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Economics for the Future

How's the economy looking to you?

Of course, none of us has ever seen "the economy," since the term is just an abstraction. But it is an abstraction that covers such a broad range of activities that we probably need a few new words to cover them all.

If you're poor, the economy doesn't look too good. Worse, there are many people with power who don't have your best interests at heart. The US House is flirting with reductions in food stamps of up to $135 billion (while keeping subsidies for already wealthy mega-farmers).    

Cynically, state legislatures are denying the poor the opportunity to receive health care coverage under ObamaCare. In Michigan, for example, working parents now must be below 64% of the federal poverty line to receive Medicaid; jobless parents must be below 37%; and childless adults are ineligible altogether. With Medicaid expansion (a provision of ObamaCare that the Supreme Court ruled each state could make its own decisions about), people in each of these groups would be eligible if their incomes were below 133% of the Federal poverty line. Yet the Michigan Senate is unsure if will allow this, although the federal government will cover more than 90% of the cost for the next decade.

On the other hand, the economy looks pretty bright for those with the smarts -- make that connections -- to benefit. Thomson Reuters has come under scrutiny for packaging the University of Michigan-produced consumer confidence index for the benefit of high-frequency traders who pay to receive it two seconds before it is released more widely -- a window in which hundreds of thousands of trades are executed and millions of dollars made by understanding consumer sentiment just a shade in advance of other stock traders.

Legal or not (there is some question), and ethical or not (ditto), this kind of economy has been designed for the exclusive benefit of the wealthy. Despite claims of creating more efficient markets, there is nothing in this kind of activity that resembles the economic activity that benefits, and that we can "see," on Main Street.

That economy -- the real economy -- is defined by jobs, actual goods and services, and enduring relationships -- not milliseconds. As Marjorie Kelly explains in Owning Our Future, this economy can be structured for sufficiency (genuinely meeting a community's needs, over a long period) rather than efficiency (trying to make as much money and profit as quickly as possible). The key is developing means of ownership that create genuine wealth, whether that ownership is in the hands of employees, communities, or mission-driven organizations.

Just one example, which Kelly mentions: Evergreen Cooperatives in Cleveland provide jobs and opportunities for low-income residents. Its employee-owned green laundry, solar/energy efficiency, and hydroponic gardening businesses contract with major Cleveland organizations including the Cleveland Clinic, University Hospital, and Case Western Reserve University to provide needed services. The revenues from these businesses stay within Cleveland to create community wealth rather than wealth for absentee owners, mainly supporting residents with household incomes below $19,000 (the federal poverty line for a family of four is $4,500 more than that). An institution that received much deserved recognition at the recent BALLE conference, Evergreen businesses allow employees to purchase an ownership stake in the company after six months of employment (which it helps finance), entitling them to vote on all issues (one vote per owner), to receive health insurance, and to expect $65,000 in equity from profits in eight years of employment.

This kind of economy has many different manifestations. What unites them is the vision of a stable, inclusive community, striving for sufficiency, honoring the needs of people and respecting the natural world. An economy built to endure, not live its life in seconds.

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Moving Pictures Move the World

Imagine the sound you make when you blow on a long untouched stack of papers, and visualize the cloud of dust you stir up ....

        <insert the electronic equivalent of sound and image here>  

... because, after a days that became months of not writing anything on this blog, starting just before Christmas, I'm back at it.

What's been going on? A few highlights:

1. Significant progress on my "Wish I Knew" book, based on interviews with 100 plus social entrepreneurs. Amazing people, amazing stories and insights about their work, and incredibly generous in sharing what they've learned. With all that they've shared with me, the book should practically write itself.  More likely, I'll probably plod forward as I try to pick just the right word adjective adverb, as I often do.

2.  Have been working with some students and faculty colleagues on advising three social enterprises. One, Circles USAholds great promise for alleviating poverty in the US; another Global Fairnessis working to improve the livelihood and the environment for tens of thousands of poor Indian women. The third, Impact Enterprisesis working to bring jobs to Zambia for the dual purposes of tackling stifling unemployment and helping fund a ground breaking educational initiative.

