital alone is not enough. In 2005, we launched the Global Fellows Program to build a corps of leaders with financial skills, operational know-how, and moral imagination. Today, Acumen Fund

Fellows are emerging globally as architects of innovation for the poor. With a growing understanding of the power – and need – of supporting a new kind of leadership, we launched an East Africa Fellows Program and envision thousands of Acumen Fund-inspired leaders working to renew systems of capitalism and government. We also see the need to share insights and lessons from successes – and failures – to mainstream the ideas of patient capital and see Acumen Fund’s role, increasingly, as a true laboratory of innovation for the poor.

We’ve written this report to share our progress, major lessons learned, and our plans for the future. In it are “reality checks” we’ve included as part of our commitment to sharing failures, bumps in the road, and consequent insights that are critical to innovation. We hope it will inspire an open conversation about what it really takes to bring forth effective solutions to some of the toughest problems of poverty.

Ten years have left us more committed than ever to pursuing the dream of a world in which every human being has access to affordable, critical goods and services; has the opportunity to make his or her own decisions; and can solve his or her own problems. We know it will take many more investments in companies, leaders, and the spread of ideas. Ultimately, it will take each and every one of us. I thank everyone who has touched Acumen Fund over the past decade, from our dedicated Board of Directors, global and local Advisors, Partners, Chapter members, supporters from around the world, entrepreneurs and their customers, Fellows, interns, and friends, to every member of the Acumen Fund team. It is a privilege to work with you.

Here’s to the next decade, and to a world where dignity can thrive.

With gratitude and renewed commitment,

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Dear Friends,

a l e t t e r F r o M j a C q U e l I n e n o v o g r at z f o u n d e r & c e o o f a c u m e n f u n d

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j a C q U e l I n e n o v o g r at zf o u n d e r & c e o

1. An investing approach that aims to maximize social impact and seeks return of capital. It is unwilling to sacrifice the interests of the end customer for the sake of shareholders; has a greater tolerance for risk than traditional investment; and has longer time horizons for return of capital.

2. A bold new way of tackling poverty that is about dignity, not dependence, and choice, not charity.

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F M I a C l I e n t, pa k I s ta n

A client of First Microinsurance Agency, which provides life and health insurance for low-income customers in Pakistan.

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A Dial 108 ambulance in Trivandrum, Kerala.

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In InDIaIn 2007, India had almost no high-quality ambulances. If you had a medical emergency, there was no single phone number to call. Nine out of ten ambulances transported dead bodies. Today, Ziqitza Healthcare Limited (ZHL) is changing this with a business model based on an ethos of “Service for All.” When Acumen Fund invested $1.6 million in ZHL in 2007, they operated ten ambulances

in Mumbai. Now they operate 635 in five states across India, providing affordable emergency care through Dial 108, a public-private partnership with state governments, and Dial 1298, a private provider. When customers dial 108 or 1298, an ambulance usually arrives in 15 minutes. That’s what transformational change looks like — and it’s saving lives.

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Innovative products don’t make a difference if they can’t reach the market, or if businesses selling them don’t scale. Services and delivery models can be just as transformative as great products. ZHL shows how operational excellence coupled with existing technology can create a breakthrough business model.

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These three farmers from Bahawalpur, Pakistan are clients of NRSP Microfinance Bank.

In rUral pakIstanIn pakistan, 120 million people depend on agriculture for their livelihoods and 86% of the country’s population lacks access to basic financial services. With Acumen Fund’s support, the National Rural Support Program (NRSP) Microfinance Bank has become the first financial institution in Pakistan to focus on serving rural farmers. The bank helps

farmers grow their businesses with crop and livestock loans, insurance, and working capital, and they’ve pioneered a savings product that already serves more than 100,000 people. NRSP is showing how patient capital can help businesses achieve rapid scale, and deliver social impact in hard-to-reach markets.

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Farms growing Western Seed maize near Kitale in western Kenya.

In kenyasmallholder farmers risk everything each growing season in Kenya, where a failed harvest means serious hardship. Western Seed is helping farmers increase their crop yields with affordable hybrid maize seeds that are resistant to drought and disease and can quadruple yields.

Acumen invested $2.1 million in 2010 to help Western Seed expand production. Today, Western Seed has reached more than 307,000 farmers, and the company is the largest private seed company in Kenya — with big plans for growth.

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In tanzanIaMalaria kills 781,000 people every year. Acumen Fund helped build a world-class production facility for anti-malarial bednets in Tanzania when we provided a $325,000 loan to A to Z Textile Mills in 2004. Led by an incredible

entrepreneur, Anuj Shah, A to Z is now one of the largest companies in Tanzania. They employ more than 7,000 people, produce 29 million bednets per year, and help to keep millions of people safe from malaria.

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We sponsored a study to find out if distributing free bednets creates a cycle of dependency, and if end users would purchase nets. An Acumen Fund-supported research team led by economists Jessica Cohen and Pascaline Dupas discovered that people who need bednets the most usually can’t afford them. Most people won’t pay more than $1 per net, so free distribution is critical.


