I was just reading an interesting policy memo written over at the Centre for Microfinance (CMF) about microfinance and social capital. The study was conducted w/ VWS Microfinance in Kolkata, but the findings are relevant here in the US as well (although it's hard to be 100% sure that the results would be the same in the US).
Basically, through a randomized evaluation in which 1000 clients were put in groups that met weekly and 1000 were chosen to meet monthly, the researchers found that those that met weekly were more likely to trust one another and also spend time with one another outside of the group meetings. Also, in the medium term, those that met weekly were 8% less likely to default on their loans.
These findings demonstrate that group meetings can be beneficial for financial and community purposes. It's good to read that some of our assumptions about microfinance hold true with rigorous research. That said, cultures are very different across countries, so it is hard to take these findings in all locations/cities/countries.
For a more detailed dive, check out the India Development blog entry and 3-page memo here.
http://www.indiadevelopmentblog.com/2010/04/getting-handle-on-intangibles.html
Tuesday, April 6, 2010
Thursday, February 11, 2010
Interesting approach to "green entrepreneurship": From Africa to NOLA to Rural US
The below is taken from an email exchange with Project HOPE:
"How do we link low-wage workers to "green entrepreneurship"?
Build homes, like The Millennium House in OK (http://www.pathnet.org/sp.asp?id=12535) but using enough, effective and applicable renewable energy to produce surplus electricity into the utility grid or, say in Africa, to use for entrepreneurial ventures. This is much of what Light for Africa does by electrifying rural homes with solar panels and some internal wiring to provide lighting and electricity with solar power!
Take Eldon Hathaway's Light for Africa concept one step forward and look at his approved and funded venture in New Orleans to replace one, destroyed school and the surrounding community, i.e. making it productive with green energy!
Suddenly, home owners have investment and direct interest in the energy market AND in renewable energy technology. You know what else?! The elementary school has access to renewable energy technology training, on-site! That is employment opportunity in a burgeoning market!
Thanks to a forward, thinking Prime Minister Nehru, India today has used this concept, i.e. getting their populace into the technology market, with the computer technology wave, lifting up millions in their poverty-stricken land to reach for dignity and opportunity along with self-determination!
Low wage workers can become entrepreneurs and use the ongoing, monthly payments for surplus electricity to re-vitalize their rural communities or expand their family's capabilities. All of this is done, while living in a safe, truly affordable home, with zero energy cost, the potential to produce a monthly income from surplus electricity sales, AND homes can withstand an F3 tornado, are immune to termites, won't mold, PLUS have a safe breathing environment, as Styrofoam and concrete put out no toxic fumes. Roof them with stainless steel AND solar shingles produced in Michigan, and the homes also have nearly permanent roofs, etc."
"How do we link low-wage workers to "green entrepreneurship"?
Build homes, like The Millennium House in OK (http://www.pathnet.org/sp.asp?id=12535) but using enough, effective and applicable renewable energy to produce surplus electricity into the utility grid or, say in Africa, to use for entrepreneurial ventures. This is much of what Light for Africa does by electrifying rural homes with solar panels and some internal wiring to provide lighting and electricity with solar power!
Take Eldon Hathaway's Light for Africa concept one step forward and look at his approved and funded venture in New Orleans to replace one, destroyed school and the surrounding community, i.e. making it productive with green energy!
Suddenly, home owners have investment and direct interest in the energy market AND in renewable energy technology. You know what else?! The elementary school has access to renewable energy technology training, on-site! That is employment opportunity in a burgeoning market!
Thanks to a forward, thinking Prime Minister Nehru, India today has used this concept, i.e. getting their populace into the technology market, with the computer technology wave, lifting up millions in their poverty-stricken land to reach for dignity and opportunity along with self-determination!
Low wage workers can become entrepreneurs and use the ongoing, monthly payments for surplus electricity to re-vitalize their rural communities or expand their family's capabilities. All of this is done, while living in a safe, truly affordable home, with zero energy cost, the potential to produce a monthly income from surplus electricity sales, AND homes can withstand an F3 tornado, are immune to termites, won't mold, PLUS have a safe breathing environment, as Styrofoam and concrete put out no toxic fumes. Roof them with stainless steel AND solar shingles produced in Michigan, and the homes also have nearly permanent roofs, etc."
Wednesday, February 10, 2010
Social Security and Drug Addicts
http://www.druglibrary.org/schaffer/GOVPUBS/gao/gao20.htm
Government memo on social security, disability, and substance abuse as these topics relate to the payee system.
Government memo on social security, disability, and substance abuse as these topics relate to the payee system.
Friday, January 15, 2010
New Blog! Continue to follow our progress
Please check the Community Empowerment Fund's website for continuing research and reports on our progress towards adapting microfinance to meet the specific needs of the homeless and at-risk populations in North Carolina.
http://www.communityempowermentfund.org
http://www.communityempowermentfund.org
Thursday, September 10, 2009
Final Summary: Summer 2009 Research
With my SURF award, I had the honor of working extensively with the Community Empowerment Fund (CEF), a pilot program in Chapel Hill that provides small loans to individuals experiencing or at-risk of experiencing homelessness. Though I grounded my research in existing literature on domestic experiences in microfinance and poverty alleviation, the majority of my work was done through my direct involvement with the program’s incredibly dedicated pilot CEF loan officers and the constantly inspiring pilot borrowers.
