The Land of Opportunity
This week we celebrated the Fourth of July. Hot dogs, swimming pools, fireworks – how better to ring in this annual occasion and take a few days to remember our country’s history? As I sat along Boston’s Charles River banks this Sunday evening, I couldn’t help but reflect on our country’s core principles of freedom, opportunity, and equality.
Moreover, my thoughts centered on those who come to the U.S. every day to realize the “American dream.” But we all know that U.S. soil doesn’t guarantee a life free of struggle.
Imagine two scenarios. In one, a Venezuelan women moves to Miami with her husband. She has limited English fluency and little personal savings, as her husband handles their finances. But she wants to begin a small sewing business to keep herself busy and contribute to the household income. In the second scenario, a young man comes to the United States from Ecuador. He has his Masters degree, nearly twenty years of business experience, perfect English fluency, and a hefty savings. He hopes to open a leather importing business in Boston.
Despite their many differences, these two individuals have two things in common: their lack of credit history and knowledge of the U.S. financial system. And because of these key similarities, neither can get an affordable loan.
These descriptions detail the experiences of two ACCION USA clients. Lack of credit history is only one of many challenges immigrants face when trying to access financing. Language barriers are also great, as detailed by the U.S. Government Accountability Office’s recent report, entitled Factors Affecting the Financial Literacy of Individuals with Limited English Proficiency. The report explains that language barriers can prevent individuals from understanding financial products’ terms, disputing charges or fees, managing accounts, and simply accessing financial education opportunities. Furthermore, many immigrants carry a negative correlation with financial institutions, due to prior experiences or institutional fraud and instability in their countries.
ACCION USA has many programs and services in place to address these challenges. For example, our small credit builder loans are specifically designed to help individuals with no credit history begin to build one. Our financial education workshops help immigrants understand not only how to build credit but also why building credit is important in the United States. And we continue to work closely with groups such as the Massachusetts Refugee Enterprise Achievement Program to establish ACCION USA as a trusted and reliable name among immigrant communities.
Through these programs and relationships, ACCION USA continues to help immigrants achieve the full “American dream.”
Tags: accion usa, english, Financial Education, fourth of july, immigrant, literacy, massachusetts, miami, report
My Five Tenets for U.S. Microfinance
This post is presented as part of our Youth Microfinance blog series. By nurturing student thought leadership, ACCION USA is helping to build future leadership for the microfinance industry as a whole. We hope that you’ll enjoy the ideas and perspectives of ACCION USA’s youth leaders as well as Main Street Microfinance’s regular posts from industry professionals.
By Jameson Lee
Growing up in Orange County, California as a seventeen-year-old high school student, I have been fortunate enough to avoid the extreme cases of debt, lack of food, water or shelter that affect a large percentage of the world today. Introduced to microfinance by a teacher at my school, I soon recognized the potential that such a system holds to combat poverty.
While I do believe that helping business owners in developing nations will help to balance the financial inequality felt throughout the world, U.S. microfinance deserves equal attention, with the current economic times making it harder than ever for businesses to qualify for loans. Motivated to make a difference, I hope to reach out to my fellow teenagers to help spread the word about the power of microfinance.
I’ve read everything about microfinance that I can get my hands on, and came across Muhammad Yunus’s “16 Decisions.” I found them to be powerful messages for entrepreneurs in developing countries to move towards better social environments. Yet I believe that in an environment where concerns such as access to technology, transportation, education and safety are less significant, business owners in developed nations must have their own personalized guidelines.
I gave some thought to the “16 decisions” of Muhammad Yunus and felt inspired to think about a few that would be well-suited for U.S. microfinance.
Here are my “5 tenets” for U.S. entrepreneurs.
- To demonstrate independence, ambition, innovation and creativity in all aspects of life.
- To work within our means while also looking for economic opportunities in both local and foreign markets.
- To maintain a healthy social lifestyle to foster an ideal learning environment in which all family members can succeed in their own endeavors.
- To be economical in all aspects, making sure to place the welfare of family and business before oneself.
- To never take on more responsibility than can be managed, and to immediately confront issues concerning debt, education and living expenses.
