Defeating Global Poverty

GlobalGiving.com was setup as a grassroots organization to match small-scale donors with entrepreneurs addressing social problems in developing nations. They describe themselves as an "online marketplace for international giving." They address projects in categories including healthcare, the environment and education. Donors can browse and select by geography. Global Giving is a non-profit, so gifts are tax deductible.

Global Giving (along with Kiva -- read my previous post) claim that they have on-the-ground partners who are vetting the projects and people requesting funding to give you (the donor) confidence that your gift is being used for what it is intended and that the project is genuine.

Listen to Public Radio International's The World Micro Finance Report which interviews the leaders of Global Giving and Kiva.

As you can tell from many of my other posts, I believe that microcredit (providing loans vs. handouts) is proving to be a more effective in creating long-term, sustainable improvements in developing nations. The reality is that microfinance in certain countries currently needs to be subsidized until the microfinance institutions gain scale.

Labels: globalgiving, poverty, social investing

A recent article in Business 2.0 revealed what Dean Keman, inventor of the Segway, has been working on ... a solution for not one, but two of the world's biggest issues -- clean water and electricity. An estimated more than 1 billion people don't have access to clean water and more then 1.5 billion have no electricity.

His prototypes (they are not yet being manufactured in volume) are each the size of a washing machine. The water purifier uses small amounts of electricity to produce 1,000 liters of pure drinking water each day. You can input any kind of water including raw sewage. The electricity generator will burn anything (including cow dung) to generate 1 kilowatt ... enough to power 70 efficient light bulbs. The target end-user cost is $1,000-2,000 per machine.

While the benefits of clean water are obvious, the core benefit of electricity is increased productivity in being able to do activities when it's dark outside. This includes reading, doing homework and working. One of the biggest challenges for the poorest children is that they don't have electricity in order to study at nighttime.

Keep the innovations flowing!

Read full article

Labels: poverty, social enterprise, technology

Microinsurance is a relatively new financial service designed as affordable insurance for the poor ... typically in developing countries. In concept, the microinsurance products are similar to regular insurance products except they are typically providing benefits on a much smaller scale requiring a different approach in order to be feasable and sustainable. Microinsurance products can cover health, life, disability, crops/weather, housing, capital equipment and almost anything else which can be insured.

Increasingly, microfinance institutions (MFIs -- banks for the poor) are experimenting with new microinsurance both as a benefit to their clients as well as a method to reduce risk. One of the top reasons that microloans fall into arrears is due to health issues (including death) of the borrower or in their family. Many MFIs already have required life insurance built into their microloans so that if the borrower dies, the loan is automatically paid off and surplus can be used by the family to pay for funeral arrangements and give them some time to start earning again.

I just got back from participating in the Unitus Leadership Summit in Malaysia. I wanted to highlight examples of two innovative pilots of microinsurance which were discussed.

Grameen Koota, a MFI based in Bangalore, India has been piloting a health insurance program in 2 branches for the last year for their microloan clients. They have priced this program at about $3/person/year so a typical family of 5 can be insured for less than $1.50/month. For this fee, they are able to provide free outpatient services, free surgeries, significant discount on generic drugs and 3 hospital day stays per year. The clients are able to use convenient, designated local hospitals for health services. They are expecting that they will need to charge a small co-pay for outpatient services (less than $0.25) when they roll out the program more widely into other areas.

Jamii Bora Trust (JBT), a MFI based in Nairobi, Kenya is now serving more than 130,000 members with microloans and other financial and social services. When JBT experienced some microloan repayment issues in 2000, they researched and found that the #1 reason was health issues with a family member. In over 80% of the cases, borrowers were paying hospital bills first and therefore were not able to make loan repayments. JBT did research and found the cheapest commercial option they could provide to their members would cost $100/person/year which was way too expensive for their clients. They found a local Catholic hospital group which agreed to partner with them for a cost of $15/year to insure a borrower plus up to 4 children! Even at this amazing low cost, JBT has run this health insurance program at a surplus every year while providing good, basic healthcare services to their members.

These innovations are pioneering new models of affordable and sustainable healthcare solutions for the poorest of the poor. Credit is important in providing opportunity to generate new wealth. Insurance is a key tool in providing the important safety net from calamities/misfortune which otherwise might wipe out all assets (and earning potential) and place victims back into desperate poverty. Please post comments on other experiments and progress in microinsurance that you are aware of.

Other resources:

• Healthcare Insurance for the Extreme Poor
  
• Microsave's Microinsurance Center
• Microinsurance in microfinance institutions
  
• USAID's MicroLinks [some articles on micro-insurance if you search]
  
• International Discussion Forum on Micro-Insurance [somewhat outdated, but good definitions and an overview.
  

Labels: grameen koota, jamii bora, microinsurance, poverty

Unitus, the global microfinance accelerator, is hosting the Unitus Leadership Summit in Malaysia. This 3-day event brings together CEOs and senior management from 11 high-growth microfinance (MFI) banks based in developing countries including India, Mexico, Kenya & Philippines were participating. I am onsite for this event. I am blogging more details on the Unitus blog.

The focus of this summit is peer learning. On average, these organizations are growing at 70-80% per year. With this kind of growth comes major challenges in outgrowing systems, people and capital.

Mixed in with these entrepreneurial leaders are a group of talented business leaders from other industries who are presenting lessons learned from high growth and how to think about creating a high performance organization. Executive have experience from high-tech, consumer products, organization development and venture capital. This process of having an intimate environment of multi-industry executive interaction and learning is very unique as most microfinance conferences generally involve only MFI-insiders. This is another example of the innovative approach that Unitus is taking to helping the microfinance industry break-out of its overall less-the-stellar growth (based on the market demand.)