In the spirit of community-based research, I relied heavily on personal interviews and interaction to inform my research. Thus, alongside CEF borrowers, I went shopping for affordable apartments, signed up for cell phone contracts, job searched, rode the bus line, applied for federal benefits, dealt with addiction and relapse, sought higher education, tried to balance expenses, and worked to save for the immediate future. And through these experiences, I confronted systemic challenges that prevent the poor from becoming otherwise. These include: the lack of affordable housing, the constraints of credit, the limited availability of living wage employment, the opportunity costs of education, the bureaucratic and sometimes backward nature of welfare, the constant battle against drugs and addiction in low-income neighborhoods, the barriers to safe and convenient savings, and the difficulties of existing in a financial system that is not built for you or your household. These obstacles both necessitate and hinder opportunities for domestic microfinance; but this summer, as loan officers and borrowers faced these challenges together, CEF became much more than a loan program.
Project Results:
• There is a demand for small loans within the homeless community and amongst low-income households in Orange County. Loan size ranged from $150 to $300 initially.
• Social ties and networks within the target community provided opportunities for borrower outreach and significant peer pressure amongst program participants.
• A larger percentage of applicants was interested in housing assistance, while a smaller percentage was immediately interested in small business investment or employment assistance.
• The program was able to prevent default and encourage repayment within the summer term.
• The program was successfully able to recruit interested male applicants and has a vested interest in creating more methods of recruiting female, youth, and Latino applicants.
• All borrowers interviewed cited their relationships with student volunteer loan officers as the greatest benefit of being involved in the program and as CEF’s strongest assets.
• Loan officers benefit from opportunities to interact with the target population outside the confines of the loan.
• Within the term of the summer pilot, CEF received 18 complete applications. CEF approved 5 loans in the pilot – 4 to men and 1 to a woman, with 5 additional applications pending.
• In addition to loan funds, CEF volunteers supported all applicants through resume-building, job searching, connections to services, computer literacy, and much more – all of which significantly increased the true loan value and provided opportunities to applicants not approved for a loan.
The CEF pilot launch answered many operational questions for program managers, but raised new questions relevant to the model’s success. For example, how can domestic microfinance grow to offer more savings opportunities to more communities? How can housing policy be adapted to allow more flexible regulations that provide low-income renter households the opportunity to finance homeownership sustainably? How can banks provide traditional financial services in communities currently dominated by alternative services such as check-cashing and payday loans? Can addressing disparities in the banking market solve questions of asset inequality; or how can we address more than income inequality in public policy? Overall, how can the domestic financial system be re-evaluated or re-structured on a community level to serve a new market – the low-income, enterprising individuals whom financial services have historically marginalized as too expensive to serve. And finally, could microfinance models such as CEF be the answer to any of these questions?
In the spirit of community-based research, I relied heavily on personal interviews and interaction to inform my research. Thus, alongside CEF borrowers, I went shopping for affordable apartments, signed up for cell phone contracts, job searched, rode the bus line, applied for federal benefits, dealt with addiction and relapse, sought higher education, tried to balance expenses, and worked to save for the immediate future. And through these experiences, I confronted systemic challenges that prevent the poor from becoming otherwise. These include: the lack of affordable housing, the constraints of credit, the limited availability of living wage employment, the opportunity costs of education, the bureaucratic and sometimes backward nature of welfare, the constant battle against drugs and addiction in low-income neighborhoods, the barriers to safe and convenient savings, and the difficulties of existing in a financial system that is not built for you or your household. These obstacles both necessitate and hinder opportunities for domestic microfinance; but this summer, as loan officers and borrowers faced these challenges together, CEF became much more than a loan program.
Project Results:
• There is a demand for small loans within the homeless community and amongst low-income households in Orange County. Loan size ranged from $150 to $300 initially.
• Social ties and networks within the target community provided opportunities for borrower outreach and significant peer pressure amongst program participants.
• A larger percentage of applicants was interested in housing assistance, while a smaller percentage was immediately interested in small business investment or employment assistance.
• The program was able to prevent default and encourage repayment within the summer term.
• The program was successfully able to recruit interested male applicants and has a vested interest in creating more methods of recruiting female, youth, and Latino applicants.
• All borrowers interviewed cited their relationships with student volunteer loan officers as the greatest benefit of being involved in the program and as CEF’s strongest assets.
• Loan officers benefit from opportunities to interact with the target population outside the confines of the loan.
• Within the term of the summer pilot, CEF received 18 complete applications. CEF approved 5 loans in the pilot – 4 to men and 1 to a woman, with 5 additional applications pending.
• In addition to loan funds, CEF volunteers supported all applicants through resume-building, job searching, connections to services, computer literacy, and much more – all of which significantly increased the true loan value and provided opportunities to applicants not approved for a loan.
