Recap of the Net Impact Conference with Katherine Rosenberg

Last weekend Grameen America’s Director of Evaluation and Education, Katherine Rosenberg, attended the 18th Annual Net Impact Conference at the University of Michigan’s Ross Business School. The conference, entitled 2020: Vision for a Sustainable Decade, was very successful with over 2,500 MBA students and sustainable development professionals participating in the panels, lectures and expo.

Katherine took part in a panel called Markets For Good: How Social Investors Will Change the World. Other participants on the panel included Mari Kuraishi (Co-Founder and President of GlobalGiving Foundation), Brian Walsh (Director of Liquidnet for Good) and David Wilcox (Founder of ReachScale). About 100 people attended the panel, which focused on gaining access to capital markets on international and domestic levels in the non-profit world. The speakers explored how the profit and non-profit worlds can combine to create access to capital without jeopardizing the ultimate mission of creating opportunities for the poor.

During the conference, one of the recurring questions that Katherine was asked was “does microfinance actually work?” Her response: “Microfinance has become a broad spectrum. Speaking on behalf of Grameen America, we offer small loans and have great stories about how we have already pulled people out of poverty”. Although the term microfinance is slowly beginning to register as a household term, people are still uncertain about how effective it can be, especially on a domestic level. This is one of the challenges we are continuing to explore and one of the benefits of being able to attend these conferences.

One of the most informative panels that she attended was called Philanthropy 2020: How is Philanthropy Changing and what are the Implications for Nonprofits. The panel focused on the measurement of social value in the nonprofit sector.

Katherine also found the keynote address by Gary Hirshberg, Chairman, president and CEO of Stonyfield Farms inspiring. He spoke on the transformation of his company from a small dairy farm to the worlds leading international organic yogurt producer with over $366 Million in annual sales. One of topics he touched on, which helped Stonyfield experience such rapid growth, was innovative marketing technique such as advertising on the tops of yogurt and milk containers. It was a simple method but one that clearly produced results – certainly something that could be applied in the non-profit sector as well.

Although Grameen America was only involved directly through Katherine’s participation in the panel, Professor Yunus’ name came up several times because of his focus on promoting social business. It was apparent during the conference that his influence has encouraged people to change their way of thinking – not just to run a business but to be socially minded about it as well. We can only hope that his influence can do for social business what it has already done for popularizing microfinance.


Follow this link for more information about the 2010 Net Impact Conference.
2010.netimpact.org

Follow this link for more information about Gary Hirshberg on the Stonyfield website.
www.stonyfield.com

To check out Professor Yunus' latest book Building Social Business please click here.

Women and Grameen

One of our colleagues recently took this picture in the Atlanta Airport. The picture shows Professor Yunus’ recently published book “Building Social Business” next to a book that she’s mildly obsessed with called “What Women Want” by Paco Underhill. The book focuses on the rise of women’s independence and the tremendous buying power women now have in the global marketplace.

From the titles, the books might not seem similar, but with further thought, the subject of “What Women Want” is a perfect compliment to the mission of Grameen America. Grameen has evolved into a social business that gives individuals a chance to lift themselves out of poverty and reach a significant level of independence. Today, both Grameen Bank and Grameen America serve primarily women. However, not long ago, women once shared the benefit of Grameen’s services equally with men.

How, then, did women end up leading the way in benefiting from Grameen’s microloans?

When Professor Yunus started lending in rural Bangladesh in 1976, the borrower demographic was only 20% women. He soon realized that when women had control of the household income, more money was kept within the family and would be used only for the most critical needs such as food, children's education, and health-care. Today, over 8 Million People in Bangladesh have benefited from Grameen Bank’s microfinance operations and 97% of them are women.


Since 2008 Grameen America has brought microfinance to low-income women in New York City and Omaha, Nebraska. Grameen America’s micro loans have made an instant impact on the lives of women in these communities. Those who have taken out loans have been able to start businesses and successfully keep savings while investing in their families needs. With a repayment rate of over 99%, these women are proving that with the help of a little money, hard work, and some big dreams they can provide a better life for their families right here in the United States.

MFI Connect: Student Microfinance Forum

Written by Chris Temple, MFI Connect Founder...

I wholeheartedly believe that students hold enormous potential to
initiate change in this world. Students are optimistic, eager, and dedicated free-thinkers. The question is how to harness their fiery passions? How to transform their potential into tangible actions that bring an end to global injustices, such as world poverty?

The microfinance buzz has not only spread amongst the business
world; it has also infiltrated university campuses in the form of student clubs, fundraisers, and in some rare cases classes. Its revolutionary tenant of providing credit as a human right, regardless of available credit history or collateral, has ignited the
interests of today's youth. The question becomes how to empower student microfinance initiatives to maximize their impact and to prepare students for thought-full, productive careers in the industry?