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Acumen Fund first invested in Pakistan in 2002. Today, we are the country’s largest and most recognized social investor. Our companies deliver financially sustainable and scalable innovations in affordable housing, water purification, and agricultural credit products, providing new choices to Pakistanis living in poverty.

Supported by an exceptionally strong group of Partners and Advisors, our investees are changing the conversation about how to tackle poverty in Pakistan. Ansaar Management Company expects to provide affordable housing for 15,000 low-income households, and is pioneering home mortgages for the poor. Kashf Foundation has provided loans to 305,000 families. And Pharmagen sells more than 100,000 liters of clean water every day to low-income customers in lahore.

By improving hundreds of thousands of lives, our Pakistan investees have established innovative models for change. Their success indicates a growing appetite for social enterprises that catalyze progress – and hope.

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Acumen Fund established an office in nairobi in 2007, building on a track record of investment in the region that began in 2003. Since then, we have built a world-class investment portfolio across Kenya, Tanzania, Uganda, and Rwanda. Our portfolio is growing quickly with investments in large low-cost manufacturing companies; energy infrastructure; innovative healthcare products and services; and agricultural inputs and services. Insta Products limited is a leading supplier of fortified food to aid agencies. Gulu Agricultural development Company is helping more than 30,000 smallholder farmers reach international markets. Western Seed Company is increasing agricultural productivity, farmer incomes, and food security across western Kenya. Acumen Fund works with partners in East Africa including Root Capital, the Grameen Foundation, and Gray Ghost Ventures. We have made an unparalleled commitment to leadership development by launching our East Africa Fellows Program, which will train leaders who can help solve East Africa’s toughest development challenges.

Acumen Fund began actively exploring expansion into West Africa in late 2010, and set up an office in Accra, Ghana, in January 2011. This is our first expansion into a new geography since 2006, and it represents our commitment to spreading patient capital around the world. like our nairobi office, our office in Accra will be a regional hub, serving portfolio investees throughout West Africa, with an initial focus on Ghana and nigeria.

In nine months, we have built a robust pipeline of investment opportunities and approved investments in health, housing, and agriculture with potential for global impact; recruited advisors and other strategic partners to support our work, including Databank’s Ken Ofori-Atta, who has joined our global Board of directors; and built the foundation for a strong local team and community. Acumen Fund is positioning itself to make a significant impact in the region.

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India is a laboratory for social innovation. Since 2004, when we first invested in the region, our investees in India have been doing what others thought impossible.

husk Power Systems is bringing electricity to 200,000 people in rural Bihar, using biomass technology to light up villages that the government said “could not be reached by conventional means.” Waterhealth International (WhI) is providing safe drinking water to hundreds of thousands in rural India, and is expanding to West Africa. Irrigation technology from Global Easy Water Products (GEWP) has increased productivity for more than 300,000 farmers, and we facilitated a transfer of this technology to Microdrip in Pakistan. And Ziqitza healthcare limited has grown from just 10 ambulances in Mumbai to 635 across India, providing one Indian every minute with urgent and emergency care.

Patient capital can scale, and our team in India, managing our largest country portfolio, is on the forefront of innovation in delivering critical goods and services for the poor.

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When Acumen Fund was founded in 2001, we worked from a single New York office. We learned the limits of this approach in terms of our ability to provide management support, share knowledge, and build community in-country. We opened our first international office in Karachi in 2006, and have focused on building local teams and solutions ever since.

2 10

b r e a k t h r o U g h I D e a s

thIngs we’ve learneD aboUt taCklIng global poverty

In our first ten years, we have learned that none of us has all the answers, and that all of us are needed to discover what works. Our opportunity today is to deepen the questions we ask, to be audacious in our aspirations but humble in the way we walk through the world, and to work together to find solutions that create a world where the full dignity of each and every person can be realized.

to r e a D t h e F U l l C o n t e n t o F 10 t h I n g s , v I s I t w w w. a c u m e n f u n d. o r g / t e n

Dignity is more important to the human spirit than wealth.

neither grants nor markets alone will solve the problems of poverty.

3poverty is a description of someone’s economic situation; it does not describe who someone is.

4we won’t succeed in the long term without cultivating local leaders, local money, and strong local communities.

5great people, every time, no exceptions.

6great technology alone is not the answer.

7If failure is not an option, you’ve ruled out success as well.

8governments rarely invent solutions, but they can scale what works.

9there is no currency like trust, and there are no shortcuts to earning it.

patient capital investing is built upon a system of values; it is not a series of steps to be followed.

1

global FellowsAcumen Fund launches the Global Fellows Program, committing to developing the next generation of leaders for the social sector.

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MetrICsAfter three years of joint development, we launch our metrics platform, Pulse, at the Clinton Global Initiative. At the same conference, the Aspen network for development Entrepreneurs (AndE) is officially announced in a move to further professionalize the sector.

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Acumen Fund is launched with support from 20 Founding Partners, including the Rockefeller Foundation, Cisco Systems Foundation, and the W.K. Kellogg Foundation.

patIent CapItalThomas Friedman writes an op-ed in The New York Times about Acumen Fund and patient capital.