More on all of this later.

But, where I left off -- when I took my few-days-become-a-few-months break ... 

I'm convinced that videos are one component of placing people's attention on societal issues (think: Academy Award-winner, Argo) and hopefully promoting social action (think: Chasing Ice and A Place at the Table). For the second year, my undergraduate Base of the Pyramid / Social Enterprise students created videos with impact for their final projects. They supported real organizations and their needs: fundraising, recruiting volunteers, raising awareness, etc. Several videos have been seen more than a thousand times. Others helped raise several hundred thousand dollars. Others (still embargoed) will be shown by internationally-known organizations and aired on television and in other media campaigns.

So, my 4-month late Christmas / Hannukkah / Kwanza present to you ... 

Racquet Up Detroit: Squash to promote education in Detroit

Motor City Blight Busters: Reclaiming Detroit


Detroit Girls on the Run: Empowering girls

Eco Fuel Africa: Creating jobs and clean energy in Uganda

We Support Detroit Schools: Pretty self-descriptive

University of Michigan Entrepreneurship Commission: Student entrepreneurship

Detroit Parent Network:  Supporting Detroit parents

Dance Marathon: Fundraising campaign for pediatric rehabilitation

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The Erb Institute at the University of Michigan along with the Union of Concerned Scientists held a workshop last weekend titled, "Increasing Public Understanding of Climate Risks and Choices: What We Can Learn from Social Science Research and Practice."  A video from the public Town Hall can be found here.

As the name of the workshop suggests, the intent was not to advance the science of global warming -- the science is overwhelmingly clear that climate change is occurring, the changes are due to human activity, and the consequences may be extremely destructive.  Instead, the intent of the workshop was centered on effective communication to help make these ideas more widely accepted and, most importantly, lead to action.

Some sobering statistics (courtesy of Anthony Leiserowitz of the Yale Projet on Climate Change Communication):

  • Various polls (Gallup, Pew, Harris Poll, and others) all show that, since 2006, the public has become less convinced that global warming is happening
  • We are also becoming less likely to believe that human activity is the cause
  • The majority of the public does not believe there is agreement among most scientists that global warming is happening, and that misperception, too, has become more pronounced in the last few years.
  • There are "Six Americas" in terms of general beliefs about global warming, those who are: Alarmed, Concerned, Cautious, Disengaged, Doubtful, and Dismissive.  There are approximately the same number of Alarmed or Concerned (37% combined) as there are Disengaged, Doubtful, or Dismissive (35% combined).

Much of the workshop focused on what social science recommends we do to set the facts straight and, more important, create action. Among the the ideas offered were suggestions to make sure  that all messaging 
  • begins emphatically with the idea that scientists agree that climate change is occurring, 
  • that it is caused by human activity, 
  • can lead to drastic changes and 
  • is solvable if we act
Further, to be effective in communication we must 
  • understand which of the Six Americas we're addressing 
  • appropriately tailor messages for each group and 
  • address them through the appropriate messenger (church congregations are vey open to their ministers, e.g.).
But what can you do?

Eric Pooley, of the Environmental Defense Fund and a former reporter, commented on journalists succumbing to "balance bias," where they feel compelled to balance pro's and con's to the point where reporting becomes mush (my word, not his).  

Thus, there is a need for non-mainstream communication, especially social media.  Already we've seen the powerful effects of social media in the Arab Spring and the Occupy movements.  Young people can play a strong role in trying to stay informed and spread the truth.

More concretely, it's possible to act as a environmental gadfly. Climate change deniers deliberately attempt to disseminate bad science.  (How else can we explain the disconnect between the actual consensus about climate change and the public's misunderstanding?)  Where are these views most likely to be published?  Mother Jones? The New Republic?  Not likely.  What about The Wall Street Journal?  Fox News?  You (and friends) might each "adopt" a news outlet that communicates bad science. Vigilantly track everything they publish about the environment and write in to correct errors in fact.  Every time.

Or: Help communicate what efforts work (or don't) in addressing climate change.  Follow and measure efforts in your own backyard and share them with clearinghouses like ClimateAccess.