Exposed to the change enacted by ACCION USA, I found such an MFI to be the logical organization to contact in my search for ways to influence my own community. While the need for microfinance in Orange County, California where I live may be less prevalent than other communities, by working alongside such an organization like ACCION USA, I hope to directly influence the lives of others in order to help business owners help themselves. As an advocate for microfinance, I look forward to the chance that it can give to local entrepreneurs, and to the entire world.
Jameson Lee is a teen blogger interested in microfinance, social business, entrepreneurship and helping small business owners to help themselves. His work focuses on explaining the fundamentals of Microfinance, while also questioning the basics foundations for a circumferential understanding of the system. You can follow his work at www.TheRevelationist.com or follow him on twitter @TRevelationist
ACCION USA Celebrates One Year on Kiva.org!
I’m not one for remembering dates; I’ll even admit that I confuse my mom and dad’s birthdays. So when June 10th was approaching, there weren’t any plans going on to celebrate the one-year anniversary for ACCION USA’s partnership with Kiva.org.
Without further ado, a blog post to commemorate the partnership!
On June 10, 2009 the first U.S. loan appeared on the Kiva website, Elizabeth Polanco. I did my best to be the first person to lend to a U.S. entrepreneur; Maria Shriver beat me to it though!
The weeks that followed ensued passionate conversation about the need for microfinance in the United States, compared to traditional Kiva partners in developing nations. A lending team on Kiva was created to support us, check out the Happy Kiva Lenders . There were also some interesting conversations going on in the blogosphere that have helped fuel more support and awareness for microfinance globally.
Since June 10, 2009, ACCION USA has raised almost $500,000 dollars to support 95 borrowers through Kiva.org. Each of these borrowers has had a chance to share their story of entrepreneurship with the lending community on Kiva. Their Kiva profiles help generate a narrative about the successes and challenges for entrepreneurs, and the need for access to small business loans.
U.S. microfinance has only reached the tip of the iceberg, so to speak. It is through partners like Kiva that we are inspired and become innovative to reach those in need. With our missions aligned, ACCION USA and Kiva will continue to grow and inspire interest in microfinance—together.
And now for the Thank You’s!
Dear Kiva lenders, we have been overwhelmed by your generosity and conviction to the mission of microfinance. Thank you for all of your support and kind words—we always look forward to hearing from you. We hope that you choose to continue supporting ACCION USA through Kiva.org.
To our clients, a sincere thank you for participating in the Kiva program—your stories are the reason that we come to work everyday!
Please take a look at our current loans fundraising on Kiva!
Tags: accion usa, kiva, kiva.org, maria shriver, microfinance, us microfinance
The Issue of the 21st Century
“If you don’t know better, you cannot do better.”
On Monday, businessman, author, and social entrepreneur John Hope Bryant used this statement to support a Huffington Post op-ed in which he boldly asserts that financial literacy is not simply a goal for which all must strive, but is moreover, a universal right of every human being. Bryant notes that the struggle for civil rights characterized the 20th century; and he believes the challenge of achieving universal financial literacy will characterize the 21st.
But is financial literacy a “right,” equivalent to civil rights? I personally have to say no. We must use caution in characterizing anything as unequivocally endowed upon birth. What I do believe, though, is in the importance of education. I will always be an advocate for knowledge and believe in its power to generate progress, growth, and development – on both the micro and macro levels.
A year and a half ago, this core belief in education was the foundation for my support of financial literacy efforts. That was prior to the economic wake-up call of 2008 and prior to my time with ACCION USA. Now, my support is grounded in my everyday work, where I continually see the detriments of financial illiteracy.
My colleagues have spent hours working with clients to dispute credit report errors, resolve stolen identities, and create payment plans for collections accounts. After months of work, many of these individuals continue their struggles in resolving these issues.
Furthermore, payday loans, high-fee credit cards, check cashers, and other predatory services populate the financial world in which many of ACCION USA’s clients exist. For many, this is reality – and the only one they have ever known. And with the FDIC’s recent white paper reporting that 25% of the U.S. population lacks a relationship with a financial institution, financial illiteracy is quickly becoming an issue that permeates socio-economic borders.