Acumen Fund approves a $325,000 loan to A to Z Textile Mills in Tanzania. A to Z produces long-lasting anti-malarial bednets and will grow to become one of the largest employers in Sub-Saharan Africa.

We approve our first debt and equity investments: $150,000 in Kashf, a microfinance enterprise in Pakistan, and $350,000 in Sekem, a sustainable development enterprise in Egypt. These are our first investments in housing and our first in civil society organizations in the Muslim world - one of Acumen Fund’s investing priorities in the aftermath of 9/11.

Acumen Fund approves its first Water investment: $600,000 in equity in Water health International (WhI), which operates community water systems across India. WhI currently provides 500,000 customers with safe water each day and helped catalyze the community water sector in India.

hoUsIng Acumen Fund launches its housing Portfolio.

Acumen Fund invests $100,000 in IdE India, which distributes low-cost drip irrigation systems. These systems help farmers increase crop yields and conserve water, increasing their incomes.

Acumen Fund makes a $250,000 loan to Saiban, an affordable housing development in Pakistan. Today, a thriving community of 30,000 people live in Saiban’s affordable housing units.

The Bill & Melinda Gates Foundation pledges $3.9 million to Acumen Fund to support our Water Portfolio.

pakIstanAcumen Fund opens an office in Karachi, Pakistan.

InDIaAcumen Fund opens an office in hyderabad, India. In 2011, the office moves to Mumbai.

Acumen Fund approves a $1.6 million equity investment in Ziqitza healthcare limited.

east aFrICaAcumen Fund opens an office in nairobi, Kenya.

agrICUltUreThe Bill & Melinda Gates Foundation commits $6.7 million to launch Acumen Fund’s Agriculture Portfolio.

the blUe sweaterAcumen Fund founder and CEO Jacqueline novogratz publishes The Blue Sweater, a memoir about her personal journey and the founding of Acumen Fund. New York Times columnist nick Kristof reviews the book, calling Jacqueline “one of the most interesting innovators in aid and development.”

ChaptersAcumen Fund’s first official volunteer Chapter, new York for Acumen, is established. Today, Acumen Fund has 11 Chapters in cities around the world.

Jamii Bora, a housing investee in Kenya, fully repays its $250,000 loan, marking Acumen Fund's first official exit.

The first Presidential Summit on Entrepreneurship, hosted by The White house, takes place in Washington, d.C. President Barack Obama invites five Acumen Fund entrepreneurs to attend.

Residents of nairobi’s Kibera slum and neighboring areas organize a Blue Sweater book club discussion with Jacqueline novogratz.

Jacqueline novogratz is named one of the "Women Who Shake the World" by Newsweek & The Daily Beast.

west aFrICaAcumen Fund announces its expansion to West Africa and opens an office in Accra, Ghana. In summer 2011, Acumen Fund approves its first investments in the region.

healthAcumen Fund launches its health Portfolio with two investments, a $324,000 grant to Satelife and a $400,000 grant to Project Impact.

Water health International closes a Series d round of funding of $15 million from the IFC, proving its ability to scale and gain access to commercial capital.

waterAcumen Fund launches its Water Portfolio.

Acumen Fund releases a concept paper on the Best Alternative Charitable Option (BACO), explaining a methodology for comparing impact investment opportunities with traditional charitable alternatives.

Acumen Fund makes a $970,000 equity investment in Global Easy Water Products (GEWP), a for-profit sales arm of IdE India. Today, hundreds of smallholder farmers in India are benefiting from increased crop yields and income thanks to GEWP’s drip irrigation systems.

Acumen Fund invests $800,000 in equity in d.light design, our first Energy investment. d.light’s solar powered lights replace kerosene lamps, which are dirty, dangerous and expensive. Since our investment, d.light has provided three million people with access to safe solar lighting, primarily in India and East Africa.

eDUCatIonAcumen Fund launches its Education Portfolio to help expand educational opportunity for low-income communities around the world.

Acumen Fund approves a $208,000 grant to Aravind Eye hospital in India.

regIonal FellowsAcumen Fund launches the East Africa Fellows Program to build leadership capacity and community in East Africa’s social sector. This program is the first of many Regional Fellows Programs we plan to launch in the coming years.

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energyAcumen Fund announces the launch of its Energy Portfolio at Clinton Global Initiative.

p h oto b y M I C h a e l g r o s s

Secretary of State hillary Clinton mentions Acumen Fund’s model in a major speech on international development.

Acumen Fund approves a $375,000 convertible debt investment in Husk Power Systems (hPS). Currently, hPS uses rice husk-powered generators to provide electricity for more than 150,000 people in rural Bihar, India.


j o C e ly n w yat t g lo b a l f e l lo w 2 0 0 7

Executive Director and Co-Lead, IDEO.org

Jocelyn founded IdEO.org to bring human-centered design to the social sector. IdEO.org launched its first fellowship class in September 2011.

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Director of Operations, Bridge International Academies

Ram is bringing high-quality, ultra- low-cost education to children in slums across Kenya.

