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?
Thursday, September 10, 2009
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.
Sunday, July 19, 2009
July Prompt
- Briefly describe the current status of your project.
- How does your CBR experience compare to your initial expectations?
- What has been the most rewarding and challenging aspects of working with your community partner?
Currently, CEF has approved 5 loans and has 4 pending. So, we got off to a slow start recruiting, intaking, and approving applications, but we have a groove now and are definitely on a roll. Referrals are more often coming on an applicant-to-applicant basis (or borrower-to-applicant, depending), and from our outreach events.
I think that my experience so far is more or less in line with my initial expectations. Initially, I was of course hoping that everything would run smoothly, all borrowers would always show up to group meetings and interviews, and that all borrowers would show incredible and rapid progress. But I think I always knew that realistically, we would hit snags, people would miss meetings, miss payments, and we would find ourselves in a tough spot every once in a while. And that has all happened, and every time, we as a group find ourselves in the position to make a decision, and we make it, I record it, and that decision essentially becomes a part of the way the pilot is operating. For example, just today the borrower whose loan application we approved most recently let us know that she would not have the funds to make her savings deposit until August 7th, which means that she would not be able to get her loan disbursement until then. We talked with her about options because she is taking out a loan for a bus pass to get to school in Durham and is currently on a short-term leave of absence from her school. We talked with the group and were able to figure out that even though we approved her loan for the full $300, she could make her first month bus pass purchase and her books next week, hold the loan funds for the second month bus pass, and that would bring her initial savings deposit down from $25-30 to $14-$15, which she could afford to make sooner. Then, when she is ready to get her second month bus pass, she would just need to make another $10 savings deposit in addition to her loan repayment that particular week. This will make it possible for her to go back to school sooner, get out sooner, and get full-time employment sooner.
Additionally, I have two formal interviews scheduled with two of the borrowers this week to discuss how the program has worked for them thus far. So far, these two borrowers have primarily experienced the application and approval process, so we will be talking together to assess that process, weaknesses, strengths, things to change, things to consider that we may have never thought of before, and in general -- does the process work for the applicant? In the following week, I will be holding similar interviews with a couple of the loan officers asking essentially -- does the process work for the volunteers? We'll be coming together in one of the coming borrower group meetings and holding a focus group post-meeting to talk about how to address issues that come out in these interview sessions.
The most rewarding aspect so far with this project has just been seeing that there is a GREAT demand for this program and that as soon as you start talking about it, people listen, ask questions, get ideas, and get moving. When I was working on planning this project, it was easy to loose sight of whether or not this loan program would actually be of any service to anyone or whether it could really be useful, so it has been incredibly rewarding to see that it is in such demand and people view it as a legitimate and unique opportunity, which is everything I hoped.
The next has been to see that the application process is truly self-selecting in many ways. Those that follow through with the application, the multiple meetings with loan officers, and the up-front savings truly are qualified to borrow. The next rewarding aspect has been working with the CEF volunteers. They are amazing, and have truly come to appreciate that just as much as our first borrowers are pilot borrowers, they are all pilot loan officers and this position will be exactly what they make of it. Their impact on the program as individuals, even though all joined on just in May-June, has been incredible. They are the people that have made this thing that has been a figment of all of our imaginations for so long into a working and constantly innovating pilot program, and I have to say, I am truly fortunate that they all randomly got on our summer listserv.
The next rewarding thing actually just happened. One of the men I have worked with for a long time on another project, Talking Sidewalks - a literary magazine written by individuals living on the street or in the shelter, applied for a loan today. He applied for a small loan, just for a cell phone, and looking at his finances knows that he will be able to pay it off shortly. He is really interested in the program because of the small business planning, small business taxes/accounting, and those types of counseling services that we can either provide or put him in touch with. But his ultimate goal with us is to be a loan officer, which is really my ultimate goal for the program -- that as borrowers graduate, they can stay involved with the program by doing outreach, working as a loan officer, and being there as one-on-one, been there and done that mentors. And this man in particular would do a fantastic job as our first loan officer who is also a graduated borrower.