Whether mismanagement, misunderstanding, or mistrust lie at the root of these situations, they all share a common solution and, more importantly, prevention: financial literacy.
It is our hope that ACCION USA’s financial education program may meaningfully address the growing issue of financial illiteracy. With each workshop, each counseling session, each webinar, and each article, we are helping people “know better”…and with that, as Bryant says, we can empower them to “do better.”
If financial literacy empowerment is the issue of the 21st century, ACCION USA certainly has a hand in the game.
Tags: accion usa, financial literacy, huffington post, illiteracy, john hope bryant, predatory lenders, right
Why We Do This: Greg’s Microfinance Success Story
Elements of financial education appear throughout the lending process. From teaching individuals about the high costs of payday loans to showing business owners how to separate their personal and business finances, ACCION USA equips and empowers entrepreneurs with the education to achieve their financial goals.
Every so often, one of those days comes along that brings you back to the roots of what you do. It’s that client, that partner, that sale or proposal – that something that stands out and reinforces your daily work. It’s what causes you to go home with a smile on your face.
I’m fortunate to work in a place where these days come frequently – weekly, not quarterly. At ACCION USA, our success comes from our clients, and you’ve probably seen our many client success stories. Read one, and you’ll see the power of matching a microloan with the entrepreneurial spirit. It’s exciting, and it’s inspiring.
What you might not see, though, is the added value of financial education – an element of ACCION USA’s service portfolio that makes us unique among microfinance organizations. Elements of our financial education program are weaved into each and every client success story. Whether the client attended a legal counseling workshop, used our online budgeting worksheet, or received a half-hour of technical assistance from a loan consultant, financial education is ever-present in our work.
One of our most recent success stories is a true testament to this service.
Greg’s journey with ACCION USA began in February 2009. He owns an answering service business and needed a loan to keep up with his growing list of clientele. When a damaged credit history and low credit score meant that he didn’t qualify for a loan, Greg demonstrated two characteristics that entrepreneurs tend to possess: persistence and a desire to learn. He contacted our Boston office, determined to understand how he could improve his credit history.
That call was the first of many. Throughout the next year, my colleague Melissa led Greg through the process of improving his score. With her guidance, Greg took control of his debt, improved his credit score over 60 points, and regularly called to check in with Melissa. And his hard work paid off: last month, Greg was approved for a loan.
Greg is proof that financial education can give hard-working, determined individuals the boost they need to realize their entrepreneurial dreams. And all I’m left to say is congratulations. Congratulations to Greg on his persistence and drive to grow his business. Congratulations to Melissa for her dedication.
And congratulations to all of ACCION USA’s supporters for helping connect them. You make this all possible.
Tags: accion usa, client, Financial Education, microfinance, microloan, service, small business, success story, technical assistance, value added, workshop
Students + U.S. Microfinance = Three Reasons to Blog
I have three reasons to blog today, and all three relate to college students and U.S. microfinance.
1. Microfinance USA conference (MFUSA)
The conference takes place in San Francisco from May 20-21, and includes keynote speakers Maria Shriver and Gavin Newsom. “A Living History: U.S. Microfinance Past, Present and Future” and “Leveraging Partnerships to Reach Millions” are two of the panels to which I am most looking forward. I also can’t wait to meet some of the 200 students that will be in attendance at the conference. I’ll be moderating a panel on student-led microfinance to talk with various stakeholders in microfinance initiatives on campuses across the U.S. and discuss their strengths, challenges, and impact. I hope to see you there!
2. A video about a lemonade stand
Recently ACCION USA ran a “Twitition” (A competition on Twitter) in which three student groups competed to win two trips to the Microfinance USA conference. In addition to tweeting in support of ACCION USA, the students held events on their campus to raise awareness about U.S. microfinance. I’d like to congratulate Global Youth Connection from the College of Wooster (Ohio), which won the Twitition and will be attending the conference next week. Because most students are more familiar with international microfinance, Global Youth Connection became an important voice for U.S. microfinance. Check out the video about their lemonade stand!
