Muhammad Yunus, microfinance pioneer and Nobel Peace Prize recipient. Bonus points for argyle socks!
Loans. Muhammad Yunus. Kiva. Poverty. Grameen Bank.
This is what comes to mind for most people when you mention the world ‘microfinance’. But you’re not alone if the details are a little fuzzy. In fact, the fact that microfinance has become trendy and hip means that more people are likely to feel embarrassed for not knowing what it is, and avoid asking questions.
If that’s you, then help is here. Here’s Microfinance 101:
Microfinance is the provision of financial services like loans (microcredit), savings, insurance, and training to people living in poverty. It has been a great success stories in the developing world in the last 30 years and is widely recognized as a just and sustainable solution in alleviating global poverty.
Benefits: Clients use services to learn skills, grow businesses, employ others, and transform their own communities. One of the harshest aspects of poverty is irregularity and undependability of income. Access to credit and savings helps the poor to spread out cash flows to avoid periods where access to food, clothing, shelter, or education is lost. They can better manage shocks like sickness of a wage earner, theft, or natural disasters. The poor use credit to build assets like buying land, which gives them future security. Women participants in microcredit programs often experience important self-empowerment.
Microfinance Institutions (MFIs) are organizations that provide financial services to the poor. MFIs are, in effect, banks. MFIs can be owned by governments, like the rural credit cooperatives in China; members, like the credit unions in West Africa; socially-minded shareholders, like many transformed NGOs in Latin America; and profit-maximizing shareholders, like the microfinance banks in Eastern Europe.
Sustainability: Microfinance has proven to be a sustainable model of development. This means that when it is done right, relatively small up-front subsidies (from donors or governments) lead to permanent institutions that can continue providing services year after year with no further subsidy needed, and can expand those services to reach many millions of low-income clients.
Microfinance is very complex and there’s a lot to learn, but hopefully this is a good start. If you’re curious for more, go here, here, or, of course, Wikipedia.
What questions about microfinance do you have? Let me know and I’ll attempt an answer in subsequent posts.
Some thrive of the rush of closing a sale, others live for the thrill of helping someone learn a new skill or discover a new truth. Me? I get fired up about efficiency. Conversely, inefficiency irks me.
There HAS to be a better way...
That’s why I was excited to start reading my technical guide for the microfinance product costing tool I’ll be implementing for HOPE/Esperanza in the DR.
The tool was developed by CGAP (Consultative Group to Assist the Poor), an independent policy and research center dedicated to advancing financial access for the world’s poor. Here’s what they say about the tool:
CGAP developed and field tested this activity-based costing tool to help MFI managers understand and analyze individual product costs, especially administrative/organizational costs. Once a product’s costs are determined, the tool suggests methods for understanding why and how the costs were incurred and how the product contributes (or not) to the overall financial viability of the MFI. Activity-based costing, the preferred method outlined in this tool, traces indirect costs in microfinance to core operational activities. It is a potent tool for identifying opportunities to improve business process effectiveness and efficiency.
So here’s the theory behind what I’ll be doing in the DR: measure cost >> understand profitability >> identify improvement areas >> become more efficient >> alleviate poverty using fewer dollars. BAM!
In 2009 I had my first taste of life in the Dominican Republic. (See posts here and here). In just under 2 months I’ll be back for seconds…and this time it’ll be more of a smorgasbord.
From October 2010 – June 2011, HOPE International is letting me cut my teeth in on-the-ground microfinance as a Dominican Republic Fellow. I’ll stumble through Dominican Spanish, commit many cultural faux pas, and attempt to implement a new cost measurement system in bank branches around the Caribbean nation.
HOPE is a Christian international microfinance nonprofit whose mission is to invest in the dreams of the poor in the world’s underserved communities so that they might be released from physical and spiritual poverty. HOPE doesn’t have the size as some of the “giants” of the microfinance community (i.e. Opportunity International, FINCA, Grameen Foundation), and yet it has a deep impact wherever it operates.