I am working on posting to this blog more often now, so please expect more soon. I post a great deal to the project blog, specifically every time a decision is made within the pilot and every time we discuss an applicant or intake. Please just send me a quick email if you would like to read more on the past couple months of operation on the project blog, which is at http://thecef.blogspot.com, and is permission-only for privacy purposes.
- How does your CBR experience compare to your initial expectations?
- What has been the most rewarding and challenging aspects of working with your community partner?
Currently, CEF has approved 5 loans and has 4 pending. So, we got off to a slow start recruiting, intaking, and approving applications, but we have a groove now and are definitely on a roll. Referrals are more often coming on an applicant-to-applicant basis (or borrower-to-applicant, depending), and from our outreach events.
I think that my experience so far is more or less in line with my initial expectations. Initially, I was of course hoping that everything would run smoothly, all borrowers would always show up to group meetings and interviews, and that all borrowers would show incredible and rapid progress. But I think I always knew that realistically, we would hit snags, people would miss meetings, miss payments, and we would find ourselves in a tough spot every once in a while. And that has all happened, and every time, we as a group find ourselves in the position to make a decision, and we make it, I record it, and that decision essentially becomes a part of the way the pilot is operating. For example, just today the borrower whose loan application we approved most recently let us know that she would not have the funds to make her savings deposit until August 7th, which means that she would not be able to get her loan disbursement until then. We talked with her about options because she is taking out a loan for a bus pass to get to school in Durham and is currently on a short-term leave of absence from her school. We talked with the group and were able to figure out that even though we approved her loan for the full $300, she could make her first month bus pass purchase and her books next week, hold the loan funds for the second month bus pass, and that would bring her initial savings deposit down from $25-30 to $14-$15, which she could afford to make sooner. Then, when she is ready to get her second month bus pass, she would just need to make another $10 savings deposit in addition to her loan repayment that particular week. This will make it possible for her to go back to school sooner, get out sooner, and get full-time employment sooner.
Additionally, I have two formal interviews scheduled with two of the borrowers this week to discuss how the program has worked for them thus far. So far, these two borrowers have primarily experienced the application and approval process, so we will be talking together to assess that process, weaknesses, strengths, things to change, things to consider that we may have never thought of before, and in general -- does the process work for the applicant? In the following week, I will be holding similar interviews with a couple of the loan officers asking essentially -- does the process work for the volunteers? We'll be coming together in one of the coming borrower group meetings and holding a focus group post-meeting to talk about how to address issues that come out in these interview sessions.
The most rewarding aspect so far with this project has just been seeing that there is a GREAT demand for this program and that as soon as you start talking about it, people listen, ask questions, get ideas, and get moving. When I was working on planning this project, it was easy to loose sight of whether or not this loan program would actually be of any service to anyone or whether it could really be useful, so it has been incredibly rewarding to see that it is in such demand and people view it as a legitimate and unique opportunity, which is everything I hoped.
The next has been to see that the application process is truly self-selecting in many ways. Those that follow through with the application, the multiple meetings with loan officers, and the up-front savings truly are qualified to borrow. The next rewarding aspect has been working with the CEF volunteers. They are amazing, and have truly come to appreciate that just as much as our first borrowers are pilot borrowers, they are all pilot loan officers and this position will be exactly what they make of it. Their impact on the program as individuals, even though all joined on just in May-June, has been incredible. They are the people that have made this thing that has been a figment of all of our imaginations for so long into a working and constantly innovating pilot program, and I have to say, I am truly fortunate that they all randomly got on our summer listserv.
