I tweeted recently about an article by Bruce De Boskey who is a prominent US philanthropist, business strategist and consultant with numerous significant positions in the business and academic world who is dedicated to community building and social change. In this article, he summarized the success of not-for-profit microfinance organisations in America, which is very relevant and encouraging to Purple Shoots, seeking to follow a similar model in Wales. Microfinance in developing countries, where it has its roots, has been relatively well researched and documented – we hear less about its success in developed world economies.
The article starts with statistics – one in seven US citizens living below their poverty line – that’s 47 million people on very low wages or out of work. For all of these, most with hopes, dreams and aspirations to improve their circumstances, traditional banking and lending programmes are unavailable, just like they are here in the UK. De Boskey goes on to say that microfinance organisations in the US have helped many of these people start businesses, creating jobs, lifting themselves out of poverty and these have also had an impact on their neighbourhoods and communities. This is encouraging for Purple Shoots seeking to do the same in the UK context.
He cites many examples – I have picked out a couple. Accion New Mexico, Arizona and Colorado is a not-for-profit microfinance organisation working in those states of the US. Last year it gave loans totalling US$10m to 1500 businesses. Their repayment rates are around 98% and 7000 jobs have been created in 330 communities. Rocky Mountain Microfinance Institute focuses on people a little further away from starting a business (as Purple Shoots seeks to through its self-reliant groups) offering business coaching and training to help rebuild confidence and self-esteem. In 3 years they have helped launch 83 businesses in Denver, going beyond just lending to help activate the potential of their clients.
De Boskey concludes that microfinance fills a significant gap in access to finance in the US but many of these organisations can only achieve what they have through the generosity of donors and investors who accept that this type of lending may not be profitable (although it can be sustainable), but it can provide a vital social impact on communities.
Full article here: http://www.denverpost.com/business/ci_26347045/microfinance-helps-low-income-folk-build-businesses-rise