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COO, Tasmeen Middle East

Yehia is addressing the Middle East’s unemployment crisis by developing one of the first agencies focused on supporting creative talent in the region.

a b U b a k e r M U s U U z a e a s t a f r I c a f e l lo w 2 0 1 1 Co-Founder & Director, Village Energy

Abu is increasing access to renewable energy by bringing affordable solar-powered lighting systems to off-the-grid communities in Uganda.

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Regional Director, Cooperation for Fair Trade in Africa (COFTA)

Joan leads COFTA’s work to empower African entrepreneurs and businesses by promoting fair trade principles.

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It takes great people to change the world. Whether in our investees, the Acumen Fund team, or our Global and Regional Fellows programs, Acumen Fund prioritizes and invests in leadership. The vision for our Fellows Programs is to build a cohort of leaders with the financial skills, operational experience, and moral imagination to create more inclusive markets and social systems. Our Fellows are emerging leaders from all geographies and walks of life, and we bring them together for intensive training and hands-on work in some of the most challenging markets in the world. Fellows learn from each other, our investees, and the Acumen Fund community. They are already emerging as the next generation of architects for our sector and beyond.

g lo b a l F e l lo w s

We launched our flagship leadership initiative, the Global Fellows Program, in 2006. We saw how challenging it was for our investees to recruit top talent, and recognized a need for leadership training in our sector. Each year we recruit ten Fellows from more than 500 applicants from 70 countries. They spend a year with Acumen Fund: two months of training in new York

followed by a nine-month placement with one of our investees. It is a challenging year. Fellows must integrate into fast- growing organizations, make their way in unfamiliar countries, and often confront the gaps between their expectations and realities on the ground. We see remarkable transformations in our Fellows. Our Global Fellows alumni now work as CEOs, entrepreneurs, and senior managers in leading organizations in the social and private sectors.

r e g I o n a l F e l lo w s

Building on the success of our Global Fellows Program, Acumen Fund launched our first Regional Fellows Program in East Africa in 2011. We recruited Fellows from Kenya, Rwanda, Tanzania, Uganda, and South Sudan. Our Regional Programs train entrepreneurs and intrapreneurs who drive social change initiatives in their own communities. The year-long program is structured like an executive MBA: Regional Fellows participate in five intensive seminars while continuing to work at their organizations, and they hold a culminating innovation conference as a capstone for the year. In the next three years, we plan to launch Regional Fellows Programs in all of our geographies.

aCUMen FUnDFellows

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bUIlDIng a CoMMUnItyto Change the worlD

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We have spent the last ten years cultivating a community that believes in patient capital as an effective model of change. We work globally with thousands of people to realize our vision of a world in which all people have access to the critical goods and services they need – a world where all people can live with dignity. pa r t n e r s *

Our work would not be possible without the generous support of our Partner community. In 2001, 20 Founding Partners helped to launch Acumen Fund when it was just an idea. Today, our Partner community consists of 350

individuals and institutions that span geographies and cultures, united by a shared commitment to changing the way the world tackles poverty. C h a p t e r s

Since 2009, our Partner community has been strengthened by volunteer- led Acumen Fund Chapters. Chapters organize events to cultivate an understanding of Acumen Fund’s values and raise funds to support our work. Through our Chapters, we hope to inspire hundreds of thousands, and eventually millions, of people to join and support the social sector, because this work will take all of us.

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* s e e pa g e 32 f o r a f u l l l I s t o f o u r pa r t n e r s


t h e s o C I a l s e C to r

growth oF oUr seCtor

s o U r C e a n d e 2 0 1 0 I m pa c t r e p o r t. d ata I s b a s e d o n p u b l I c a n n o u n c e m e n t s

The Rockefeller Foundation, B lab, and Acumen Fund initiated the Impact Reporting & Investing Standards (IRIS) initiative to create a common framework for organizations in the impact investing sector to describe and report the performance of their investments.

We are a founding member of the Aspen network of development Entrepreneurs (AndE), a global network of 110+ organizations that work to propel entrepreneurship in the developing world.

We are a member of the Global Impact Investing network (GIIn), a not- for-profit organization dedicated to increasing the effectiveness of impact investing.

We developed PUlSE in collaboration with Google to help organizations track and benchmark financial, operational, environmental, and social data. Today 53 organizations use this tool to track the impact of their work.

When Acumen Fund was launched in 2001, we were one of the few organizations in the world using an investment model to fight poverty in the developing world. We joined a handful of existing players in the nascent impact investing space, including pioneers like E+Co and Technoserve.

Today, there are at least 199 “impact investing” organizations. We are proud of the role we have played in our first ten years to build partnerships and share knowledge across the sector. As we look to the future, we are committed to building an even more dynamic ecosystem to drive social change around the world.

