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> Posted by Center Staff
No one knows the business of social entrepreneurship better than Rupert Scofield. Cofounder and president of FINCA International—a nonprofit microfinancing institution with 7,000 employees serving 750,000 customers in 21 countries— Scofield has been a social entrepreneur for 40 years.
In The Social Entrepreneur’s Handbook, Scofield leads you through the entire process of starting up and running a nonprofit, sharing personal success stories and advice on what not to do—valuable lessons he learned the hard way. The process, while risky, isn’t as difficult as you might think. Practically speaking, you need only two things: an idea and a plan. The former comes from you and you alone. This book supplies the latter.
The Social Entrepreneur’s Handbook illuminates the path to building a successful nonprofit from the ground up. You’ll learn how to:
* Create a realistic plan for getting started in your chosen cause Read the rest of this entry »
> Posted by Eleanor Coates
This is the third dispatch from Eleanor Coates, who is spending every day this month interviewing FINCA/Zambia clients as part of FINCA’s client survey process. For more from the field, be sure to read her first and second posts here.
I recognize that the microfinance industry has been ingenious, as a whole, at using incentives to reduce risk and moral hazard. FINCA uses village banks to provide social incentives for people to repay their loans in a timely manner, responding to the pressure of their friends and group members. They also use the groups to monitor client businesses, to ensure that the clients are engaging in entrepreneurial activities rather than using their loans for other purchases, such as consumer goods. Clients have the incentive to watch out for each other, to work together and to collaborate in their efforts to build up their businesses in order to not only repay their loans, but to ensure that they will be able to get larger loans in the future. FINCA has been able to structure the incentives for the village banks such that repayment rates stay high, allowing FINCA to continue functioning with interest rates which, according to many clients, are lower than most. However, there are other incentives at work in the relationship between the clients.
FINCA Zambia has both a social and a financial mission – to help the poorest entrepreneurs have access to loans, create businesses and jobs, and to be a commercially solvent and sustainable microfinance institution. FINCA clients, as we have seen through many client interviews, are well aware of the consequences of delinquency in their loans. But some people tell us that their loan officers are too strict when it comes to paying back their loans – that if they could only have some allowances it would be better for them. Loan officers have incentives not to make too many allowances for clients, while still earning and maintaining their trust. They face a delicate situation. While at first, FINCA’s strict insistence, as reflected in its loan officer incentive structure, seems at odds with its social mission, failed endeavors into microfinance by organizations who were not strong enough in their institutional incentives to collect loans show that the pressure that FINCA applies to its loan officers to collect loans from their clients is well founded. Without strong incentives, even with perfectly well-intentioned clients who will pay back, the logistics of exceptions would increase costs and interest rates, making loans affordable to fewer people. So while the incentive structures for loan officers do serve to create some tension between them and their clients, that tension is a necessary component of making microfinance work.
> Posted by Eleanor Coates
In this post, Eleanor Coates writes from Zambia with early thoughts about her experience as a FINCA fellow.
FINCA’s Client Assessment Tool is used to study clients, their lives, consumption, their well-being and quality of life. As a fellow, I underwent the week of training in Washington DC in the bustling K Street office, where our task seemed straightforward: go into the field and interview clients using the tool. We were told to expect to do about seven interviews a day, and sometimes more. We were told to expect to have a steep learning curve. We were told to expect things not to go according to plan. Enter Zambia.
The clients are centered around markets, so every day we go with a new loan officer to a new market in Lusaka. Some markets are markedly more chaotic than others. Our first interviewing experience with real clients took place at the clean and calm Chalston Market, with patient clients who sat with us for upwards of two hours, answering our somewhat awkwardly personal questions about their health, their families, their toilet type. The next day found us winding under tunnels and across train tracks to a plastic-bottle-paved market in the center of town. Now, with a full week of interviews under our belts, we are gaining confidence and speed with the interviews, learning when to speed up and when to slow down, when ask more questions and when to accept the stories for what they are. We have learned not to anticipate any aspect of the process, and to enjoy the variety that we have encountered. From one day sitting in the dusty back yard of a village banking client’s home after a half hour walk to the very outskirts of town, to perching on a pile of textiles in the back of a crowded tailors shop. Trekking across Lusaka every day, from the chaos and shade of Kamwala market to the wide and winding rows of the Garden market, the unexpected is what makes this experience so rewarding.
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