Bankomunales (Community Capital)
We create local financial organizations that use as capital, resources from their own community. We offer financial and administrative counseling to rural communities secluded from formal financial services, so that Bankomunal will be made up of and operated by people from within the community. This way, the community will be lending financial services to its own members. The idea is that not only are we using the communities own resources, but also that these contributions are not made through a process that we have termed micro- investment. This way, the people are not savers of Bankomunal, but investors, meaning that a passive saving, but rather an active investment. This way, all the risks, as well as all the benefits of the financial dealings are shared by all the people of the community. It deals with an investment exercise that allows the people to obtain a return on their money, offering credit services at a low cost to its residents. These temporary surpluses occasionally experienced by the poor, by these means, can be used profitably to satisfy the temporary credit needs of the residents. This is a highly efficient way of using local resources that would be otherwise under-utilized. Its effects on poverty are immediate, not only on the aspects of credit that support a high number of revenue-generating activities, but also for investment aspects, thus permitting moneys that would otherwise be used in lost in the effects of inflation, to be used profitably for the benefit of investors and credit solicitors.
About You
Location
Project Street Address
Project City
Project Province/State
Project Postal/Zip Code
Project Country
Your idea
Sector of activity
Financial Services
Other sector of activity
Community organization
On the mosaic diagram, which of these factors is the primary focus of your work?
Factor
Poor understanding of the human and social capitals of low income communities
Principle
Change radically the logic behind your business model
Name Your Project
Bankomunales (Community Capital)
Describe Your Idea
We create local financial organizations that use as capital, resources from their own community. We offer financial and administrative counseling to rural communities secluded from formal financial services, so that Bankomunal will be made up of and operated by people from within the community. This way, the community will be lending financial services to its own members. The idea is that not only are we using the communities own resources, but also that these contributions are not made through a process that we have termed micro- investment. This way, the people are not savers of Bankomunal, but investors, meaning that a passive saving, but rather an active investment. This way, all the risks, as well as all the benefits of the financial dealings are shared by all the people of the community. It deals with an investment exercise that allows the people to obtain a return on their money, offering credit services at a low cost to its residents. These temporary surpluses occasionally experienced by the poor, by these means, can be used profitably to satisfy the temporary credit needs of the residents. This is a highly efficient way of using local resources that would be otherwise under-utilized. Its effects on poverty are immediate, not only on the aspects of credit that support a high number of revenue-generating activities, but also for investment aspects, thus permitting moneys that would otherwise be used in lost in the effects of inflation, to be used profitably for the benefit of investors and credit solicitors.
Innovation
Description of your products or services:
We create local financial organizations that use as capital, resources from their own community. We offer financial and administrative counseling to rural communities secluded from formal financial services, so that Bankomunal will be made up of and operated by people from within the community. This way, the community will be lending financial services to its own members. The idea is that not only are we using the communities own resources, but also that these contributions are not made through a process that we have termed micro- investment. This way, the people are not savers of Bankomunal, but investors, meaning that a passive saving, but rather an active investment. This way, all the risks, as well as all the benefits of the financial dealings are shared by all the people of the community. It deals with an investment exercise that allows the people to obtain a return on their money, offering credit services at a low cost to its residents. These temporary surpluses occasionally experienced by the poor, by these means, can be used profitably to satisfy the temporary credit needs of the residents. This is a highly efficient way of using local resources that would be otherwise under-utilized. Its effects on poverty are immediate, not only on the aspects of credit that support a high number of revenue-generating activities, but also for investment aspects, thus permitting moneys that would otherwise be used in lost in the effects of inflation, to be used profitably for the benefit of investors and credit solicitors.
Description of the operational model:
We arrive at a community and do a quick diagnostic of it. We analyze the community based on a series of preset parameters that allow us to measure the possibility of success in that community. Once the feasibility of creating a Bankomunal in the community has been determined, we contact the non- traditional community leaders who would help us get the project off the ground. We look to establish a first meeting with a representative group in the community and explain how the model works, its potentials and the requirements that would need to be adhered to by them and us if we decide to initiate the project. Upon ending the meeting we would ask the group if they would like to initiate the project of creating a Bankomunal. If the response is positive, we would initiate a series of four (4) meetings in order to create rules of operation for the organization. In the end a provisional person will be chosen to get the ball rolling. Once enough capital has been obtained to begin the credit operations, the Bankmunal officials will be chosen from amongst the contributing members and the credit operations will be initiated. Progressively more and more people will get involved in the project, while more and more people will be receiving credit. We have established a chronogram of capitalizing activities in order to pass over all of the operative functions to the community, each day with less of our supervision.