HOPE International's global reach
What distinguishes HOPE is its holistic definition of and approach to poverty - certainly a physical condition, but also emotional, relational, and spiritual. To some this might seem nebulous and unnecessary, but I think it reflects an understanding of what it is to be human – body, heart, mind, and soul. I obviously have much more to learn about the organization, but I’m very happy to be joining the HOPE team (which includes my cousin-in-law Chris Horst).
In the Dominican Republic (DR), HOPE operates through another nonprofit, Esperanza International. If you know a little español, you’ve realized that “esperanza” means “hope”. Despite this fortuitous coincidence, they are distinct organizations.
Over the next months I’ll be prepping for the 9-month adventure, raising support, and blogging about thoughts on microfinance, culture, economics, poverty, and…if we’re lucky…a few UFO sightings.
So stop back here like Chicagoans vote: early and often!
Today marked the 98th birthday of Nobel Prize winning economist Milton Friedman. Friedman died in 2006 and left a profound legacy to all of us who enjoy life in the US. I admire him for his ability to communicate counter-intuitive economic principles in common language. Simply put, he makes sound economics intellectually accessible. It helps that he look like a cute grandpa.
In this clip, “grandpa Milton” explains how poverty and economic liberty are related. (Includes a sweet shot of him overlooking Hong Kong. Tough gig!)
“Which system has the best arrangement for enabling poor people to improve their lives?…The freer the system, the better off the ordinary poor people have been.”
It’s been a busy last 2 weeks as I’ve packed in tests & projects as well as preparations for the trip. I leave less than 48 hours!
It’s hard to believe, especially since life continues to move at the same pace. In only a few days I will be traveling to an island in the Caribbean. It will be sunny and in the high 80s next week, but we won’t be hitting the beaches…
Preparations: We’ve been preparing a lot this week: a final logistics meeting on Tuesday night, a prayer service on Wednesday, and team dinner tonight (Thursday). I wish I could say I feel prepared to go, but I’m learning that I can never be fully ready for when God shows up in my life. But I’m definitely excited!
Our team will be driving an hour south to the Pittsburgh airport on Saturday morning to catch our flights. Traveling is a little complicated, since I decided to join this trip later than some of the others. Most of the team will be flying on an earlier flight, while mine departs at 3:20 to Miami, then touching down in Santo Domingo at 10:30pm. The others’ flight is due in Santo Domingo at 10pm, so it should work out well. But still, pray that we would all be able to meet up successfully in the airport. Fortunately I speak Spanish, so the worst-case scenario is not as bad.
After meeting up in the airport, we will head to Las Canitas outside of Santo Domingo. We learned recently that for lodging we will be split into pairs and stay in homes of families in the neighborhood. This was very exciting news to me, as it will provide a lot more opportunities for interaction with the people & customs of the Dominican Republic. Dominicans pride themselves on their hospitality, so we should be in good hands.
On Sunday we will attend a lively Palm Sunday service (Domingo de Ramos) at the catholic church, which I hear is quite the experience. Dominicans, like many Caribbean peoples, are a very lively and passionate people, so it will be fun to worship together with them.
As for our work, the details are still somewhat uncertain. Sister Mary Providence has told us that she has everything planned for us, but what exactly that is…we’ll find out! In general, we will be helping the nuns with their normal ministries to the community – preparing and sharing meals with elderly people, working with children, visiting homes in the community, and possibly doing some painting at the convent. As with any mission trip, we will just have to be flexible and have a good attitude about whatever God has for us to do.
God has opened up an opportunity to serve my team by leading some of the daily devotions and discussions. I still need to do a little planning for that, but God will equip me for every good work that he has for me to do. Hopefully I can be used to help build the spiritual focus and unity of our group while on the trip, through spending time with God and sharing with others what he is teaching me throughout the day.
After (almost) a week of work, service, and eye-opening experiences, I’ll fly back to Chicago (through San Juan, Puerto Rico) and arrive home on Thursday night!