The next rewarding thing actually just happened. One of the men I have worked with for a long time on another project, Talking Sidewalks - a literary magazine written by individuals living on the street or in the shelter, applied for a loan today. He applied for a small loan, just for a cell phone, and looking at his finances knows that he will be able to pay it off shortly. He is really interested in the program because of the small business planning, small business taxes/accounting, and those types of counseling services that we can either provide or put him in touch with. But his ultimate goal with us is to be a loan officer, which is really my ultimate goal for the program -- that as borrowers graduate, they can stay involved with the program by doing outreach, working as a loan officer, and being there as one-on-one, been there and done that mentors. And this man in particular would do a fantastic job as our first loan officer who is also a graduated borrower.
I am working on posting to this blog more often now, so please expect more soon. I post a great deal to the project blog, specifically every time a decision is made within the pilot and every time we discuss an applicant or intake. Please just send me a quick email if you would like to read more on the past couple months of operation on the project blog, which is at http://thecef.blogspot.com, and is permission-only for privacy purposes.
Sunday, June 21, 2009
Applications and Decisions
The program has received the first 3 applications! I will be posting on these applications and the results of these applications following Tuesday's meeting with the full group.
June Prompt
- Please share surprises or challenges you've encountered with your research project thus far.
- Has your research question or scope of your project shifted at this point?
One of the biggest challenges for me in my research has been outreach. CEF is "the new kid on the block" in terms of the social and economic service sector, and is working to build relationships and build our name in the community. It is hard to accurately and fully evaluate borrower applications when we cannot evaluate them from a larger pool of applicants. I believe that the implications of this will push us to do targeted outreach for at least a month before the launch of the full-fledged project in the fall. We are working now on several outreach events, offering the resources we have accumulated to offer to borrowers (resume-building workshops, personal finance and budgeting workshops, etc.) to non-borrowers. This way, we can sit down with potential borrowers, work with them through these activities, and if it seems applicable, discuss CEF with them on an individual basis. We are also working to reach out more to area agencies to get more referrals. Referrals have been our main source for our first 7 applicants.
Other challenges have been basic programmatic decisions. It helped to be able to research other MFIs, whether or not they were in the US, to inform those decisions. For example, we were deciding whether or not we should require up-front savings before the loan is given out. After looking into the model used by Washington CASH, the Rural Center, and several other organizations, we decided that we wanted to include this requirement. We also were deciding whether or not we would do matching savings for this up-front savings, and have decided to do so after conversations with other MFIs.
My research question is in general the same - How can CEF be structured to best meet the needs of the homeless through microfinance? - but I am realizing more and more the value of replicating the project and doing another pilot in a place like Durham, NC. Durham, though just 10 miles down the highway from Chapel Hill is a totally different environment - in terms of size, demographics, community action, social services, and social issues. To really pilot an idea like that of CEF, I am beginning to think that it must be applied in more than one environment to also be able to talk about what parts of the idea are specific to Chapel Hill-Carrboro, and what parts are replicable. We have talked with folks in Durham, and will be planning for this pilot, and hopefully launching a small pilot in January 2010.
- Has your research question or scope of your project shifted at this point?
One of the biggest challenges for me in my research has been outreach. CEF is "the new kid on the block" in terms of the social and economic service sector, and is working to build relationships and build our name in the community. It is hard to accurately and fully evaluate borrower applications when we cannot evaluate them from a larger pool of applicants. I believe that the implications of this will push us to do targeted outreach for at least a month before the launch of the full-fledged project in the fall. We are working now on several outreach events, offering the resources we have accumulated to offer to borrowers (resume-building workshops, personal finance and budgeting workshops, etc.) to non-borrowers. This way, we can sit down with potential borrowers, work with them through these activities, and if it seems applicable, discuss CEF with them on an individual basis. We are also working to reach out more to area agencies to get more referrals. Referrals have been our main source for our first 7 applicants.
Other challenges have been basic programmatic decisions. It helped to be able to research other MFIs, whether or not they were in the US, to inform those decisions. For example, we were deciding whether or not we should require up-front savings before the loan is given out. After looking into the model used by Washington CASH, the Rural Center, and several other organizations, we decided that we wanted to include this requirement. We also were deciding whether or not we would do matching savings for this up-front savings, and have decided to do so after conversations with other MFIs.