The CEF pilot launch answered many operational questions for program managers, but raised new questions relevant to the model’s success. For example, how can domestic microfinance grow to offer more savings opportunities to more communities? How can housing policy be adapted to allow more flexible regulations that provide low-income renter households the opportunity to finance homeownership sustainably? How can banks provide traditional financial services in communities currently dominated by alternative services such as check-cashing and payday loans? Can addressing disparities in the banking market solve questions of asset inequality; or how can we address more than income inequality in public policy? Overall, how can the domestic financial system be re-evaluated or re-structured on a community level to serve a new market – the low-income, enterprising individuals whom financial services have historically marginalized as too expensive to serve. And finally, could microfinance models such as CEF be the answer to any of these questions?
Saturday, August 15, 2009
August Prompt
- Has your involvement in community-based research impacted your motivation to engage in community issues, research or service?
- What assistance will be most helpful to you in the fall semester in wrapping up your CBR project?
- Write a brief letter of advice to a 2010 CBR-SURF.
My involvement in this CBR project has taught me the value of research to any work with community issues. I came into this already motivated to engage in my community’s issues, but without a full appreciation of the role of research in addressing those issues. This has pushed me to seek out ways to continue the targeted incorporation of research into community projects in which I am involved, and to recruit higher-level researchers to work with CEF to answer the many, many questions that I came out of this summer with.
As I work to wrap up my project this fall, the assistance that will be the most helpful will be that of the CEF borrowers and loan officers who have decided to remain a part of my research.
And here’s my brief letter of advice to a 2010 CBR-SURF:
1. Be realistic. A summer is a summer, and when it comes down to it, is really short. Set realistic goals and design a research question that you can really answer in the time period that you have before you. Doing community-based research, we are really all out there trying to make a felt impact on the community we are working with, and we are all tempted to ask and answer a research question that confronts all the issues facing that community. But looking back I think the best way to do that would be to solidify a deliverable research question that focuses on just one part of the larger, holistic question facing our communities - despite the fact that in the course of your research you will come in contact with people and places dealing with the realities of more and deeper questions. Over-ambitious projects are beautiful and make the world go round, but both my community and my research would have benefited in many ways had I narrowed my focus even more than I did.
2. Be prepared to leave your project with more questions than answers.
3. Other than that, just listen, listen, listen.
- What assistance will be most helpful to you in the fall semester in wrapping up your CBR project?
- Write a brief letter of advice to a 2010 CBR-SURF.
My involvement in this CBR project has taught me the value of research to any work with community issues. I came into this already motivated to engage in my community’s issues, but without a full appreciation of the role of research in addressing those issues. This has pushed me to seek out ways to continue the targeted incorporation of research into community projects in which I am involved, and to recruit higher-level researchers to work with CEF to answer the many, many questions that I came out of this summer with.
As I work to wrap up my project this fall, the assistance that will be the most helpful will be that of the CEF borrowers and loan officers who have decided to remain a part of my research.
And here’s my brief letter of advice to a 2010 CBR-SURF:
1. Be realistic. A summer is a summer, and when it comes down to it, is really short. Set realistic goals and design a research question that you can really answer in the time period that you have before you. Doing community-based research, we are really all out there trying to make a felt impact on the community we are working with, and we are all tempted to ask and answer a research question that confronts all the issues facing that community. But looking back I think the best way to do that would be to solidify a deliverable research question that focuses on just one part of the larger, holistic question facing our communities - despite the fact that in the course of your research you will come in contact with people and places dealing with the realities of more and deeper questions. Over-ambitious projects are beautiful and make the world go round, but both my community and my research would have benefited in many ways had I narrowed my focus even more than I did.
2. Be prepared to leave your project with more questions than answers.
3. Other than that, just listen, listen, listen.
Wednesday, July 29, 2009
Our challenges
One of the primary challenges that CEF has faced so far is one of the most essential: how do we ensure repayment? From the traditional banking standpoint, the main determinant of whether or not a loan is approved with whether or not the loan officer judges that the borrower will be able to repay. We are, of course, also concerned with a borrower's ability to repay, but mainly from the standpoint that we want the loaned funds to first and foremost contribute to that individual's personal advancement. In the commercial sector, the "5 C's" they define as criteria in loan approvals are: capital, collateral, credit, capacity and character. We have had to find our own ways to build towards these 5 C's, and alternative ways of measuring and defining these traits in an applicant.
One related question always comes back to how can we make the process easy, but not too easy -- so that it can be at least a little bit self-selecting, but not prohibitive. We are still working to find a balance between up-front requirements that can tie people to the program while allowing us to build credit and collateral internally, and a program that can remain flexible and responsive to individual's time constraints and particular circumstances.
These and related questions will be the main point that I will be trying to get at in my upcoming interviews.
One related question always comes back to how can we make the process easy, but not too easy -- so that it can be at least a little bit self-selecting, but not prohibitive. We are still working to find a balance between up-front requirements that can tie people to the program while allowing us to build credit and collateral internally, and a program that can remain flexible and responsive to individual's time constraints and particular circumstances.
These and related questions will be the main point that I will be trying to get at in my upcoming interviews.
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