Philanthropy: Givers Who Mean Business: THE HEART OF WALL STREET

The ninth-floor offices of the Acumen Fund, a nonprofit that helps entrepreneurs in developing countries build businesses, overlook Trinity Church in New York City's Financial District. Consider it a case of Wall Street crossing Hope Road. "It's a good metaphor," says Jacqueline Novogratz, Acumen's founder. Some call it venture philanthropy, but Novogratz prefers the phrase "private equity for the poor." What that means is that a small company in India gets a $185,000 loan to make and sell affordable water filters. And that a Pakistani firm receives more than $260,000 in grants and loans to develop housing for urban squatters. All told, since its start in 2001, Acumen has raised more than $24 million from private donors and corporations and has invested in 16 projects in India, Pakistan, Kenya, Egypt and Tanzania.

The work is part of a newer, more businesslike style of philanthropy: "A market-based approach to giving," says Julie Juergens, director of Stanford University's Center for Social Innovation. Acumen works with local companies on business plans, then helps them make, distribute and market products and services for the poor, from drip-irrigation kits in India to generic-drug shops in Kenya. The underlying idea is that if you help build financially stable companies that sell things poor people need--clean water, housing, health care--then self-sufficiency and a better standard of living follow.

Not all projects work out. Acumen lent money to an Indian entrepreneur who designed a $42 hearing aid but wasn't able to move it to market. Yet even in that case there was a lesson to be learned, says Novogratz, a former banker. "We want to understand how to build companies that effectively deliver critical goods and services," she says. "The more we can understand how to do that, the more effective we think we'll be in bringing forward a blueprint for change to the world." --By Barbara Kiviat