Full disclosure: I recently joined the board of Unitus because of how impressed I am of their innovative approach to accelerating microfinance.

Labels: poverty, social entrepreneurs, unitus

I discovered a new microfinance service called Kiva which is attempting to truly enable person-to-person loans between a loan provider in developed countries and a low-income borrower in developing country.

I am very interested in these kind of innovations because there are currently very few options for middle-class North Americans to invest (not donate) their money in helping very low-income microentrepreneurs start or expand their microbusinesses in order to grow their income and break cycles of generational poverty.

Kiva is using technology to keep the costs of this kind of personalized service to a minimum. Here's how it works. You go to kiva.org web site and browse through a selection of pre-reviewed loan applications. You get to read an overview of the borrower (including photo), what business they want to invest money in, what size of loan they are requesting and how much they have raised so far. Once you've found someone you'd like to make a loan to, you can instantly (using Paypal) make a loan for a portion (minimum $25) or all of the remaining loan ask size. All of the money is managed by Kiva's web service with human intervention so it is very cost efficient and scalable.

Once the borrower has received a full funding of their loan, then they are actually given the loan typically with a 6-12 month repayment (with interest) period. All of the pre-screening and on-the-ground loan management is outsourced to local Kiva microfinance partners. The partners assign a loan officer who is responsible for posting all of the loan "application" information on the Internet and to write journal entries (essentially a blog) along the way as there is new information to report. All of this information is available for easy access by loan providers (and anyone else who is interested) through Kiva's web site. Additionally, loan providers are emailed with updates when there is a new posting with one of their loans.

I tried this out. I made a loan of $50 as part of a $500 loan for Steve Ogondo (see his picture on the right.) Steve needed working capital for his new butchery business he called "Gracious God Butchery" based in Tororo, Uganda. Steve has now raised his $500 and now has received his loan. You can now follow his progress on-line. You can also post comments back to him. An assigned loan officer, Moses Onyango, handles all of the translation and communication. I did my research and issued my loan all in about 15 minutes via their web site! And I received an email on Feb 3rd when his loan was granted.

This reminds me of the highly successful (and still innovative) approach to personalization which World Vision International provides with child sponsorship. By putting a face, a name, some individual details and an ongoing communication, both parties benefit from the human connection despite the geographical and cultural differences. World Vision has been able to sign-up the masses for just $26/month ... something very doable for most westerners.

There are lots of questions that this approach brings up like:

• how do you know the money is really going to the person in question?
• will you get paid back?
• is this ever going to be operationally sustainable because of the high cost of having the loan officers providing these updates?
• doesn't this cause privacy concerns?
  

Kiva attempts to answer these questions in their FAQs. The reality though is that many of these issues will take time to work out. Kiva is functioning as the "trusted intermediary" and are seeking to use open communication to facilitate this trust.

Kiva is also not yet (and for the foreseeable future) paying any interest back to loan providers ... the most the you can get back is the amount lent. They are using the interest income generated to pay for operating cost which are substantial. Kiva is therefore a non-profit and is still heavily subsidized. This is a reasonable strategy. Most people won't care about getting interest on a loan of $25-100, so this works fine. In the worst case of the loan not getting paid back, your loan becomes a charitable gift.

All of that said, I really do like the concept and innovation of this approach. Using web technology (and probably mobile technology shortly), there are amazing new possibilities for connecting people to make a social impact. Being able to personally be involved in helping someone in a far-away place with the opportunity to improve their lives is very powerful.

Please visit Kiva and consider making a small investment today.

Labels: kiva, microfinance, poverty, social investing

I recently finished reading an interesting book by Narendra Jadhav called Untouchables: Family's Triumphant Journey Out of the Caste System in Modern India. If you want to understand India and how to be effective in accelerating impact on poverty there, you need to understand the caste system and how it affects how the vast majority of people think in India.

If you think the India caste system is dead, all you need to do is open up any Indian newspaper and turn to the classifieds section for people seeking marriage partners. Almost all of the ads are explicit about the caste system of the ad buyer as well as the caste requirements of the spouse they are looking for. The explicit caste recognition is less front-and-center in other social spheres, but it is very much there under the surface and affecting how people think about themselves and each other.

This book is a biography of a dalit family living through The Great Depression, the India independence movement and up to today. Dalits are also known as the out-castes or untouchables. They are lower than the lower-castes as they are below the caste system. It is a story of triumph and yet a call to continue to fight to break the caste slavery system.

Read my longer book review

Labels: book reviews, caste, india, poverty

Bono posted a transcription of his remarks (or watch video) at the recent National Prayer Breakfast. OK. Hold it there a second. Bono was speaking at the NPB? President Bush was there along with lots of members of Congress, other political leaders and, of course, religious leaders. So, what the heck was Bono doing at this event let alone speaking?

Then I read his speech. I was inspired. Now I understand why. Bono is very self-deprecating about this privileged lifestyle and he uses humor to set people at ease. Bono demonstrates the ability to connect with people from lots of backgrounds. He reminds us that he grew up with a Protestant mother and a Catholic father ... in Ireland. He smiles out loud about the diverse group of people who are turning their hearts and attention to the "least of them."

He calls us beyond charity to justice and equality. He reminds us about how equality is such a hard thing for us to address as the job is never done.

He praises the President for his increases in support for defeating poverty in Africa. And then he reminds us that the job is far from done. Then he focuses on a very simple ask ... 1% more of government budget to be spent on defeating poverty ... a tithe of a tithe.

I continue to learn from Bono on how to approach the complex challenge of defeating poverty.

Labels: bono, international aid, poverty, u2