2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 02 0 01 2 0 1 1

1 9 9 o r g a n I z at I o n s I n t h e I M pa C t I n v e s t I n g s e C to r


I n v e s t M e n t o v e r v I e w ( a s o f 9 / 3 0 / 1 1 )

cumulatIve Invested and approved $68.5M

current actIve and approved Investments $52.9M

> debt/loan guarantees $18.4M

> equIty $34.4M

> grants $0.1M

cumulatIve number of companIes 63

number of actIve companIes 43

leverage on capItal (non-acumen follow-on or co-Investment) $206M

Our portfolio investments in enterprises that serve the poor are the foundation of our work. Our goal is to find breakthrough enterprises that serve the poor and that have the potential to reach a million or more customers with an innovative product or service that improves lives. Our portfolio of $68.5 million in cumulative investments spans geographies and sectors, with the unifying theme of uncovering new ways to unleash the energy and potential of low-income customers. Each of our investments

is a long-term relationship, often eight to fifteen years, which is why we talk about “patient capital” investing: not because we are patient about results, but because building new markets where they have not worked before takes time. Twenty of our portfolio companies are serving a hundred thousand customers or more, and seven have reached more than a million people. Patient capital can scale. And we’re just getting started. We plan to grow our portfolio to $150 million in investments by 2015.

2 0 1 0 - 2 0 1 1 p o r t F o l I o U p D at e s

portFolIoovervIew

a C t I v e & a p p r o v e D I n v e s t M e n t s b y s e C t o r ( a s o f 9 / 3 0 / 11 )

a C t I v e & a p p r o v e D I n v e s t M e n t s b y g e o g r a p h y ( a s o f 9 / 3 0 / 11 )

$11.1M pa k I s ta n $20.6M I n d I a $17.2M e a s t a f r I c a $4.0M w e s t a f r I c a $52.9M tota l

a C U M e n F U n D C U M U l at I v e I n v e s t M e n t s a n D a p p r o v a l s 12 / 31 / 2 0 01 – 9 / 3 0 / 2 0 11

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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$37.9M

$43.1M

$56.4M

$68.5M

r e a l I t y C h e C k l e a r n I n g h o w t o F a I l

Acumen Fund believes in taking risks. That’s how we create new blueprints for social change. Taking risks means sometimes we, and our companies, fail. One of our companies, a pharmaceutical chain in India, went bankrupt in 2008, resulting in a $2.2 million write-off of our investment. In total, we have written off $2.9 million in investments. We never like to fail, and we always work to learn from our mistakes.

$19.1M h e a lt h $6.0M w at e r $3.9M h o u s I n g $10.1M e n e r gy $13.8M a g r I c u lt u r e $52.9M tota l

$


F I n a n C I a l h I g h l I g h t s 2010

FInanCIal hIghlIghts2010

M o r e C o M p r e h e n s I v e F I n a n C I a l I n F o r M at I o n I s ava I l a b l e at w w w. a c u m e n f u n d. o r g

2 0 1 0 F I n a n C I a l o v e r v I e w

Acumen Fund has a complex financial structure. We report our statement of activities as a nonprofit, reflecting contribution revenues and expenses – program and administrative – each year. Unlike most charities, however, we invest a substantial portion of our assets in entrepreneurial businesses that serve the poor. These investments, conceptually equivalent to the grants made by other nonprofits, stay on our balance sheet and are not reflected as part of our program expenses on our statement of activities.

o p e r at I n g r e s U lt s

r e v enue s

In 2010, Acumen raised $13.4 million in net philanthropic contributions, an increase of 111% over the prior year. In addition, we had non-cash revenue of $1.6 million in donated legal services, primarily to support our investing work, as well as donated office space. We received $0.7 million in interest from portfolio loans, and have a loss provision of $1.5 million for portfolio investment losses, representing a conservative valuation policy. Acumen Fund carries our program investments at cost, and we lower

these valuations when an impairment exists. We do not mark up our equity investments to fair market value, even when our holdings increase in value in subsequent funding rounds. We only realize gains or profits when we exit an investment.

oper at Ing e xpense s

& progr a m In v e s t men t s

Operating expenses cover all the direct costs of running Acumen Fund programs as well as our management and general and fundraising costs. They do not reflect any of our program investments in our portfolio companies. Total expenses for the 2010 year were $10.1 million – a decrease of 18% over the prior year. The bulk of the decrease was the result of the conclusion of a large research initiative on water distribution conducted from 2008-2009 in collaboration with IdEO.org and the Gates Foundation.

Program work constitutes 77% of expenses. Portfolio expenses were $5.3 million, representing the cost of finding, diligencing and executing $13.3 million in new investment approvals as well as managing our active portfolio of 43 companies. Outreach, Knowledge

and Communications expenses were $1.7 million, representing our work in metrics, research, and sharing our insights on patient capital investing. Our Global Fellows Program, in its sixth year, had the same costs as the prior year of $0.7 million. Fundraising costs and Management and General expense accounted for $2.3 million, a 7% decrease from 2009. These overhead costs continue to be funded entirely by Acumen Fund’s Board of Directors.

s tat e M e n t o F p o s I t I o n

Acumen Fund’s total assets were $95.3 million as of december 31, 2010, a 5% increase over the prior year. Similar to a venture capital fund that raises cash upfront for a multi-year investing period, we have a strong cash position, largely the result of a significant capital raise we conducted in 2007-2008. $20.6 million of the cash we hold is restricted, designated for a specific use or committed to undisbursed investment tranches, and $7.0 million is held as an operating reserve, leaving $20.5 million for impact investing in future years or for programmatic spending. Multi-year pledges receivable continue to be collected on a timely basis and converted into cash, resulting in a $4.7 million (22%) drop in pledge balances over the prior year. Acumen grew its portfolio assets by $4.3 million or 17% in 2010 after providing for $1.5 million in potential impairment.