Follow along with Twitter: To help you all follow along, (and at the suggestion of my oldest brother), I’ve set up a Twitter account, which I then linked to this blog – check it out on the right. I’ll be able to send short text message updates from the DR, which will post right here to this website! Hopefully I’ll have adequate cell coverage and it will go through (the rates are actually quite affordable).
Thank you to all of you for your love and support and shared excitement as I embark on this trip. I have felt very loved as you have sent me emails and comments letting me know that you are following the trip and praying for me. Don’t stop now! I need your prayers more than ever.
Things to pray for: Travel safety & that we would all be able to meet easily once we’re down in the DR. Pray for the family that I’ll be staying with, that they wouldn’t have too much trouble dealing with me. Pray for me as I lead the devotionals and other group – reflection times. Pray that I would be emptied of myself and my own strength and be filled with the Holy Spirit, and feed on Christ daily. Pray that our team would both make an impact and be impacted to become more like Jesus. And pray that God would protect us during our stay and on the way home.
This week was very encouraging as I am beginning to wrap my mind around what God has in store for me on my trip to Santo Domingo and beyond. Our team had a good bonding time over dinner this week. We are comprised of 10 students, 6 guys and 4 girls ranging from Sophomore to Senior. Before January I had never met most of the team, so I’ve really enjoyed getting to know everyone.
I’m also glad that my good friend Ben “Chappy” Chapman is on the trip, too. Ben, a sophomore, is in my fraternity and we share a similar passion for Christ and the Spanish language. Ben spent last summer interning at a missions organization in the Dominican Republic, so he has all sorts of insights into the culture (aka all the coolest words and phrases they use!). So far I’ve learned, “Oye pana, ¿qué lo qué?” (translation) “Hey dude, what’s up?”.
God has also been amazing so far in providing financial support. We raised about $500 from our pretzel fundraiser and just learned this week that the college is going to cover 33% of all our travel costs. God is good!
Looking ahead to this next week we will be doing some cultural training, complements of Grove City’s Office of International Education. I’m not really sure what that will entail (hopefully some samples of traditional food!), but I’m sure it will be helpful.
I thought I’d put together a little cultural training of my own, just for you…
Dominican Republic – A Brief Description: If you were Christopher Columbus, where would you set up camp and establish the first capital of the New World? You would land on the island of Hispaniola and establish a little town called Santo Domingo. Though I’m sure Martha’s Vineyard was a close second choice.
The Dominican Republic in the Caribbean
Today, Hispaniola is shared by two nations – Haiti on the west and the Dominican Republic on the eastern half (observe the nifty map). A relatively young democracy, the Dominican Republic is the Caribbean’s second largest nation next to Cuba. Biggest exports include food, minerals, and Sammy Sosa.
While the Dominican Republic has enjoyed more economic prosperity than some of its neighbors, it has been hurt by government corruption, fraud, and extreme monetary inflation (another kind of fraud). According the the US State Department, Dominican children in public schools average only a 6th grade education level. And while GDP per capita (estimated average income) is $8,217, 16% of the population lives on less than $2/day and 29% are malnourished. Check out this UN Development Report for more statistics.
Numbers and statistics, however useful, never tell the full story – or even half the story for that matter. I won’t be going to the entire nation of the Dominican Republic. I will be engaging one city, one neighborhood, one family, one face. I am leaving my native soil to go meet people, to see how they live and worship, to hear their stories, and to serve them with the little I can offer. Most importantly I will learn – from others, from failures and frustrations, from God.
Prayer Requests: Please continue to pray for team unity and friendship. Pray for patience and faith, especially since several members of our team have never had any previous experience with mission trips. As for me, pray that God would fill me with humility and prepare my heart to serve those in Santo Domingo by finding ways to serve my team this week in our preparations.