A team of seven students, including myself, have created an online 
microfinance network, MFI Connect (www.MFIConnect.com), to
unite these disparate student initiatives and to provide accessible information, discussion, and opportunities. Currently the largest network of its kind, we bring together over eight-hundred members, including students from more than forty universities. More specifically, we engage our members by providing microfinance education courses, innovative fundraising and awareness campaigns, in-field exposure programs, groundbreaking discussion, and access to competitive job opportunities. MFI Connect is hoping to build on this momentum to make a lasting impact on the microfinance industry. Please join the movement at www.MFIConnect.com or e-mail christemple8@gmail.com with any questions or concerns.

The American Dream

Earlier this week, President Obama pledged to aid American small businesses with loans and dramatic tax benefits. A big part of the plan is a tax incentive for business owners to hire new workers in the coming months. The details of the plan are available here

The president’s decision reflects the importance he puts on job creation and nursing the US economy back to health. It also demonstrates just how important small businesses are to the country as a whole. Businesses have an undeniable impact on the communities they’re part of, by providing services and creating employment opportunities. With the millions of American families feeling the effects of the recession this year, the president is looking to individual entrepreneurs and mom-and-pop-style small businesses to get us back on track.

But don’t take my word for it:

“Small businesses are the heart of the American economy. They're responsible for half of all private sector jobs –- and they create roughly 70 percent of all new jobs in the past decade. So small businesses are not only job generators, they're also at the heart of the American Dream. After all, these are businesses born in family meetings around kitchen tables. They're born when a worker takes a chance on her desire to be her own boss. They're born when a part-time inventor becomes a full-time entrepreneur, or when somebody sees a product that could be better or a service that could be smarter, and they think, ‘Well, why not me? Let me try it. Let me take my shot.’”

President Obama, March 16 2009

Micro-Props #3

“Microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge. And while the lack of financial services is a sign of poverty, today it is also understood as an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves.”

Kofi Annan, former United Nations Secretery General

Micro-Props #1

“This is not charity. Let me be clear: This is not charity. Together, we can create a broader foundation of prosperity that builds new markets and powers new growth for all peoples [...]”

President Barack Obama, announcing a $100 million growth fund to bolster MFIs.

Micro-Props #2

“One cannot lift a person out of poverty. There is no country in the world that has raised itself out of poverty through charity. What we offer to [microfinance borrowers] is access to a ladder that they can climb up to take themselves out of poverty. But the climbing they must do themselves.”

Ingrid Munro, Director of Jamii Bora, an MFI in Kenya

Women and Microfinance in the U.S

American women are poorer and more excluded than men . . . and are also a very promising business investment . . .

Why do many microfinance organizations in the U.S. work so hard to involve female borrowers? Many resourceful, smart, and enterprising American women are becoming self-sufficient through small businesses and have already proven they can excel in the competitive business world once dominated by men. So why would they need a leg up?

Because things are still far from fair. Most women remain outsiders to the financial sector, and do not have access to the same opportunities in the labor market that men do. These injustices can only be remedied with good programs and lots of time.

Women get a raw deal in finances because they lack experience. A story in the New York Times reported that although women generally have better credit scores, they are 32% more likely to carry high-interest mortgages than men with similar incomes. Experts from the Consumer Federation of America speculated that the reason for the disparity is that women are less familiar with the mortgage market, so they don’t feel comfortable shopping around for the best deal. African American women are particularly likely to have subprime loans, because they have traditionally been outsiders to matters of finance. Not knowing the ins and outs of the system can cost them big time.

Women are tracked into jobs that pay less. Just one of the reasons they tend to be poorer.

Women are more likely to be poor than men. In 2007, there were about 25% more American women living below the poverty line than there were men. This has a lot to do with the job market: Women are sometimes paid less than men, even when they do the same job for the same number of hours. Also, women are tracked into “pink collar” jobs like teaching, nursing, waitressing, and cleaning, which tend to be low-paying. Women also spend more time than men giving unpaid care for family members, and are more likely to bear the costs of raising children.

Women repay their loans. A hot-off-the-press working paper by D’Espallier, Guérin, and Mersland shows that for 350 MFIs studied, “more women clients is associated with lower portfolio-at-risk, lower write-offs, and lower credit-loss provisions, ceteris paribus.”

Finance Industry: Evolve or Go Extinct

The times are a-changin' . . . and industries are going to have to please the people if they want to keep up . . .

This is the 21st century: Tough times are driving dinosaur inefficiencies to the brink of extinction, and innovation is the name of the game. We’re living in a new world. For hundreds of years, industries had been evolving into the leanest meanest systems they could be… and then all the rules suddenly changed. Think about it: How great was our newspaper sector? U.S. media was at the top of its game, relying on trusty principles the industry had been tweaking for decades, riding the reputation it had built up over years . . . and then technology happened. Now here you are, reading a blog.