Total liabilities at the end of 2010 were $5.7 million, a 14% decrease from 2009. $5.1 million of the $5.7 million of liabilities are notes payable by Acumen Capital Markets (ACM) to ACM investors. net assets at the end of the year were $89.6 million compared to $84 million at the end of 2009, a 7% increase.

s tat e M e n t o F F I n a n C I a l p o s I t I o n a s at D e C e M b e r 31 2 0 1 0 2 0 0 9

a s s e t s

unrestrIcted cash $ 20,545,612 $ 18,448,032

board desIgnated operatIng reserve 6,956,813 8,261,100

restrIcted cash from grants 7,718,594 8,091,167

commItted for approved Investments 12,900,000 8,300,000

tota l C a s h a n D s h o r t-t e r M I n v e s t M e n t s 48,121,019 43,100,299

pledges receIvable 16,947,464 21,632,046

other assets 946,671 855,313

program related portfolIo loans receIvable 9,049,394 6,506,372

program related portfolIo equIty Investments 18,995,103 16,743,854

loan guarantees and other portfolIo assets 1,280,563 1,799,230

t o ta l a s s e t s $ 95,340,214 $ 90,637,114

l I a b I l I t I e s a n D n e t a s s e t s

short-term lIabIlItIes $ 448,258 $ 761,734

capItal contrIbutIons receIved In advance - 3,312,361

notes payable and accrued Interest 5,293,503 2,602,973

net assets and mInorIty Interest 89,598,453 83,960,046

t o ta l l I a b I l I t I e s a n D n e t a s s e t s $ 95,340,214 $ 90,637,114

s tat e M e n t o F a C t I v I t I e s y e a r e n D e D D e C e M b e r 31 2 0 1 0 2 0 0 9

r e v e n U e , g a I n s a n D o t h e r s U p p o r t

contrIbutIons $ 13,481,462 $ 8,452,569

provIsIon and reserve for uncollectIble pledges (71,000) (2,100,000)

donated servIces 1,680,007 2,208,000

other revenues 282,212 355,612

Interest Income - program related portfolIo loans 774,834 539,715

loss provIsIon on portfolIo Investments (1,499,987) (1,994,688)

t o ta l r e v e n U e , g a I n s a n D o t h e r s U p p o r t $ 14,647,528 $ 7,461,208

e x p e n s e s

portfolIo management $ 5,298,643 $ 5,532,371

outreach, knowledge and communIcatIon 1,770,667 3,607,248

fellows program 709,547 716,631

t o ta l p r o g r a M s e r v I C e s 7,778,857 9,856,250

management and general 1,110,654 1,417,230

fundraIsIng 1,168,351 1,043,047

t o ta l e x p e n s e s 10,057,862 12,316,527

foreIgn currency exchange loss (99,688) (151,910)

I n C r e a s e ( D e C r e a s e ) I n n e t a s s e t s $ 4,489,978 $ (5,007,229)


Ingrid stangeJames o’shaughnessyJames wongJennifer r. mccann*Joan & george hornigJohn & tina novogratzJohn hughes & annette langsethJohn p. & anne welsh mcnulty

foundationJohn schaetzlJonathan carpJoy family foundationJulie menink. richard & elizabeth flynt

foundationkatherine collinskatherine fulton & katharine kunstkevin krusekristin spindler & david smootlaird norton family foundationlaura & gary lauder*laurent demuynck & maia ming fongleith greenslade lemelson foundationlesley goldwasser & Jonathan plutziklindsay & brian shea*malik & najmi sarwarmanoj varghesemarcie polier swartzmarks family foundationmarten hoekstramartha & toby brooksmary pat ryanmasahiko sumiyamatthew dontzinmerrill lynchmichael poppelmikael ahlstrommike Jacobellisml resources social visionmohsin nathanimonis rahmanmontag family foundationmorgan stanleymr. & mrs. James r. treptowms. laurie bernsteinmuneer khanmunib & kamila Islammurray dalzielmurray metcalfenarendra & Julie rocherollenathan cummings foundationneeraj mehta & Jennifer l. mehtanew york for acumennew york lifenuru projectorigen private equity limitedpascal rochepaul hastings llp**paul petruccellipedro hapeter f. moorepricewaterhousecooperspuricom water Industrial corp.ram sundaramramesh & neeraja murthyravi & ginny akhouryraymond everett & lucy chowroger d. bayatrohit bansalromita shetty & nasser ahmadron & beth dozoretzronald g. & patricia J. andersonross ulmerruss dirgantororussell faucetts and p goodwill fundsan francisco for acumen

sanne charitable trustsasha rabsey & fred berkowitzschering ploughscott turnershamaya gilosharique siddiquisharjeel kashmirshehnaz & shakil tapalshirin sultan dossa foundationsimon clarkstage right enterprisesstephanie gainessteve silbersteinsupporting opportunity foundationsusquehanna foundationsyed ali Zaidithe Jacquelyn and gregory Zehner

foundationthe louie-marsh family fundthe marjorie merriweather post

foundationthe mr. & mrs. michael p. kirby

charitable gift fundthe thanks be to god foundationthomas cooperthomas dardentimothy J. boyletoronto for acumen unaizah moonisvancouver for acumenverdele polsonwahid maskatiyawalid muslihwarren Jasonwes fullerwilliam rosenzweig & carla fracciaZeelaf & munir mashooqullah