Use sources such as this and NEON when it is up and running to stay informed about the scientific consensus and what people can do to effect change.  You do not need to be a geothermal scientist to be informed.  But by being informed and acting on your convictions, you just might help us save the planet.  (Put me in the America that is Alarmed.)

Food Gleaning Hybrids

glean  verb:  to pick over in search of relevant material

In America, the wealthiest country in the world, more than one in seven families are unsure if they will have enough to eat.  Among these 50 million people are 17 million children.

Yet, our country has more than enough food to feed us all. The USDA estimated that more than one-fourth of all food produced is never even eaten.  Others  put the figure at nearly forty percent, or more than 29 million tons of food wasted each year.
So, there is ample "relevant material" to pick through.

That is where organizations such as Gleaners Food Bank of Southeastern Michigan come in.  Founded in 1977, Gleaners obtains and "banks" surplus food, which it then distributes to other agencies that provide food directly to those in need.  In 2010, Gleaners distributed 36.7 million pounds of food.  Gleaners purchases at low cost about one-third of the food it distributes with the rest being donated by grocers, retailers, manufacturers, the government, and others.

Gleaners is a large organizations with $75 million in revenues, including $55 million in donated food.  Gleaners provides food through nearly 500 partner agencies.  The very scale of its operations requires food to be collected, "banked," and then redistributed to others.  This places an emphasis on non-perishable food.

This is where other "hybrid" models of food gleaning have taken up the challenge.  For instance, B-Line Sustainable Deliveries in Portland, takes a very -- well, Portlandia -- approach to gleaning and to delivery more broadly.  Fully in keeping with its ultra bike-friendly culture, for-profit B-Line's goal is to create sustainable, livable urban communities.  Pulling their 600-pound capacity storage crates with electric-assist cargo "tricycles," B-Line makes local pickups and deliveries, freeing businesses from managing these details, and packing a wallop of carbon savings at the same time. Now, B-Line has entered the food gleaning business.  

By being completely "connected" in the local distribution network within Portland, B-Line is able to use its trikes to make small pickups and timely deliveries.  Partnering with high-end food companies like Whole Foods, B-Line whisks food around the city, providing meals at half the typical cost to shelters and food kitchens, and letting them serve delicacies including fresh, organic produce (which might otherwise be landfilled). B-Line's financing model relies on B-Shares, or tax-deductible contributions individuals and its partners make to its mission to eliminate hunger in Portland.  B-shares can be purchased in one-time, $20 denominations (which provide 40 meals) or on a recurring, subscription basis.

But this is but one of many other hybrid gleaning models.  In Ames, Iowa, fresh, gleaned food is intended to provide the ingredients for Food-At-First's non-profit restaurant.  This is a restaurant that serves all strata of Ames -- from those who would typically go to a food pantry to others who simply want to enjoy a meal out. Customers may donate what they can (helping subsidize the meals of others) or offer to work in exchange for what they have eat.

Many benefits flow from this model, certainly not the least of which is the ability to feed the hungry with food that would otherwise be wasted.  But the restaurant also fosters a sense of community between those of us fortunate enough know that there will be a next meal, and those who aren't.  In many of the problems we face as a society, creating a shared mission among community members from different walks of life is a vital first step.

In their book Cradle to Cradle (read it if you haven't) Will McDonough and Michael Braungart describe a new industrial model where waste equals food. In other words, industrial processes should produce "waste" that can become an input ("food") for producing something else.

Gleaners, B-Line, At-First-Food, and other organizations like them show how this advice can be taken literally -- and nutritiously -- to address a problem we are more than capable of solving. 

A number of us at the University of Michigan are banding together to explore sustainable food systems.  Among us are are faculty members representing Ecology and Evolutionary Biology; Natural Resources; Urban and Regional Planning: Public Health, Political Science, Complex Systems; and Business.  The University is funding five faculty positions to support this work.  Stay tuned as I report on this exciting initiative.

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The Art of Social Entrepreneurship

I just closed the book on fall  semester.  For the past few weeks, I've been plowing through an eight-inch stack of papers my students wrote on topics related to microfinance, social entrepreneurship, and the base of the pyramid.  


