Going Undercover
Once per quarter we gather the staff of Capital Good Fund for a half-day “staff date.” Each of these staff dates revolves around a different topic: customer service, fundraising, social impact, etc. Last Friday’s topic was all about understanding our competition, and to do that we decided to go into the “belly of the beast.”

We met at our storefront office in Woonsocket, RI and then split up into two-person teams. We assigned each team to a predatory lender–payday lender, pawn shop, or rent-to-own store–and then sent them out to pose as customers and learn how they do business. Laura, our Connecticut Programs Coordinator, and I posed as a brother and sister making $1,500 per month and looking to purchase the biggest TV possible. To do that, we went to Aaron’s Rent-to-Own, a publicly traded firm that sells TVs, furniture, appliances, and other electronics. Our goal was to pay attention to signage, the layout of the store, the nature of our interactions with their employees, and how they pitched their products.

I’ve spent so much time thinking about predatory lending here in the US that it’s been a while since I’ve contemplated what the picture looks like in other countries. Sure, I know that Grameen Bank got started in Bangladesh in the ‘70s to put the loan sharkes out of business, but I haven’t stayed on top of what’s going on today.

Two articles this week helped me gain some perspective. First, Eli, my Development Assistant, spotted a hilarious art installation called Pocket Money Loans, which satirizes the payday loan industry in the UK; I highly recommend you check out their website, http://pocketmoneyloans.com. The joke is brilliant: pocket money cash advance loans for kids at the wonderful interest rate of 5,000%!

President Obama’s recent Executive Order on immigration will have a significant impact on 4-5 million immigrants who are at present living in this country illegally. I’m not interested in discussing the politics of his action, so no need to read on if you’re looking for that! Rather, I want to go over what I think will become a key challenge for immigrants who wish to participate moving forward: the cost.

This is nothing new. Ever since our founding in ‘09 we’ve been doing loans to cover the cost of applying for US citizenship–$680 to the government plus legal fees. For many low-income families, that fee is simply too high; in fact, I estimate that there are around 700,000 to 800,000 legal permanent residents in this country who are eligible for citizenship and don’t begin the process due to cost.

Yaay Equitable Financial Services!

There are a lot of wonderful things about the use of financial services as a tool to tackle poverty: it respects the dignity of the poor; generates a revenue stream for the lender; builds the borrower’s credit; and allows borrowers to make investments, such as in a security deposit or computer purchase, that they would otherwise be unable to make.  One challenge, however, is that there is an inherent tension between making loans to the poor and maintaining high repayment rates: the lower the income of the borrower, the riskier the loan.  This is not due to any character flaws on the part of the poor, but rather the instability–financial and otherwise–that often defines their lives.

Given that our poverty-fighting mission, it is imperative that we figure out how to make loans to deeply vulnerable populations without taking on an unacceptable level of risk.  Many of our referrals come from caseworkers and agencies that work with the temporarily homeless, the mentally ill, ex-offenders and survivors of domestic violence, and there it is very frustrating to deny a loan application that can transform the life of the applicant–a loan to cover the cost of a security deposit for a homeless family, for instance.

Ask any CEO of a nonprofit about the worst part of their job, and they will almost certainly speak to the never ending struggle to raise funds.  I come to that conclusion not only because it is how I respond to the question, but also thanks to nearly six years of interacting with my fellow nonprofit leaders. Grant reports, newsletters, proposals, lunch meetings and calls with potential donors are all critical elements of our job descriptions; yet they, on the face of it, have nothing to do with the mission. 

Almost all of us get into the nonprofit sector to serve others and solve problems.  What motivates us is knowing that our client’s lives are improved: we like to see the borrower, talk to the recipient of Financial Coaching, and read success stories.  Of course we all know that without money, none of this good work can be accomplished.  Still, as we spend hours staring at a computer or schmoozing, it can at times feel like you are more a glorified paper-pushed and beggar than agent of social change.

My Fortunate Experiences with a Healthy Lifestyle

I’m an athlete, and have been one my entire life. Growing up, I played all the usual sports: soccer, baseball, basketball, and then, more seriously, tennis. For each sport I had lessons, practices, and games to which my parents drove me. There were the costs of gas, equipment, and any number of other expenses. As I got into my teens I began to really focus on tennis, which meant gym memberships, a focus on healthy food, lessons, clothing, gear, and travel to and from matches. None of this came cheap; no matter how frugal you are, these costs are unavoidable, especially if you want to perform at your best.

Nowadays I am an avid cyclist. I bike to and from work, and go for training rides whenever possible. I take advantage of everything I can to stay motivated and make the most of my riding: I keep my bikes maintained, have the requisite gear for any weather, and even use a coach. As a result of all this and more, I am able to lead a healthy lifestyle.