RPOS 572: Rockefeller College Microfinance Initiative
What we did and why we did it
The Rockefeller College Microfinance Initiative began as an idea generated from the Spring 2009 Foreign Economic Policy class. The challenges of development and the hardships of global poverty inspired a drive to get involved as a unit, as well as on behalf of the College. While noting its shortcomings, the class elected to get involved in microfinance and the decision was made to use Kiva.org as the institution through which the investment would be made. The microfinance or micro loan model of aid has a much different structure to foster a higher standard of living for individuals living in poverty. These programs provide money, but in the form of loans rather than goods or services. These loans are given to entrepreneurs that can use the money to invest in their own production capacity. They invest in projects ranging from business investment for expansion, agricultural production, or whatever project that will generate income so that the loan can be repaid and passed on to the next project. Thus, Kiva was a good fit for our initiative. One of the best traits of microfinance projects is that the individuals involved are in charge of their own destiny. They are taking on risk, just the same as the donor is taking a risk of not having their loan repaid. There are also added benefits of bypassing many government agencies that could potentially divert funds, or cherry pick development projects in their countries. By utilizing KIVA, we have the ability to pick our own partners and projects in order to ensure that our funds are well managed, put in the hands of individuals that want to enhance their lives, and produce results that can be passed on to the next generation.
The initiative was also introduced simultaneously to the Political Science and Public Administration departments, both of which were glad to get involved. Professor Holly Jarman enlisted the help of her colleagues and with the help of class members pitched the idea to a class in Public Administration that, after assurance that future years would also donate and raise funds also joined the effort. Thus began the endeavor to enlist donations. With a goal of $300, emails were sent to professors, and some face-to-face groundwork was carried out in getting staff on board with the idea. At this point, we had done what could be considered the easy part of the ordeal. We still needed to decide which partner organizations, what types of projects we would consider donating to and how much to give to each. The class then dedicated time to ironing out the details of unwanted traits of partner organizations, and key things we wanted to pay special attention to. We concluded that each member of the class would take a subregion, as divided by the Kiva’s website. We did not want to invest in organizations that required their loan beneficiaries to partake in religious activities as a stipulation, and we did not want organizations whose values undermined the basic values of projects like this. The class decided that preferable were organizations with similar core values to the University at Albany, ones that had lengthier track records on Kiva, had high repayment rates, low comparative interest rates and did not engage in external activity antithetical to the aforementioned core values. Finally, the class wanted to invest in a variety of organizations so that by the time the next generation of students would be working on Kiva, they might be able to see some of the returns.
Next, the class narrowed down their results by region. This was extremely challenging because Kiva relies upon its partner organizations to report local indicators. This naturally compromised the reliability of the figures. Regionally, Eastern Europe had a scant listing of organizations. Asia had the most successful organizations by rate of repayment (90% and above), whereas the other regions hovered within the 80% range. Our meeting revealed that narrowing down a top 5 set of organizations was difficult because in some instances, we wanted to give a chance to pilot organizations but were fearful of our donors feeling insecure in such an investment. In other instances, we liked the established organizations but an examination of their websites revealed an overly capitalist project (i.e. long polished wooden board room tables with businessmen in interviews that consistently mentioned how “profitable” they were, which cast a slightly negative feeling. To our surprise, our initial concern that women would not be represented was completely countered by the fact that almost all the organizations made above 50% of their loans to women. During two hours of discussion, the class decided to narrow their short list of 5 to an even shorter list of 3 by region. We posted these to our class website, and joined the Kiva Group Membership Dr. Jarman had created on the Kiva website. On the last day of class, we were informed that the Initiative had raised $800 dollars. Having exceeded our goal, the money was split between the political science and public administration classes to be donated accordingly. In the coming years it is our hope that students will engage as thoroughly and unreservedly by gathering donations and actively carrying on this project. It is our hope that by encouraging an entrepreneurial spirit, and raising the standard of living directly for individuals that have the drive and ambition to engage in development in some of the least developed countries, that in some way we are helping them transition to a modern economy one business at a time. This initiative is an embodiment of the world within reach.