I'd be lying if I said I never complained about all the grading, but there's a nice upside, too:  Because the assignments I give are open-ended, asking students to think deeply and write about a topic that really grabs them, I feel like I'm crowdsourcing answers to the question "What stuff do you think a professor of social entrepreneurship and microfinance should know about that he might not?" I get the benefit of receiving both interesting ideas and the current outlook and perspective of those I'm trying to reach.

I read about specially commissioned train rides across India to prepare social entrepreneurs; soccer balls that convert kinetic energy into electricity; and a Detroit classroom where students learn about the judicial system by issuing real criminal sentences.  (Sound interesting? Follow this space.)

But one paper stuck out by helping confirm and extend some ideas I was struggling with.  A paper about the video projects that I had assigned my students.

A few years ago, I was at the Skoll World Forum at Oxford. Steve Skoll spoke about his transition from eBay to Participant Media (then Participant Productions), which creates social change through movies.  An Inconvenient Truth, Fast Food Nation, Syriana, Waiting for Superman, The Help -- these and other films attract people wanting a fun night out and, in the process, educate and let people know how they can take action (with respect to the environment, the food industry, global oil, education, and domestic workers in these cases).

I loved the implication that you don't need to join the Peace Corps, start a microfinance institution or work for Ashoka to create social change. And if you could do so as a filmmaker, what about as a a photographer, an artist, a designer, or an engineer?  Indeed, I've thought about this a great deal and have laid out some of my thoughts about looking at the impact you the person or you the corporation can have by exploring the Changemaker's Cube.

Fast forward to last August. I was contemplating how I might gut a course I teach that culminates in students writing business plans for base of the pyramid businesses.  Why would I do that to a highly successful course?  Because, as much as I knew that students were learning from creating those business plans, they were still fictitious businesses.  Students weren't creating genuine impact.

So, I decided my students would create videos for real social enterprises.  Videos with impact.

Early last September, when I told students what their term-end project would be, much was uncertain.  How would they react to the idea of something so, uh, non-academic? How would they learn to film and edit videos? What organizations would the videos support?  Was there any chance this project could even work?

Today, the day ater Christmas, answers have replaced most questions.  Students created videos dealing with health care and microfinance, the revitalization of Detroit and student volunteerism, improving education and creating better food systems.  Sponsoring organizations were located in Liberia, Haiti, and Honduras as well as an hour away in Detroit and a short walk across campus.

Students succeeded in all aspects, from researching their organization, capturing their essence through short videos, and creating calls to action that create awareness for their organization, help with fundraising, recruit volunteers, or provide other forms of support.

But a question remained.  I knew students were engaged by producing their videos, but were they actually engaged in a process that transcended that particular form of expression? 

Jon Hornstein, one of my students, was exploring a similar question and wrote about it in his paper for the course.

The project undoubtedly was a blast for our team.  We each had the opportunity to display a certain talent and use this towards the creation of something that told an important and unique story. We learned a great deal through the process both about the company and social entrepreneurship in general, and we were able to share our creative product with an appreciative audience. So not only was this project a blast, but it was incredibly worthwhile. Yet, for some reason, after its completion, I wondered if we had accomplished what we had set out to do. More poignantly, the question I kept finding myself coming back to was: did we help?
Or, in other words, does art themed around social entrepreneurship truly contribute to the betterment of humanity through business, or is it just purely an art expression for aesthetic purposes. If I am a rapper who writes songs about Social Ventures and different issues going on around the world, am I a social entrepreneur?
Art's role in Social Entrepreneurship is to help a social enterprise gain traction and publicity. But much more than that, art's is to build a bridge ... between the strictly logical and the emotional. By linking hope with memories and inspiring courage, art serves to make tragedies bearable by connecting one's emotions with the cause. 
[And that is also] the essence of social entrepreneurship! It's not just a form of business centered solely on profits, but a form of business that is also about bettering the common good. To better the common good, one needs to have a passion to make change, and this is what art evokes in us. 
The rap song we created for Union Microfinanza doesn't just inform the public about their mission, but it emotionally connects the listener with the problems of Honduras and, hopefully, evokes a sense of compassion among the listener to care about the cause. This, after all, is where creativity and growth stem from in Social Entrepreneurship, through caring about a particular issue and shifting the focus of Entrepreneurship from solely garnering profit, to garnering profit with a greater cause.
So now group beansquad can rest easy, as we truly did help Union Microfinanza in eliciting these emotions surrounding their cause among the video's viewership. We succeeded, after all. That is, if the video goes viral.

