Yesterday evening we held an event at Brown University to launch Capital Good Fund’s $4.25 million Direct Public Offering in front of about 50 potential investors. You can click here to learn more about the DPO, but here’s a very […]
If you are a reader of this blog, you’ve probably heard a lot about social enterprise, social business, social entrepreneurship, corporate social responsibility, B-corporations, triple bottom lines…the list goes on. And if you’ve heard about all this, you might be left with the impression that these trends are vibrant and rapidly growing. You might sense at this point that a ‘But’ is coming, and you’d be right. For all the buzz about new business models for social change, the fact of the matter is that the successful enterprises in this space are few and far between and that it remains exceedingly difficult to start and grow them.
I know, because Capital Good Fund is one such social enterprise (that’s the jargon I prefer to use to refer to us), and I’ve seen firsthand all the barriers to growth. Let’s cover some of these barriers:
But no, we don’t live in a nation of masochists; instead, we live in a nation so swayed by the illusion of upward mobility that we can’t see our own stagnation. Even worse, by refusing to note that hard work and perseverance are no longer enough to make it into the middle class–and stay there–we pour our anger onto the 47 million of those that live in poverty. We do this in a myriad of subtle and not-so-subtle ways. For instance, we have a tax policy that favors the wealthy (loopholes, capital gains tax rates that are far lower than income tax rates, mortgage deductions, etc). Or there’s the fact that the poor are more likely to be audited than the rich. Or a funding system for public schools based largely on local property tax revenues, ensuring that the wealth of those living in a community dictates the quality of a school and the likelihood of its children graduating from high school and college. And so on and so on and so on.
We all have dreams that fiercely flicker in the darkest depth of our being; they envelope us like string made of sunlight, spilling through a forest canopy to recover something precious from the Earth. But always we awake to sights and sounds that take us away. We rise, we wash, we eat, we travel, we work, we worry. And always there is that something, that compost composed of all that humanity has discarded because they did not believe it could survive. And because we did not believe in its survival, this precious something seemed to die. And all around us there was injustice: a billion people living on a dollar per day; wars raging in jungles, in deserts, in mountains; millions of human beings languishing in jails for drug addiction, dying from curable disease, despairing of tomorrow, their today filled with sorry; hundreds of millions lacking access to clean air, clean water, information, health care, good governance, good schools, and hope; an environment stretched its limits, struggling to satiate a boundless hunger…
Oh, but even though we thought it dead, this precious something had instead been accumulating beneath our feet. The rivers, streams, beaches, oceans, and even the pavements, the parking lots, the abandoned plots of land strewn about the world, all contain the soil of hope, of justice, of love, of beauty, of truth, and from that soil can sprout the world we all have sought.
I originally wrote this post for the Capital GREAT Blog.
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This morning, as I planted the above tree in my yard, I started thinking about the saying “you can’t see the forest for the trees,” which refers to someone who is so caught up with the details that they can’t see the larger picture. The saying felt especially pertinent as I have spent last week working on how CGF is going to go from 3 loans a week, to three loans a day, to 300 hundred a day and, so on. As I’ve pondered the challenges associated with achieving such significant scale, I have also kept my focus on those three loans a week–the loans to the low-income entrepreneur, to the disabled woman in need of a special chair, to the parent seeking to purchase a computer to help her child with homework–and so as I planted that beautiful little tree, as I showered it with water, with love with care…it occurred to me that when it comes to social good, you must see the both trees and the forest.
What I mean is that, when you plant a tree, or when you empower another human being, you are doing a wonderful thing. However, if all you do is serve one tree, one person at a time, then you are ignoring the scope of the broader problems facing earth and society, and you are also ignoring the broader social conditions that have disenfranchised the person and damaged the forest to begin with. In other words, even as you work, one gesture of kindness at a time, to better the world, you must also think about how to replicate, scale and increase the impact of your actions.
Andy and Jill with a Grameen Bank Center Manager and Borrowers
If you talk to anyone at Grameen Bank they will tell you that the real bank can only be found by going to the villages where Grameen operates. Grameen, after all, means rural, and in fact by law Grameen can only operate its lending programs in the villages. It is for this reason that on our third day in Bangladesh we–Jill, me, an Australian named Mark, our translator Matin and Mark’s translator Yunus–are all crammed into a mini-van barreling down the roads that lead to Rashahi, the zone that we will be visiting. Traffic here is an eclectic mix of motorcycles, bicycle rickshaws, cars, trucks hauling absurdly large loads and comically unstable buses all chaotically weaving and swerving, honking and narrowly avoiding catastrophe.
After 6 hours of bouncing along these roads we are happy, if not relieved, to have arrived at the Branch that will be our home for the next 10 days. It is a two-story building–the first occupied by Grameen–with two small rooms for guests. In order to understand where branches fit into the Grameen hierarchy, I need to take a moment to explain how the bank is organized. For in truth, Grameen is nothing short of an organizational miracle. In fact, I would go so far as to say that while Dr. Muhammad Yunus is praised for recognizing that the poor can be credit worthy, his real, lasting achievement is in the details of how he goes about delivering that credit to them in a cost-effective manner.