Impact
Description of the financial model:
Up to now, only 30% of the organizations pay for its services, which cover approximately 10% of the expenses. We finance our organization?s operations by selling our consulting services to private businesses interested in social investment or in becoming familiar with the market potential for their products in these sectors. With the help of McKinsey and Company we have designed a plan of expansion and sustainability that should help us to obtain revenue through direct payments from clients that will cover over 90% of our operational expenses in approximately 18 months.
Client fees represent this approximate percentage of operational budget:
10%
Key operational partnership:
Our greatest allies are of course the communities that we work in. Essentially, they provide the work and the capital to build the credit funds that they use. After that it?s basically the private and government enterprises that use our services for various purposes: To carry out social investment policies (especially oil companies), to generate social capital through the promotion of solid and independent community organizations that allow us to implement various programs and projects (private and state-owned oil companies), to explore markets for its products (cement and construction companies). We also have strong ties with the Angina Promotion Corporation who is financing the creation of a platform of systematic change that will allow the model?s replication in the countries of the Andina region where the corporation operates. We have also acquired consulting alliances with famous consulting firms like McKinsey and Company and with international business schools that usually provide volunteers.
Current outreach:
We are at the Scaling Up stage. ? We are in the initial Expansion stage. Currently we are active in a large territory. We cover populations in 8 states in the country. We have already planned the strategy for national and international expansion. Nationally, the plan is to have 200 Bankomunales across Venezuela at the end of 18 months. Internationally we are already replicating the model among migrant communities in Spain and we have scheduled a visit next November to Congo (Africa) in order to try the model there. The trip is sponsored by Total Oil. We have deemed the international expansion model ?the liberation federation?, where we will establish ties with similar organizations in other countries, without the restrictive barriers that make participation difficult, having only the basic principles that we should share.
How many clients have benefited from your product/service in total? Over the last year?:
Approximately 7,000 persons have benefited directly in 8 countries.
What percentage of your clients is below the poverty line ($2 per day)?
15% Approximately 15% have daily incomes under 2 dollars, however this measurement for an oil-rich country with high income, is somewhat erratic and the economic realities of the families. A study done by the PNUD determined that more than 51% of the members are of low-income
What is the order of magnitude of the potential demand for your products or services? Which other low-income groups, countries or regions could benefit from it? Try to quantify (number of clients, market size in currency).
The demand could up to 100,000 persons, especially if we consider that we are now starting to work in urban communities and with working class populations
Scale-up strategy:
How many low-income individuals do you plan to benefit in three years from now? How are you planning to scale up or replicate your solution? What are the major constraints to scale up?
In Venezuela alone we hope to reach 22,000 direct clients
Which specific areas - and why - in your field would benefit most from investment by corporations, foundations, and other investors:
We have made a great effort to systemize the solution and we are creating what we call The Expansion Platform. The 5 instruments supporting the expansion are: 1. ? an E-learning Tutorial to teach the model to the organizations with which we have alliances. 2. ? Accounts management Software that allows us to monitor from a distance the primary financial and organizational indicators of the Bankmunales created in other countries. 3. ? Funding for the model?s financial stability. 4. ? Legal study that establishes a general legal framework that serves and a referential framework to affiliated organization desiring to expand in their countries. 5.-Detailed expansion plan that attempts to simplify the operations of our allies, giving special attention to details such as recruitment of personnel, sustainability planning, operational costs, monitoring tools for the Bankomunales, preparation for promoters, etc.
This Entry is about (Issues)
Sustainability
The organization: How does the initiative fit with your overall organization's strategic goals and priorities? How did the initiative start?
We have already described part of the designed expansion plan. The biggest obstacles to national expansion will be adapting Fundefir?s organizational structure to the expansion plan. Internationally the biggest obstacle will be demonstrating the goodness and benefits of a new model that confronts the traditional way of that micro-financial business is developed, especially facing the so called successes obtained by models largely promoted by large cooperative bodies. To impose on a competitive market like that of micro- finance a new model that directly benefits the people and no the financial resource intermediaries, is a great challenge.
Organization's legal status:
Civil Association
Number of Employees:
11
There is no activity associated with this entry