3. Tonight’s meeting with the Microfinance Council (MFC)
ACCION USA has a core group of volunteers called the Microfinance Council that is nearly 300 members strong. Tonight I will be meeting with them to discuss ACCION USA’s initiatives with campus microfinance clubs. The MFC will be heading up a project to manage partnerships between ACCION USA and student groups that are interested building awareness, fundraising, and bringing access to microloans in their communities. The MFC is essential in spearheading research into new products and partnerships at ACCION USA. We look forward to sharing with you the fruits of our work!
Working with students over the past few months, I have learned a great deal about their creativity and dedication to a cause. ACCION USA plans to continue expanding our connection with campus microfinance clubs. In the meantime, I am looking forward to learning about “Leveraging Partnerships to Reach Millions” at MFUSA and seeing how students can play a role in strengthening their communities.
Tags: accion usa, accionusa, lemonade stand, microfinance, microfinance usa, microfinance USA conference, student microfinance, us microfinance, Youth Microfinance Series
Mission, Not Profit, Drives Interest Rates in the U.S.: Response to “Banks Making Big Profits from Tiny Loans”
Readers of “Banks Making Big Profits From Tiny Loans” (The New York Times, April 14, 2010) should note that the lending practices described are not consistent with the practice of microfinance in the United States, where the strategy is also alive and well.
The U.S. ACCION Network has distributed over $260 million in loans to micro-businesses across the US. We have done so with interest rates that reflect our primary mission: to put reasonably priced credit in the hands of those who are locked out of the traditional financial mainstream, and to do so in a manner that assists the business owner in increasing, not depleting his/her assets. Though it would be easy to say thresholds are set by law, the primary driver is creating an environment in which hardworking people have an opportunity to succeed.
Typical U.S. microloan interest rates are set so that the loan recipients profit, not the lender.
Our rates range by program and by state but are well below the rates cited as endemic in the microfinance world, below credit card interest rates, and are accurately stated on the Kiva website. On loans that average $10,000, there isn’t much income generated for ACCION once we have covered our capital costs and the risk we take per loan. As a result, while we continue to drive improvements, we are not sustainable without the support of foundations, individual donors and government. That is a fact that has limited how much of the market we can serve and our ability to go to scale.
Following a rigorous due diligence process, ACCION USA was chosen by Kiva to be one of two microfinance partner organizations working with US-based businesses. The relationship serves each of our missions well: to facilitate access to the capital required to start or grow a business. Kiva’s ability to harness the good will and interest of millions of people in investing to directly affect the lives of individual business owners enables ACCION USA to lend more to more businesses. That’s not the material of criticism; it is a positive outcome born of innovation, common mission and a dedication to doing what is right for the people we serve.
ACCION USA In the Running for a $1 Million Grant
We’ve got a big secret to share. For the past three months, ACCION USA has been knee deep plotting and planning its biggest microloan marketing and awareness campaign to date. Today, we’re happy to fill you in on the details.
ACCION USA is proud to be one of eight nonprofit organizations chosen to compete for a $1 million grant in Giving Made Simple, an online voting campaign where Sam’s Club members will help choose how to direct $4 million in charitable giving. In order to get the top $1 million grant, we’ll need to get the top number of votes in the entrepreneurship category.
Giving Made Simple is challenging us to put out networks to work! We’re in the running alongside some amazing small business support organizations— the Corporation for Enterprise Development (CFED), Community Reinvestment Fund (CRF) and Kiva will all be vying for the funds—and will need each and every one of our supporters helping to spread the word about our campaign.
Here’s how to get involved:
- Sam’s Club Members: Vote! If you’re one millions of people in the U.S. that belongs to Sam’s Club, VOTE NOW and VOTE OFTEN – you can vote once a day each day through May 2. We did the math and know that we’ll need about 750,000 votes to win, and each time you vote ACCION USA brings us one step closer.
- Spread the word by donating your profile picture for a day at www.DonateProfilepicture.Org. You’ll let all of your friends know that you support ACCION USA, and will inspire others to get involved. The video gives more detials.
- Calling all student groups: We need you to use your creativity and social networks to spread the word on campus. Learn how you can win a trip for two to the Microfinance USA 2010 Conference and support AUSA’s Giving Made Simple campaign by participating in our Student Challenge. Learn more here.