Each one should use whatever gift he has received to serve others, faithfully administering God’s grace in its various forms. If anyone speaks, he should do it as one speaking the very words of God. If anyone serves, he should do it with the strength God provides, so that in all things God may be praised through Jesus Christ. To him be the glory and the power for ever and ever. Amen. ~1 Peter 4:10-11
As some of you now know, I am heading off to Santo Domingo, Dominican Republic over my final Easter Break of college (April 4-10). There, with a team of 9 other Grove City students and a fearless professor, we will partner with the Sisters of Divine Providence to serve the people of Santo Domingo. Hence, Inner-City Outreach Santo Domingo, or ICO Santo Domingo for short.
The Ministry: The Sisters of Divine Providence are a small convent of four nuns from around the world: Puerto Rico, Germany, Korea, and the United States. They followed God’s call to serve the extremely impoverished in barrio Las Cañitas, one of the poorest neighborhoods in Santo Domingo. Sister Mary Providence Kriley, from the US, is the aunt of Dr. Charles Kriley, Professor of Chemistry here at Grove City College (hey, that’s where I go!). Dr. Kriley has been Santo Domingo many times to serve alongside the Sisters of Divine Providence, and is helping organize this trip.
The Mission: The mission of our trip is to catch a glimpse of our God’s heart for the poor of Las Cañitas, one of the most deprived neighborhoods in Santo Domingo. We’ll do this by helping the Sisters as they minister to the sick & elderly in their own homes, serve food to and eat with local community members, and help out with youth programs. It’s not glamorous work, but it will allow us a lot of interaction with dominicanos. I’m sure both their physical poverty and spiritual vibrancy will be a shock.
The Support: Recently, I was struck by a few things I believe only half-heartedly. One of these realizations was my lack of faith in the power of prayer. This is not good on my part, to put it lightly. God can and does work powerfully when Godly people pray hard.
My Thoughts & Goals: I’m pretty pumped for this trip – there are so many reasons why. Service projects and mission trips have played a huge role in both my spiritual formation and personal perspective on the world. In high school I had the unique privilege to travel to Costa Rica twice and establish a relationship with a local church and youth group there. Since then, however, I have not been a part of any intentional mission trip – though I have learned more and more that life is just one big mission. So, the opportunity to have my faith stretched and challenged is a little scary, but even more exciting. I’m also really looking forward to being able to listen, speak, and live in a Spanish speaking culture. Spanish is definitely something I want to cultivate and use long-term. I feel like God has given me a knack for Spanish, a mind for economics and business, and a passion to see brokenness of this world restored. Because of this, a career in international economic development intrigues me – but it all begins with seeing poverty as God does. In addition, I’m hoping to learn a lot about poverty. So, This trip is an amazing opportunity to do so by serving some of the most impoverished people in the Western Hemisphere. That said, my thoughts and goals for this most likely will go right out the door the moment I step off the plane, to be replaced by what my Father has in store.
Prayer Requests: I’m hoping you can join me in praying for this trip – whether its just a quick prayer right now or something more regular, God honors it and it makes a difference. To help you out and encourage you to stay engaged in prayer, I’ll include specific prayer requests once a week (at least) leading up to the trip. And feel free to email me and ask for other ways to pray if I don’t give enough detail.
This week has been good for our team as we worked together on fundraising (selling tasty soft pretzels!) – please pray that we continue to grow into a unified team, getting to know each other better. Pray also for my spiritual preparation, that my heart would be made sensitive to the Holy Spirit to get out of my comfort zone when I see opportunities to serve, share the gospel, and love sacrificially.
Well, that’s about it for now. Leave a comment, ask a question, and come back soon for more updates!
Welcome to MarshallBirkey.com! I’m your host, Marshall.
Though the impetus for dusting off this corner of the Internet is my impending trip to Santo Domingo, Dominican Republic, I hope to make this a more permanent home to keep in touch and let you know what’s on my mind. So pull up your office chair (feel free to bounce up and down if you have hydraulics) and stay awhile!