Da beansquad's video helps support coffee growers in Honduras who receive support from a microfinance institution specially designed to provide them financial, technical, and marketing support.  Help it go viral by watching it on YouTube.  Or watch it below.
Jon Hornstein is the lead rapper in the video.

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What We Buy Matters

It's Sunday after Thanksgiving. Christmas must be tomorrow, or maybe "Black Friday" has become "Black Every Day" based on my email inbox and all the TV commercials I've seen the past few days.

Buying stuff is alive and well.

But something else is in the air, something I'm reminded of as I plow through end-of-course papers written by my students in my course on "Solving Societal Problems Through Innovation and Enterprise." That something else is the spectrum of ways we can vote with our wallets to bend corporate behavior.

I believe that we can shape the evolution of a better society by creating better tests and then amplifying the efforts of companies that pass them ( What follows are sketches, inspired from students, that give illustration. As these ideas continue to percolate, you'll be hearing more from me about nouveau consumerism.

Mia B. alerted me to consumerism for "slactivists." These are people who aren't deeply involved with political or social causes but can be induced to participate when the situation is right.

Carrotmobs (carrot: as in reward, as opposed to a stick) are relatively ordinary consumers who, when given a signal, mob a store that commits to using an agreed-upon percentage of the mob's revenue to make "sustainability" improvements like changing its lighting or buying organic seeds to grow and sell more healthful produce. 9carrots (9: I have no idea) operates similarly by letting shoppers find participating stores, buy lunch or a ladder there, and receive "9carrot receipts," which direct 10% of their purchases to the proprietor's energy upgrades and allow consumers to track these energy improvements.

For consumers, these can be fun experiences, maybe a bit time consuming if lines get long (but, hey couldn't that make them more fun?), and they just buy what they already intended to anyway. Companies learn that a more inclusive way of being tested ("I'll shop at your store more if you're more socially relevant") can help their business.

TOMS Shoes (TOMS: as in "tomorrow," not Thomas) creates a generational dividing line. I've polled friends and family in my age group -- above 30, well above -- and no one (and I've asked at least two people) has heard of TOMS. But as Mary Fritz begain her paper, "It's impossible not to notice that all the cool kinds are wearing TOMS." TOMS combines consumer choice with a business model built at its foundation to create a better society.

TOMS Shoes creates a better world through consumerism by donating one pair of new shoes for every pair that someone buys. This model has placed one million pairs of shoes on the feet of poor children.

Why shoes? When kids go barefoot it shows that they're poor, but it also contributes to their poverty by increasing the odds that they'll contract disease, get injured, or be denied admission to school. Other buy-one-give-one companies are sprouting up, selling everything from eye glasses and clothes to books, food bars, and even services like tutoring.

Whereas 9carrots lets consumers know that, if they need Crest toothpaste, they can purchase it "sustainably" by shopping at a particular store, the buy-one-give-one business model shapes consumer preferences. Consumers view TOMS as "social" shoes and seek them out, creating a strong, "hip" brand.

GoodGuide is a step ahead of TOMS, possibly 140,000 steps. GoodGuide lets consumers choose products based on characteristics covering their entire life cycle (from manufacture to disposal),  helping put in place new and better tests of which products are best.

GoodGuide takes publicly available information and lets consumers conveniently use it to compare various products. Consumers choosing coffee, T-shirts, or even cars can make comparisons based on societal/environmental considerations including their toxicity, greenhouse gas emissions, labor practices, etc. All told, 140,000 products are rated using over 1,000 different indicators. GoodGuide's genius? Making its free information operate in the background on consumers' computers and smart phones while they create shopping lists, order items online, or want to spot compare at the supermarket. Social comparisons become no more burdensome than deciding that 2 for $1.50 is a better price than 1 for $1.