Newspapers will have to face the future and cater to the public.

If journalism is going to survive (and it will, it’s only a question of form) it will have to do some serious reinventing. Instead of looking backward to the past or inward to its strengths, the business of the news will have to face the future and cater to what the masses demand.

That’s true of all institutions. Another example: Today in the library where I work, a woman asked me where to find Mexican recipes. I just happened to know (after hours of shelving) that cookbooks are in the 641s, according to the Dewey decimal system standard to all libraries. Blank stare. Ok, so I walked to the 600 aisle and pointed. But next time she has any other question, she’s back to square one, relying on me for help. Why does my library use Dewey? Because all libraries do and because nobody wants to make new labels.

Unlike the library, bookstores realize they have to make customers feel comfortable. These days you've got to give individuals what they want.

But Barnes and Noble knows that it has to make its customers comfortable with clear signage, or unhappy readers will wander away to satisfy their literary jones at Borders. How can a public book collection flourish in a digital age? By reaching out with new technology, and by focusing on what the public wants. These days, you’ve got to please the people.

Finance was the T-Rex of 20th century industries. (Right down to the bloody teeth and beady little eyes.) But the biggest fall the hardest, and the structure of the banking system has already changed as the economy struggles to get back on its feet again. In this changing world, the industry will need to look to innovation and fresh ideas to win over clients who got burned.

Finance was the T-rex of 20th century industries (right down to the bloody teeth). Time to evolve!

So, what about providing loans that until now were considered too little to be worth the effort? What about branchless banking for the millions of poor people in neighborhoods without banks? Or helping community members back each other up with rotating savings and credit associations ? Or providing financial education? How about banking for the little guy? Time to evolve!

Any other ideas? Leave a comment! I’d love to hear what you’re thinking (innovative economics really floats my boat). Show me what you’ve got.

Tough times call for revolutionary measures.

Microfinance: Simple but Brilliant

Why don’t big banks loan to the poor?

Unfair stereotypes clearly play a role. However, banks have lots of other reasons, too, some better than others. The simple yet brilliant Grameen group method allows microfinance to do everything that banks won’t – and do it better. Microfinance institutions (MFIs) in the U.S. and around the world typically have 97-99% repayment rates, way higher than those seen in the conventional financial sector.

The poor have no credit history: When banks make loans, they use a credit score to decide how risky a borrower is. If they start including people who have never before received loans, there is no way to tell the responsible borrowers from the irresponsible ones. It makes each loan a gamble.

The solution: The Grameen group method. When an entrepreneur wants a Grameen loan, she is sent back into her community and networks to find four other borrowers to complete her group. Banks may not be able to predict who is a responsible borrower, but neighbors definitely can. Grameen relies on the community-level knowledge of its clients to select the entrepreneurs with the brightest business ideas and the trustiest reputations.

The poor cannot offer collateral: They have few valuable assets (such as a house or a car) that they can offer as a back-up to banks if they don’t repay the loan. Banks say that a poor borrower could just take the money and run, with nothing to stop them.

The solution: Again, the Grameen group method. Borrowers are in groups with their friends and neighbors. If one borrower falls behind on her payments, she effectively prevents her group members from getting new loans. This inter-dependency encourages clients to follow through with their commitment. While the poor cannot offer an expensive house to guarantee their good faith, they do put their reputation on the line.

Each borrower works hard to make her whole group a success, so that she'll be eligible for future loans.

More loans = higher costs: The overhead costs involved in making many small loans lower banks’ profits. That’s because banks require reams of legal documents for each client.

The solution: You guessed it. Muhammad Yunus’s brilliant Grameen group method comes through again. Grameen banks rely on personal interactions with borrowers, making the red tape unnecessary. Group members meet weekly to monitor each other, examining receipts and financial records. Because each member’s access to future loans depends on the success of the group as a whole, everyone has a strong motivation to see that things are done by the book.

Bill Clinton highlights Grameen America’s work on the Daily Show with Jon Stewart

Just when we here at Grameen America were already excited about the 5th Annual Clinton Global Initiative this week, former President Bill Clinton gave us another reason to anticipate the 2009 gathering. For those who missed it, here is a link to Bill Clinton’s interview on the Daily Show with Jon Stewart last Thursday. In the clip, Clinton talks at some length about Grameen America and how it fits into CGI’s mission of finding workable solutions to some of the world’s most pressing challenges.

Needless to say, we are thrilled and honored to have former President Clinton single out Grameen America as an organization that is showing how the US can learn from models developed in other countries.

Check back here as the weeks goes on, or follow us on Twitter, for more breaking news from CGI…