Making Microfinance More Effective

Harvard Business Review

The Grameen model of microfinance gained a great deal of attention in the international development field after early data showed that it was associated with high repayment and low default. One study showed that just eliminating the costs associated with opening a savings account in Kenya significantly increased uptake, overall savings, and investment levels among market vendors. First, they may reduce financial institutions’ costs. For the 2.5

Innovating The Brick-and-Mortar Injustice Infrastructure

Mills Scofield

This week''s post is by Andy Posner , Co-Founder & Executive Director of Capital Good Fund ( CGF ), a non-profit microfinance organization targeting the root causes of poverty through innovative micro-loans and personal financial coaching.

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Learning from Microfinance's Woes

Harvard Business Review

A few weeks ago, I attended a lecture about microfinance, and got sucker-punched. Expecting to hear a litany of pros and cons about the business, and an exploration of good and bad models, I was instead greeted with a knockout punch: Microfinance doesn't work, at least not in the way we think it does. The pugilist-presenter was David Roodman, a fellow at the Center for Global Development and the author of a new book, Due Diligence: An Impertinent Inquiry into Microfinance.

Guest Post: An Entrepreneur's Thoughts on Market Incentives & Foreign Aid

Mills Scofield

It may seem obvious, but when I spend all day thinking what is most cost effective and what is the most efficient allocation of resources, it is easy to lose track of the human dimension of charitable giving.

An Approach to Ending Poverty That Works

Harvard Business Review

Microfinance and other market-based interventions don’t generally reach them. It probably sounds expensive, too, but it isn’t as costly as one might think. It costs less than $500 per person for the full two years in Bangladesh.

Can Technology End Poverty?

Harvard Business Review

I agree with Peter Diamandis and Steven Kotler, who write in Abundance: The Future is Better Than You Think that higher productivity associated with the falling cost of technology is leading us to a world of plenty. If you believe the hype, technology is going to help us end global poverty.

How One Startup Developed a Sales Model That Works in Emerging Markets

Harvard Business Review

Experiment #5: Microfinance Institutions. In emerging markets, microfinance has been a key economic engine in helping low-income households fund businesses and other important purchases in daily life. Prem, a BioLite Burner on our West India team, gives a HomeStove demonstration to a group of customers at a microfinance branch in Rajasthan.

Give Impact Investing Time and Space to Develop

Harvard Business Review

As the sector grows through this period of creative destruction, models that don’t work will die out, models that survive will attract copycats, operating costs will go down, and winners will rise to the top. Impact investing has captured the world’s imagination.

Banking on Women and Girls: Key to Global Poverty Alleviation

Harvard Business Review

On this 100th International Women's Day , it is right to reflect on how women have become the heart of the microfinance industry. It is easy to forget that the initial motivation for microfinance roughly 30 years ago was, to a great extent, gender neutral. The pioneering microfinance institutions sought to provide credit to poor entrepreneurs who had no assets to pledge as collateral and, consequently, were denied access to capital by the formal banking sector.

Facebook Presence Is an Important Clue to a Social Venture's Future

Harvard Business Review

This makes sense to Milaap.org , a social enterprise in Bangalore that crowdsources low-cost capital for microfinance institutions through its online platform.

It's Not All About Growth for Social Enterprises

Harvard Business Review

An organization that can scale without directly doing the work or incurring the costs will ultimately have far bigger impact than one trying to do it by growing big. Successful examples of this approach are still rare; most people point to microfinance.

Servant Leadership Observer ? November 2010

Modern Servant Leader

Why Meetings Suck (Costs) & How to Reveal It. Peer-to-Peer Microfinance: A Sustainable Solution to Poverty. Twitter. LINKEDIN. The Modern Servant Leader Servant Leadership & Technology. Leadership. Technology. Resources. Other. Archives. September 20, 2011 Servant Leadership.

Making Sense of the Many Kinds of Impact Investing

Harvard Business Review

Currently, impact can mean anything from venture investments in new health technologies to microfinance loans in Peru; from affordable housing in the US to renewable energy in India; from social impact bonds to private equity funds that create jobs.

Businesses Serving the Poor Need to Get Over Their Unease About Profit

Harvard Business Review

Business cost structures in low-income markets are daunting: Operational expenses such as distribution frequently dwarf the costs that companies face in developed markets, while customer acquisition and retention often demand unusually intense — and costly — levels of consumer engagement. The microfinance industry is a rare D and E success story.

Funders Can Give More than Money

Harvard Business Review

Six years ago, David and Donna Allman approached Opportunity with an idea that fell outside our traditional microfinance model: to build a Community Economic Development (CED) program in Nicaragua. It called for leveraging the profits of the global microfinance institution, and coupling them with private investments from the Allmans and their donor network. We know that microfinance alone will not break the poverty cycle.

The Smart Way to Make Profits While Serving the Poor

Harvard Business Review

Instead, companies seeking to improve the lives of the world's poor should focus on a more realistic route to profitability: They need to elevate gross margins far above the company average by pushing down variable costs and boosting the price consumers are willing to pay for a unit of product. The company saves on labor costs because local wage rates are low.

Using Games to Get a Handle on Bank Risk

Harvard Business Review

The use of gaming has the potential to provide win-win solutions for both consumers and financial institutions in the following ways: Consumer Insight: The most obvious benefit to gaming is the ability for both banks and consumers to learn at low cost. They would be able to see the true cost of homeownership beyond the monthly payment — homeowner's fees, garden maintenance, utilities and taxes, extra gas mileage — and how it would affect the choices available to them.

The Downside of Focusing on Women and Girls

Harvard Business Review

Consider the undeniable costs of a caricatured bias toward women. David McKenzie's research in Sri Lanka, Mexico, Brazil and Ghana has shown that urban male entrepreneurs typically earn far higher returns from microfinance than women do (in Sri Lanka average returns on capital for women were 0%, for men 10%).