6 challenges to microfinance in the US: 1-3

by Marshall on September 17, 2010

If microfinance is so great in other countries, let’s bring it to the US!

A lot of folks have shared this thought (myself included). Maybe its a surprise, but its already been done. Well, “attempted” is probably a better word. As early as the 1990′s (I know, pretty ancient) groups like the Grameen Foundation started experimenting to import microfinance to the US. So, far it hasn’t really taken off. How come? Good question.

1. Group cohesion is more rare in the US.
Micro-lending models used by organizations like HOPE International, Opportunity International, and the Grameen Foundation depend on group lending for loan repayment accountability, training, and sharing of best-practices. High degrees of trust and friendship are necessary for group loan effectiveness. In the US, this level of group cohesion is not the cultural norm. Few poor people have 4-5 friends they consider trustworthy who are also interested in running their own business. Artificially constructed groups are ineffective and often break up over time.

Even trust falls can't solve group cohesion problems...

2. Lower population densities increase microfinance operating costs.
In many developing nations, the poorest members of society live in densely populated areas. Microenterprise institutions can serve many through fewer locations, which lowers operating costs. In the US, however, population density is lower, and the cost of delivering microfinance services increases. (Yes, even nonprofits have to worry about the bottom line.)

3. US markets are much less localized, limiting the types of small business opportunities.
Microfinance is successful in economies characterized by small and highly localized markets. In that setting, it takes little capital to insert oneself into the system. In the United States, however, there are international, national, and state-wide markets. Products like milk are available in supermarkets or grocery stores, and the amount of capital needed to enter a production and distribution network is likely to be substantially larger. So a micro-enterprise loan will only be helpful for small, local service-oriented businesses (rather than businesses selling goods), and only services not easily connected to a national or statewide distribution system.

Stay tuned for reasons 4-6…

{ 0 comments }

Friedman on Poverty

by Marshall on July 31, 2010

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.”

{ 0 comments }

La República Dominicana

by Marshall on March 16, 2009

Time for an update! Thanks for tuning in again.

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

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.

Hasta pronto,

~M

{ 3 comments }

ICO Santo Domingo

by Marshall on March 3, 2009

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!

~M

{ 4 comments }

Next Entries →