On the 41st Day Before Christmas…
Walking through downtown Boston this morning, I heard, for the first time this season, the faint but familiar sound of “Jingle Bells” ringing through the city blocks. It’s hard to believe it, but we are now six weeks away from Christmas and entering the bustling holiday season. And I’m not afraid to bring the first cheer to ACCION’s blog!
By doing so, I hope to plant a seed early in the shopping game: buy local. Now if you’re a regular local shopper, you don’t need any convincing. If you buy locally occasionally, you’re probably easily swayed (especially by the mobs at Target and Macy’s!). But I am particularly encouraging those who don’t fall into either of these categories (and it wasn’t long ago that I myself was in this mix) to simply think about shopping locally this holiday season.
Even if you use this mentality for one gift this year – just one! – you will play a vital role in supporting your neighborhood and the entrepreneurial community across our country. You will help alleviate the plight of small businesses, recently addressed in a poignant New York Times article. Part of ACCION’s work is to connect these hard-working entrepreneurs with the resources they need, including capital, financial education, and business mentoring.
How will you choose to shop this holiday season?
Today, we’re connecting them with another resource: you.
And we’re helping you by bringing a little ease and creativity to your holiday shopping! Here are a few ideas (all inspired by ACCION’s own clients from across the country) to get you started:
10. Pick up a cool piece of vintage clothing for your niece.
9. Save the pet lover in your family the hassle of cleaning the dog.
8. Grab your brother a gift card to a local coffee shop.
7. Extend the gift with a few weeks of housecleaning services.
6. Send personalized and memorable cards to family, friends, and (for you professionals) clients.
5. Treat your mom to a day of pampering.
4. Send tasty ethnic treats to your co-workers and neighbors.
3. Surprise your parents with a full car detail.
2. Buy a bracelet or CD from a foundation that supports ACCION’s clients.
1. Help ACCION continue supporting all of these entrepreneurs by making a donation in someone’s name.
This season has a different meaning to everyone. For many this is the best time of year; for many it is not. But the invariable truth remains that shopping locally can serve not only as a present for your loved one, but moreover, a gift for a small business owner. In many ways, it can be a gift for yourself, as well: the peace of mind knowing that you supported your local community and brought a greater sense of thought, creativity, and care to your purchase.
So, will you consider buying locally this year?
Tags: Boston, Buy Local, local business, microfinance, New York Times, small business, success story
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.
Reverse Remittances and U.S. Microfinance
When I interview ACCION USA clients to gather information for their Kiva profiles, they nearly always mention having a family member in another country relying on them to send small portions of their income, or “remittances,” back home. That’s why this week’s New York Times article on “reverse remittances” struck a chord with me. The article explains how families abroad are now having to send monetary support to their family members in the U.S. While immigrants originally came here to search for better economic opportunities, nowadays they are finding the opposite.
Is returning to their home countries an option? For some, it is – but it’s not that easy. It may take immense effort and sacrifice to scrape together the thousands of dollars needed to move to a new country. Many immigrants who come to the U.S. give up their homes and possessions in their native country and trade them in for an entirely new life. They may have married and had children who would be disrupted by a move to another country they barely know.
Immigrants are a vital part of our economy – in New York, for example, over the last decade, immigrant-dominated neighborhoods such as Washington Heights and Sunset Park have seen increases in new firms at rates close to 50%, and job growth of 30% (compared to overall city job growth of 7%).1 Entrepreneurship is an engine of employment, as small businesses provide self-employment for the business owner and are responsible for 75% of net new job creation in the U.S.2
Now, more than ever, small business ownership is a way for immigrants to take control of their economic future and take the initiative to provide employment opportunities for themselves and others in their communities. As unemployment grows in the U.S., ACCION USA’s mission to support these entrepreneurs and, by extension, the economic development of their communities, gains more urgency.
1A World of Opportunity, Center for an Urban Future. February 2007.
2MicroTest Outcomes 2008. The Aspen Institute – FIELD Program
Lofty Questions, Young Student
Teachable moments. Luz Gomez captured it well when she blogged recently about capitalizing on teachable moments. My opportunity came just over a week ago when a friend contacted me regarding a tour of ACCION USA. Since her nine-year old daughter had just read a special section in the New York Times about microfinance, she wanted to give her first-hand exposure. Now, as a fundraiser, I know that an individual’s propensity to give is shaped before the teenage years. So, of course, I wanted to show Amelia the power of microfinance to reinforce what I hoped would be a life-long commitment to economic development.
Martha's story of building a new life in the U.S. through self-employment illustrates the power of microfinance.
Amelia arrived on time (with mom in tow), prepared with a 4X6 note card of questions. Though we kept the conversation high level, we explored some pretty lofty subjects: sources of capital for entrepreneurs, the average ACCION USA loan size, uses for loan capital, typical client industries, and repayment rates. We also talked about individuals who might need an ACCION USA loan, immigrants like Martha who fled her native Colombia when guerrillas threatened to kidnap her daughter and who now makes her living as a seamstress thanks to an ACCION USA loan.
Because it was September 11, I also told her about Luis who was once homeless and lost his job delivering baked goods to businesses when the World Trade Center was attacked. Luis has an uplifting story because he went into business for himself using an ACCION USA microloan to buy the van he uses for his now-prospering baked goods delivery service.
After a tour of the office where she met some of the people behind the scenes who make ACCION USA’s lending possible, we took a quick a look at some of our clients’ products – the frilly dresses, jams, jellies, and artwork – that line our offices.
At the end of the day, what did Amelia learn? She learned that not everyone has equal access to credit, there is a need for alternative lenders, microfinance is every bit as necessary in the U.S. as it is overseas, and philanthropy is important to support disadvantaged individuals. At least, I think she learned all these things. But her mother is actually making her write a report on her visit to ACCION USA. And when I see it, I hope to share it here.