F o U n D I n g pa r t n e r sthe alexander family foundationandrea soros colombel & eric

colombelapex foundationcatherine s. mutherc. hunter & pamela t. bollcharles and roberta katz family

foundationcisco systems foundationgeorge w. & patricia a. welldeI. Jerome hirschJennifer r. mccannlaura & gary lauderlindsay & brian sheathe novogratz-caceres family

foundationphalarope foundationthe rockefeller foundationthe sapling foundationthe sigrid rausing trusttosawilliam h.a. wright IIw.k. kellogg foundation

p r o b o n o pa r t n e r sgibson, dunn & crutcher llppaul hastings llpmckinsey & companywhite & case llp

Founding Partner

In addition to its financial contribution, this organization provides pro bono support to Acumen Fund

CreatIng a worlD beyonD poverty

b o a r D o F D I r e C to r s , a D v I s o r s & pa r t n e r s

Joseph and susan gatto foundationkcb bankking khalid foundationkl felicitas foundationlodestar foundationmargot pritzkermarisa mueller foundationmediabrandsmichael & sarah petersonmiles morlandmr. mark lampert & ms. susan byrdosprey foundationplanet wheeler foundationresnick family foundation, Inc.rod & liz berensrural India support trustsalesforce.com foundationsalvatore ferragamoselect equity group foundationshaukat tarinshopifythe dow chemical companythe gilder foundationthe harnisch foundationthe mcJ foundationthe one foundationthe rockefeller foundation*tudor Investment corporation w.k. kellogg foundation*william e. mayerwork-in-progress fund of tides

foundation

a s s o C I at e pa r t n e r s($50,000+)anonymous (3)adnan asdarakhil guptaali & hina asgharali Jameelamjad ali khanann & thomas l. friedmanapex foundation*atticus trustcarol baker & mark steincharles & susan harrisciti foundationcraig & kirsten neville-manningelenor and howard morgan family

foundationfarooq naseemfarrokh captainharriet mouchly-weisshasan & shameela rizvihussain dawoodJay & randi coen gilbertJeffrey c. & suzanne c. walkerkarin helene bauerkashif Zafarleslie gimbellieb & bill pattersonmaggie kaplanmary lyndon havilandmatthew & anupama tatemike velingsmuna al gurgnasim begnasreen kasuriniko cannerorient links co. llcpeter cainpeter kellnerrachel mcadamsralph & dorothy bahnasadeesh raghavansamir rathsean phelan & audrey mandelashahzad qasim

sheryl & dave sandbergsamuel m. victorsteve smithsusan petersmeyersyed babar alitahir wahidthe bernard and anne spitzer

charitable trustthe cohn family foundationthe globalislocal fundw.l. lyons brown foundationwhite & case llp**Zafar siddiqiZafer achi

D e v e lo p M e n t pa r t n e r s ($10,000+)anonymous (13)abacus wealth partners, llc

philanthropic fundadventures for the mind foundationajay parekhalec hansonallegro foundationanne wade & gil haganargosy foundationasif khajaasiff hirji & sarah wigglesworthbalamurali ambatibarry mchughbetter world fundbill & betsy meehanbloomberg lpbobby & madhavi raobrad rosenbergcarolyn s. brodycathrine s. steck foundationchicago for acumenchristine a. Jacobs family foundationcoburn venturescommonwealth secretariatconnie steensmacrabby beach foundationcraig & Jennifer staubcredit suissecrown family philanthropiesdan toole & beth verheydavid & keira barrydavid & peggy tanner philanthropic

funddavid rosedc for acumen denise & Ira wagnerdennis millerdhiren & katie shahdoug & christine rohdedubai for acumendwight andersonefroymson family fund, a cIcf funderin levinfaisal & tanya mianfareed & paula throckmorton Zakariafawad anwarfrances k. dibner fundgary rindnergeeta & krishen mehtagerry ohrstromglenn & eva dubingood magazinegrant me the wisdom fundgsrdgvc fundhenriette nielsenhilton pharma ltdhong leong holdings ltdhunter douglasimago dei fundImc²

a D v I s o r y C o U n C I l

the honorable bill bradley, chair, acumen fund advisory council

fazle hasan abed, bracsyed babar ali, lahore university of

management sciences, pakistanchris anderson, the sapling

foundationdiana barrett, the fledgling fundseth berkley, gavI allianceangela glover blackwell, policylinkmark malloch brown, the united

nationstim brown, Ideoniko canner, booz & companypeter cain, ambac financial

group Inc.maria eitel, nike foundationkatherine fulton, the monitor

Instituteashraf ghani, Institute of state

effectivenessseth godin, authorpeter goldmark, environmental

defense fund

allen grossman, harvard business school

Jill Iscol, If hummingbird foundationahsan Jamil, aman foundationsaj-nicole Joni, cambridge