My research question is in general the same - How can CEF be structured to best meet the needs of the homeless through microfinance? - but I am realizing more and more the value of replicating the project and doing another pilot in a place like Durham, NC. Durham, though just 10 miles down the highway from Chapel Hill is a totally different environment - in terms of size, demographics, community action, social services, and social issues. To really pilot an idea like that of CEF, I am beginning to think that it must be applied in more than one environment to also be able to talk about what parts of the idea are specific to Chapel Hill-Carrboro, and what parts are replicable. We have talked with folks in Durham, and will be planning for this pilot, and hopefully launching a small pilot in January 2010.
Saturday, May 30, 2009
First Applicants
For the past couple weeks, I have primarily been researching other microfinance institutions that operate in the US and going through all of their applications, in addition to researching the format and content of business loan applications and applications for area service providers such as the IFC and Vocational Rehabiliation, Inc. I then took all of those applications and synthesized the pieces that seemed most relevant to CEF and worked with CEF members and men from the shelter to create this final application, which will be the working application for the pilot summer program.
Download a copy of the application here:
http://www.box.net/shared/98gzbubrar
So, once we had a final draft of the application, the next step was to start getting it out into the community. I have since received 3 referrals from the Chapel Hill Case Manager and Street Outreach Worker for PATH, 1 additional applicant who was not specifically referred to the program that I work with on Talking Sidewalks, and then am expecting referrals from the IFC in the next couple weeks.
CEF volunteers and I will be holding our first two application sessions tomorrow, and I will post notes directly following those sessions. Exciting! Both applicants are really promising candidates, and I look forward to speaking with them more in depth about their plans tomorrow. Until then.
Download a copy of the application here:
http://www.box.net/shared/98gzbubrar
So, once we had a final draft of the application, the next step was to start getting it out into the community. I have since received 3 referrals from the Chapel Hill Case Manager and Street Outreach Worker for PATH, 1 additional applicant who was not specifically referred to the program that I work with on Talking Sidewalks, and then am expecting referrals from the IFC in the next couple weeks.
CEF volunteers and I will be holding our first two application sessions tomorrow, and I will post notes directly following those sessions. Exciting! Both applicants are really promising candidates, and I look forward to speaking with them more in depth about their plans tomorrow. Until then.
Tuesday, May 12, 2009
Using Local Microfinance to Assist Transitions from Homelessness
My summer research is titled "Using Local Microfinance to Assist Transitions from Homelessness." Over the summer, I will be working to organize the two first pilot groups of borrowers for a new student-run microfinance initiative called the Community Empowerment Fund (CEF). CEF aims to provide individuals who are homeless or at-risk of experiencing homelessness with access to small loans that enable these individuals to help themselves out of poverty. CEF loans are meant to directly further the acquisition or expansion of employment. This includes, but is not limited to, loans for the purchase of goods, trainings, start-up funds, equipment, tools, uniforms, and transportation costs. Loans are given on the basis of the application process, which includes the following written application and a personal interview. Upon approval, a flexible repayment schedule will be worked out according to the client’s financial situation.
The first two groups of borrowers this summer will consist of 5 women and 5 men, respectively. The program will work mainly through referrals, but will accept and review all applications.
My summer research will ask the question: How can the Community Empowerment Fund be structured to best meet the specific needs of the homeless population in the Chapel Hill-Carrboro area through microfinance? I will evaluate the program’s efficacy and its ability to empower individuals towards obtaining more stable housing and employment, and will work with borrowers to adapt the structure of CEF.
The first two groups of borrowers this summer will consist of 5 women and 5 men, respectively. The program will work mainly through referrals, but will accept and review all applications.
My summer research will ask the question: How can the Community Empowerment Fund be structured to best meet the specific needs of the homeless population in the Chapel Hill-Carrboro area through microfinance? I will evaluate the program’s efficacy and its ability to empower individuals towards obtaining more stable housing and employment, and will work with borrowers to adapt the structure of CEF.
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