Bigger efforts to promote sustainable purchasing, led by other parties, are under way, too. Those will have to wait for another day.

Still, the best way to vote with your feet may just be to walk the other way. Ask Patagonia.


Thanks, Detroit

I have much to be thankful for -- certainly my family, friends, and the opportunity to do what I love -- but let me single out a city that I'm thankful to see on the rise.  

Forbes recently listed the places where young people are happiest.  By grading cities on economic factors like compensation and benefits as well as non-economic factors like work-life balance, they gave each city a kind of overall "grade point average."  The cities grading out the highest were Redmond, WA (been there), Ft. Lauderdale (done that, a long time ago), and Orlando (been and done more recently -- but with my wife and kids).

But another top-ten city made me smile:  Detroit, at #6.  It's a happier place to live than Chicago, San Francisco, and LA.

Why am I gratified to see Detroit included among the winners?

Teaching at the Ross School of Business, University of Michigan, in Ann Arbor, forty miles away from Detroit, I've seen a parade of talented students come to town, get their education, and take their skills and training elsewhere.  Students are inspired by the "change the world through business" courses I teach, but when it comes to applying what they've learned in the real world, they've preferred jobs in India, Africa, or Latin America.

That appears to be changing.

Entrepreneurial efforts are  harnessing the city's energy.  An organization that I've worked with, Ascension Health, the largest nonprofit healthcare system in the country, has launched Enterprising Health, a business-development organization aimed at identifying, supporting, and launching "bottom-up" enterprises that improve the health and lives of urban dwellers. 

Among the social enterprises being supported: businesses that use games or sports to encourage and educate about health; a fresh food "dollar store"; and an activity that delivers health services to the poor where they naturally congregate, thus encouraging health care among a group that is often excluded from, and suspicious of, traditional health care delivery.

Visionary thinkers like Josh Linkner, Dan Gilbert, Brian Hermelin, and Earvin (Magic) Johnson have a larger scale vision to reclaim, re-define, and re-brand the city. Though not everything they touch turns to gold (Gilbert owns the Cleveland Cavaliers), the new-age venture capital firm they've formed, Detroit Venture Partners, plans to hit a homerun in Detroit (yes, a metaphorical non sequitur -- maybe because I've got half an ear on a soccer game on TV in the other room).

DVP's culture includes its Big 11, with "passion" topping the list:

  • Build something larger than yourself
  • Stay close to your purpose and "why"
  • Rebuild Detroit
  • Drive social change

The energy of change and the opportunity to re-create a city (and create a great life)  have not been lost on students.

In a class I'm teaching to undergrad business students, Base of the Pyramid: Business Innovation for Solving Society's Problems, students work on addressing real, vexing societal problems.  In previous years, the kinds of problems students have clamored to work on have mainly been in the developing world, and this year, too, students are working on problems in settings including Haiti, Liberia, and Honduras.  

But fully half of the students this year chose instead to work on problems affecting Detroit:  health care, education, business and economic development, and food deserts.  (Watch this space as the Impact / Call to Action videos they're creating are completed.)

At the graduate school level, the Revitalization and Business Club at the University of Michigan is planning its second annual conference on using business as a force for positive societal change.  The club recognizes the overlapping desires of graduate students of all stripes -- business, policy, urban planning, and other disciplines -- to explore how innovation and entrepreneurship can create a vibrant, inclusive city.

The jury on Detroit's growth and revitalization is still out.  Richard Florida, the urban scholar and commentator, contends growth will come from increased productivity of the population rather than strategic contraction.  

Economic development today is about literally hundreds and thousands of little things that you do slowly and cumulatively at the neighborhood and community level. Building partnerships involving universities, building clusters, many, many small things that accumulate, that create some economic viability. ... That's what Detroit has to do and [it] all the assets ... It has spectacular universities like Wayne State, it has the Cranbrook Academy, the center of modern design, industrial design, and furniture design. It has two of the greatest research universities on the planet, very close by at Ann Arbor and Lansing, the University of Michigan and Michigan State. And it has a fabulous design/architecture community, creative energy in its low income communities, a tremendous, really resilient African-American community, a phenomenal Arabic community that will do anything to save and pitch in... [and] it has this legacy of musical talent that is just incredible and it continues to propulsively create new musical styles. 