We’ll keep you posted here on what we’re doing to promote the campaign and hope you’ll check back for updates!
CARD Act Gives Consumers a Break
I want you to think back to the very first time you opened your mail to find that golden ticket: a pre-approved credit card offer. Was it been everything you hoped it would be? Or did you fall for some of the oldest tricks in the book…
Were you the college freshman who now realizes that the free pizza, Frisbee, and bottle opener at the credit card company’s fall expo booth might have actually cost you more than you thought (cough, 70” flat screen TV with 24% APR, cough)? Did you find out the hard way that “due on March 17th” actually meant “due by 9:00am on March 17th, so it actually needs to be here on March 16th… which conveniently falls on a Sunday, so let’s have it here by close of business on Friday the 14th”? Or maybe it just took a little too long to realize that consistent $30 monthly payments on your $800 couch would make your payment plan longer than your sofa’s life.
Every year, a new crop of credit card users finds themselves in these types of predicaments. Fortunately, the new Credit Card Responsibility and Disclosure (CARD) Act now makes each of these situations much less likely to occur.
The legislation is complex, but the highlights include limits on interest rate hikes, broader definitions of “on time” payments, new rules for pre-existing balances, and requirements on disclosures and extending credit to young adults. No more pre-5:00pm deadlines. No more interest rate hikes without 45 days of notice. No more credit card reps hiding in wooden horses allowed within 1,000 feet of college campuses.
The CARD Act’s transparency requirements may be particularly beneficial to small business owners in offering them an opportunity to strengthen their personal credit histories, further allowing them the opportunity to finance new employees, purchase inventory, or open a storefront. As an organization, ACCION USA’s goal is not only to provide small business owners with a transparent financing alternative to credit cards but also to teach them the necessity of managing credit card debt. The underlying message is simple: spending and paying responsibly keeps money in your business. And money in small businesses means economic recovery for our country.
Let’s hope that the CARD Act’s transparency requirements will mean the same thing.
Tags: accion usa, CARD Act, credit card, Financial Education, interest rates, legislation, microfinance, money management, new law, small business
The Incredible, Shrinking Tax Refund!
ACCION USA provides taxpayers with the financial education and resources they need to make smart, informed decisions about RALs.
And so it begins. Tax season. The time of year when tax prep software commercials sandwich prime time TV shows and your friends in the tax prep industry sleep on office couches. For many like myself, it’s another opportunity to procrastinate for four months and then spend my entire refund on priority mail.
Unfortunately, this time of year is also notorious for coercion and scheming, and the latest trend is in refund anticipation loans (RALs). A tax preparer may advertise these loans as “instant loans” or “instant refunds” – in reality, the only instant thing about them is the speed with which your real refund will shrink.
Here’s how it works: your tax preparer offers you a RAL; you accept the offer and sign a document, which is essentially a loan agreement authorizing the preparer to use your refund as a guarantee, with interest rates as high as 50-500% a year; the loan is (instantly!) approved; you walk away with fast cash but actually receive a significantly smaller refund; and the tax preparer makes one hefty profit.
Certainly, the tax prep industry provides a highly-demanded service for many, many people. But according to the Woodstock Institute, 8.67 million taxpayers received RALs in 2007. A RAL may very well have been an appropriate solution for some of these individuals, but I will venture to guess that they comprise only a small portion of that 8.67 million. What about the millions who are essentially handing over their hard-earned money? I believe the answer lies in education and empowerment.
ACCION USA’s financial education team is on top of this. We have already distributed an article addressing RALs, and we are featuring RALs in our online tip of the month. In addition to educating clients on the implications of refund anticipation loans, we also provide them with valuable resources, including smart alternatives to RALs, lists of free tax preparation locations (including our Miami, FL office), and helpful websites. These resources not only have the power to produce more informed taxpayers; but they also have the potential to mold a new generation of educated, responsible, and empowered consumers.
This type of generational change may not be instant – but in terms of the return, the investment is surely worth the wait.
Tags: accion, accion usa, anticipation, education, eitc, financial, Financial Education, literacy, loan, microfinance, prep, preparation, RAL, refund, tax, tax season