This photo shows one of the Grameen center meetings
First Impressions of Bangladesh and Grameen Bank
When Jill and I landed in Dhaka on Sunday the city was shrouded in an intense fog that, we later learned, is quite common this time of year. The scene when we walked outside the airport was pretty much what one would expect of a third world capital city: people everywhere; rickshaws competing for space with taxis and buses and all manner of other vehicles, human, animal and fossil-fuel powered; bustling markets; polluted air, etc.
We were taken to the Grand Prince Hotel and then immediately met up with our interpreter, Matin, who accompanied us to Grameen Bank’s head office. Our first adventure took place when Muhaimeen hailed a bicycle rickshaw that, in just three chaotic minutes, brought us to the office. Amazingly, Grameen, a Bank that exists for and is owned by the poor, has a 21 story head office, one of the tallest buildings in the area. One can’t help but feel that Grameen is a kind of conglomerate for good: leveraging all the ingenuity, efficiency, scale and power of corporations while being driven entirely by the motive to eradicate the world of poverty, of pollution, of injustice. The numbers are staggering: Grameen has 8 million borrowers, 97% of whom are women and all of whom are poor. They have 20,000 employees, a staggeringly high repayment rate, 4 million bank accounts for non Grameen borrowers (all borrowers must open an account so that they can deposit their required weekly savings there), and have turned a profit all but three years of operation. Lastly, they are 95% owned by the borrowers themselves–each borrower gets a share in the company–and 5% owned by the Bangladesh government. In short, Grameen’s Nobel Peace Prize was well deserved.
This photo is from our first flight from Boston to London on 1-01-10
Jill and I are currently in the airport in Bahrain waiting for the third, and final, leg of our 28 hour trip to Dhaka, Bangladesh. We left Boston on the first of January at 7:20 PM and arrived in London at 6:50 AM on the second. As you can see from the photo above, we really lucked out in terms of our seating on the first flight: we got the seats that are usually reserved for flight attendants when they take naps on long flight; as a result, we had seats that could recline all the way down (even though we were in coach) and we had as much leg room as we could possibly want! The flight went smoothly and, as I have been reading The Rise and Fall of the Third Reich–an absolutely fascinating history of Hitler’s Germany–the time passed rather quickly. Our second flight took us from London to Bahrain, where we are currently in the midst of a seven hour layover before one final flight to Dhaka.
I originally wrote this article for The Capital Good Fund’s blog
Here’s a simple dilemma that plagues many American families: how does someone that lives from paycheck to paycheck and is without a credit score—and therefore without a credit card—afford to cover unexpected expenses between paychecks, such as fixing a flat tire, a doctor’s visit, or even regular expenses such as groceries and phone bills? For higher-income families, this simply is not a problem. For one thing, consider how often you use a credit card to make purchases; doing so enables you to delay paying for the item until you have received your paycheck and can afford it. And of course, being higher-income by definition means that one can most likely already afford most expenses that occur between paychecks. But in the case of lower and moderate-income families, a lack of access to credit combined with a lack of savings forces them to so-called payday lenders to make ends meet during the week.
Click here to download a PDF of my complete thesis. Questions and comments are much appreciated!
My masters thesis in Environmental Studies at Brown University looks at how microfinance–the provision of small loans and other financial services to people not considered credit worthy by traditional financial institutions–can be used to advance environmental sustainability as well as social equality and empowerment in the United States. The thesis starts out by explaining the philosophical approach that I applied to problem, namely, that to create a green economy in the US we need to ensure that all segments of society are engaged on environmental issues through entrepreneurship, jobs, investment opportunities and a sense that environmental problems are relevant to people’s lives. The rest of the thesis explores how microfinance can accomplish those goals through 1) supporting ‘green collar entrepreneurs’–low and moderate-income individuals who want to start or expand green micro and small businesses, 2) by providing environmental education to all borrowers so that they are empowered to become civic leaders advocating for policy changes, organizing community events, and starting businesses that improve environmental quality, and 3) by providing loans for residential energy-efficiency and renewable energy upgrades to homeowners that wouldn’t ordinarily be able to partake in these types of programs due to problems with credit history or other barriers.
A key component of my thesis was working to develop an organization, The Capital Good Fund, that can implement these aforementioned ideas. In particular, we are working to develop “green credit builder loans,” which are loans of $100-$300 that finance the installation and purchase of low-flow showerheads, energy-efficient light bulbs and programmable thermostats. The borrower receives education on how to use the product and realize additional savings; she also sees reduced energy bills AND she gets to build her credit history as well. In addition, we are working to develop a larger loan product ($3,000-$10,000) that will cover 100% of the up-front cost of doing residential energy-efficiency projects. What’s unique about the loan is that it is structured such that the payments are equal to or less than the savings, meaning that at a minimum the loan is revenue neutral to the borrower. Lastly, we are working with our business borrowers to green their businesses and we are developing an environmental literacy curriculum that can be taught to our borrowers.