All of those things add up to a kind of creativity and innovation being in Detroit's DNA. But [sustainable growth is] not going to come from a federal bail-out from the auto industry, it's not going to come from a big casino and convention and stadium project, it's going to come from really the small-scale efforts when people are empowered, where neighborhoods are empowered.

And that, it seems to me, is what we are seeing beginning to take hold.

Thanks, Detroit.

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Microfinance, USA: Grameen America

If it's November, then I must be teaching microfinance.

For the last several years, as fall starts giving way to winter, I start to wind down my teaching  about social enterprise and "wind up" my teaching of microfinance.

The past week, my class focused on microfinance in the United States. Microfinance is a considerably more developed activity overseas than here. 

In the US, the FDIC estimates that about $320 billion flows through alternative financial services every year, likely more.  This band of payday lenders, pawnshops, check cashing services and other providers offer financial services helps the poor participate in the financial system, but at far too high a cost.  (Example: pawning may have interests up to 300% APR, payday loans may carry an APR of 400%.) All told, 10 percent of all Americans may be unbanked, and 40 million households may be under-banked.  $8 billion of too-high fees are collected from the poor so that they can conduct their financial lives.  

If there is so much money to be made, shouldn't others -- others with more respectable motives -- be entering the game?  Yes, and they are:  New not-quite-banks like and Wal-Mart are starting to cater to the US poor's financial needs.  And so is Grameen America

I saw the film "To Catch a Dollar" when it played in theaters briefly last spring.  What follows is what I wrote then.  I remain hopeful that Grameen can serve the poor of the United States, just as they do in Bangladesh.


I just returned from watching the film "To Catch a Dollar: Muhammad Yunus Banks on America."  Yunus founded Grameen Bank in Bangladesh, which disburses $1 billion in loans annually to poor women in the developing world, without ever asking for collateral, and achieves a repayment rate of nearly 100%.

Grameen America, launched in 2008, is not a bank but it makes loans ranging in size from $500 to $3,000 to women living in poverty in the United States.  Whereas a bank can take deposits from its customers to lend out to others, Grameen America relies on contributions and long-term loans for its source of funds.

The movie tells the story of several extremely hard-working women in Queens, New York, who need to "catch a dollar."  This is the phrase Yunus uses to explain the plight of the poor who seem trapped in a cycle of poverty.  

Either they can't find a job.  Or their wages, minus their expenses for childcare, carfare, and all the other, unrelenting financial requirements that still accompany a low wage job, are entirely consumed by rent and food -- if they even cover that.  Or they get locked into a permanent cycle of indebtedness:  They get a loan at an incredibly high interest rate, can only afford to pay the monthly interest, and thus their loan balances never drop by even a penny:  a loan shark's dream -- a paying customer for life.

If they could "catch a dollar" -- meaning they could obtain money that they could use in productive ways -- they could use it to build their lives.  This is where Grameen America helps a baker buy a power mixer; a cook obtain financing to open her own restaurant; a hair stylist to buy her own "chair" in a salon so that she is now running her own business (and selling shoes on the side).

Grameen America, like Grameen Bank, turns the idea of lending upside down.  Yunus explains:  The more money you have, the easier it is to get a loan.  Banking should give priority to those who have the least money, or none at all.  Grameen America is reaching out to the 40 million un-(der)banked Americans so they can "catch a dollar" to better their lives.  

When people told Yunus that his ideas about making small loans to the poor in Bangladesh were foolish, he simply shrugged and made them anyway.  When they said that the same ideas that worked in the developing world couldn't work in the United States, he shrugged again.  

Grameen America is founded on the same principles that Grameen Bank used to start Grameen in Bangladesh, the core of which is the "self help group." Five women band together into self-selected groups.  In this group setting, each member applies for a loan (which must be used to start or expand a business), receives money from Grameen America, makes weekly payments on her outstanding balance, and shows receipts and other documentation demonstrating how her business is doing.  