International group ltd.nathan laurell, new frontier holdingsgeraldine laybourne, oxygen media

llcsusan meiselas, magnum

photographerharriet mouchly-weiss, kreab gavin

andersoncatherine s. muther, three guineas

fundarif naqvi, abraaj capitalsally osberg, skoll foundationJan piercy, shorebank corporationamy robbins, the nduna foundationram shriram, sherpalo ventureskerry sulkowicz, boswell groupcolonel patrick e. tierney, us armydaniel r. toole, unIceffareed Zakaria, tImeniklas Zennström, Joost, atomico

pa r t n e r s

a C U M e n F U n D s t e w a r D s ($5,000,000+)aman foundationamy robbinsandrea soros colombel & eric

colombel*bill & melinda gates foundationthe robert and kate niehaus

foundationthe sapling foundation*the three dogs foundation*

l e a D e r s h I p pa r t n e r s ($1,000,000+)anonymous (3)abraaj capital employeesaf Jochnick foundationthe alexander family foundation*barr foundationblood family foundationc. hunter & pamela t. boll*chandra Jesseedavid & susan lyonsd.o.b foundationglobal alliance for Improved

nutrition (gaIn)googleg.v. prasadJulius gaudiolf foundationlundin for africa societymahvash & Jahangir siddiqui

foundationpartridge foundationpeter & devon briger foundationskoll foundationZennström philanthropies

k e y s to n e pa r t n e r s($500,000+)catherine s. muther*edmond & benjamin de rothschild

foundationsgiving wingslehman brothersphalarope foundation*rajeev motwani foundationsidney e. frank foundationthe world we wantwoodcock foundation

s U s ta I n I n g pa r t n e r s ($250,000+)anonymousdcd america, Inc.francisco garcia paramésgeorge w. & patricia a. wellde*goldman sachsJohn l. thorntonkathryn & robert stewartliquidnet holdings, Inc.nandan nilekaninathan laurellnike foundationpatricia tobin kubal & larry kubalpeery foundationshawn & brook byersthe sunil paul & michelle odom

foundationsusan & gib myersthe shelley & donald rubin

foundation, Inc.tokyo foundation

s e n I o r pa r t n e r s($100,000+)anonymousalwaleed bin talal foundationbarry haimesbohemian foundationbrinson foundationbruce campbellcharles & roberta katz family

foundation*david & anita keller foundationdavid kidderdiana barrettfadi ghandourfiona & stanley druckenmillerfriso & mabel van oranjegeorge & amanda hanley

foundationgeraldine laybournehans tapariaherb allen IIIIdeoIrving foundationJay & eileen walkerJill & ken IscolJoe & amy novogratzJonathan & Jennifer sorosJosé & trish suarez

Developing innovative solutions to poverty requires strong collaboration. at acumen Fund, we are humbled by the generosity and support of our growing global community, whose passion for acumen Fund’s mission and vision makes our work possible.

margo alexander (chair)c. hunter bollandrea soros colombelstuart davidsondavid hellerken ofori-attawilliam e. mayerpat mitchell

robert h. niehausJacqueline novogratzmichael e. novogratzg.v. prasadthulasiraj ravillaali J. siddiquiJoseph e. stiglitz

b o a r D o F D I r e C to r s

*

**

I n D I aaman guptasanjay gupta g.v. prasad sadeesh raghavan vikram p. sahuvinay shah prabir talati manoj varghese

w e s t a F r I C aken ofori-atta

pa k I s ta n Zubyr soomro, chair farrokh captain ahsan Jamil Zaffar khan monis rahman

e a s t a F r I C aedwin machariaparas shahmichael turner

loCal aDvIsory CoUnCIls


oUr vIsIon For 201515

C o U n t r I e s8 to D ay

$150MIllIon 400g lo b a l & r e g I o n a l F e l lo w s

7 2 to D ay

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8 6 M I l l I o n to D ay C U M U l at I v e I n v e s t M e n t s

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acumenfund.org

DesIgn oxygen desIgn agency / oxygen.caprInted In canada

a C U M e n F U n D , I n C .

acumen fund founder and ceo Jacqueline novogratz met eliarehemu, a tanzanian day laborer, in a village called usa river in 2004. he was sick with malaria. because of the disease, he often could not work, and he earned only $6 each month. with an anti-malarial bednet from acumen fund investee a to Z textile mills, eliarehemu recovered from malaria. with each passing year, his health has improved. he has had the energy to plant more crops and to increase his income. eliarehemu is one of millions of people whose life has been transformed by a company supported by acumen fund.

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76 ninth avenuesuite 315new york, ny 10011212 566 8821212 566 8817

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