All business plans must be approved by the group, and if any member fails to make her required weekly payment, the whole group suffers because Grameen America will refuse to make any other woman in the group another loan, no matter how successful her business or her repayment history.  This creates powerful social pressure to repay, even in the absence of any kind of collateral. The group also serves as a source of encouragement and helps members support each other's efforts. 

Grameen America insists on the same financial discipline required by Grameen Bank in Bangladesh.  Customers must first take five classes in financial literacy and open a savings account before they receive a loan.  Typically, 2% of the initial loan principle is paid back each week, ensuring a declining balance and repayment of the loan within a year.  Borrowers also pay interest (at an annual rate of 7.5%) and make small savings deposits every week. 

Vidar Jorgensen, President of Grameen America, and Premal Shah, President of, explained in the panel that accompanied the video:  The poor are disadvantaged by the financial system in so many ways.  If they're on welfare, they can't receive a bank loan. And even if that weren't a restriction, they have no credit history and have FICO scores so low that no bank would make them a loan. With slightly higher scores, they may become eligible, but they will receive the worst interest rates the bank offers.  On top of all this, low FICO scores create a serious impediment to renting a place to live and getting a job.  Being poor keeps you poor. 

Which, again, is why Grameen America hopes to let its clients catch a dollar.  By making business loans and providing business support, it increases its clients' incomes.  By insisting on savings and consistent, on-time repayment of loans, it helps clients establish respectable credit histories.  Favorable credit histories can lead to larger loans (possibly by banks), better opportunities to rent, and possibly the opportunity to get a job that one would otherwise have never been considered for.

Grameen America uses a "bottom up" approach that relies on empowering individuals to enable them to lift themselves, and their fellow group members, out of poverty.   It is now hoping that individuals take up the mantle of leadership and support for its efforts.  Tell others what Grameen America is doing.  

Grameen America currently operates in Queens (New York), Brooklyn, Manhattan, Omaha, Indianapolis and, most recently, the Bronx.

To learn more, get involved or contribute, see their website which includes multimedia information.

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Do You Hear the Footsteps?

We're in the final turn of August and I hear the footsteps of fall. Believe me, when you live in Michigan, they crunch like snow and are jet-engine loud.  

Fall also means my return to the classroom.  Despite a lifelong love affair with summer, returning to the classroom is stimulating and helps keep me intellectually alive. I'm lucky to have found my groove where I get to teach, research, write about, and work on issues that are truly important to me -- creating a more just, equitable, and prosperous society.

But this wasn't part of a master plan.  I studied music (composition), liberal arts (math and psychology), and then computer science and complex systems before becoming a professor in a business school. Here, I have researched search engines (I'm one Kevin-Bacon-degree away from being there when Google was created), information-sharing software, and other technical issues in information technology before I began to be involved with helping address societal problems.

Many of our innovative solutions to societal problems likewise arise without a fully formed plan.

You may know about Muhammad Yunus, who thought he was donating $27 to the Bangladeshi poor.  He unintentionally launched the modern microfinance movement.

Interview subjects for a book I'm researching on early-stage social entrepreneurship include:

One social entrepreneur who has developed an organization that has sold 50,000 affordable ceramic water filtration devices to the poor in the Dominican Republic and Haiti (FilterPure).  Why? Because, despite having no previous business background, her experience of life in the Dominican Republic compelled her to give back.

Another founded an organization that has become a world leader in preventing human trafficking (Polaris Project). Its genesis?  Its founder, learning of this atrocious, little recognized disgrace, felt an unshakable need to take a stand against it.

Others found their outlet because of chance phone call.  A missed flight.  A mugging.  A vague promise to give back.

So, what are you waiting for?  So many causes cry out for attention. The opportunities for social entrepreneurs and intrapreneurs are everywhere.  Don't wait until everything lines up perfectly before you act.

Can you hear the footsteps?  Maybe they're not of fall but of a future you can only discover by pursuing it.

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