Financial Innovation for Poverty Alleviation
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A propos de vous
A propos de vous
A propos de votre organisation
The Capital Good Fund
États Unis, RI, Providence, Providence County
Pays dans lesquels ce projet crée un impact social
États Unis, RI, Providence, Providence County
Votre organisation est-elle une
organisation à but non lucratif
Depuis combien de temps votre organisation opère-t-elle ?
Votre organisation a-t-elle reçu des récompenses ou des prix ? Si oui, indiquez-nous lesquels.
2011 Hitachi Yoshiyama Social Entrepreneurship Award
2010: Providence Business News, 40 People to Watch in 2012
2011: Providence Monthly; 10 People to Watch in 2011
Citizen Citation: 2 Providence Mayors
Articles written in:
Providence Monthly, Providence Phoenix, Providence Business News, Providence Journal, Boston Journal, FDIC Reserve Bank of Boston Quarterly Publication and an appearance on CNN
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Sélectionnez la phase qui s'applique le mieux à votre solution
Stabilité (le projet a dépassé les premières étapes et obtient de bons résultats)
Depuis combien de temps le projet existe-t-il ?
En place depuis 1 à 5 ans
Parmi les propositions suivantes, laquelle décrit le mieux les obstacles que votre projet tente de surmonter ? Jusqu'à deux réponses possibles
Le besoin : quel problème tentez-vous de résoudre ?
Responsible financial service companies have yet to find a way of providing affordable financial services to the poor of America. As a result, payday lenders, rent-to-own centers, check-cashers, etc., reap $70 billion in profits per year. Equitable providers only serve 2% of the demand for financial services among the poor, and even then, those organizations a) have no plan for scale and self-sufficiency, b) use underwriting standards that exclude the poor and c) do not have a model for truly creating pathways out of poverty. Capital Good Fund has, over 3 years, discovered that ) a loan is not enough to get someone on a trajectory out of poverty, b) traditional lending criteria do not work for the poor, and c) interest income alone cannot make the organization self-sufficient.
La solution: quelle solution proposez-vous ? Soyez précis !
CGF has developed an unprecedented business model that a) increases social impact, b) increases earned income and c) allows the organization to lend to the very poor while maintaining a high repayment rate. The model works as follows: loan applications are process by phone during a free, 10 minute session and are then run through an algorithm in-house that pre-approved 15% of applicants. The other 85% are referred to Financial Coaching, which is a yearlong relationship between client and coach. After the first three, one-on-one sessions (covering Budgeting, Banking, Credit, Debt, Goal Setting, Savings, Taxes and Health), the client's info is run through a second algorithm, which scores clients based on outcomes achieved during coaching, attendance and the coach's opinion. We charge $120 for coaching, paid back in 12 installments of $10, increasing CGF's earned income and building the borrower's credit. 45 out of 100 applicants receive a service--loans, coaching or both--from CGF.
Le système : décrivez un exemple spécifique montrant de quelle façon votre initiative fonctionne ; indiquez vos principales activités.
Financial Coaching (FC) is the bedrock of everything we do. Because it is outcomes-based, it allows us to focus on the goals and needs of our clients (E.g., setting up a savings account, building credit, creating a resume, planning for retirement, managing debt, etc.). Also, by offering FC BEFORE making a loan, we can vet clients in a unique way, get to know them and give them the tools they need to succeed. The average FC client saves $1,000/year. We then offer FC graduates loans of up to $5,000 for an income generating activity and $2,000 for any consumer purpose (such as the purchase of a computer, application for citizenship or first and last month's rent on a new apartment). One client, Gretchen, came to us on the verge of homelessness; after FC and two loans, she now profits $2,300 from her eco-friendly catering/meal prep business. Another client, Magda, saved $9,600 in one year, bought a computer and is now launching her own food-based venture.
We also offer free tax prep, and have already returned $275,000 to the community. We have lent out $220,000 to our borrowers, 100% of whom are low-income, while maintaining a 90% repayment rate. Finally, we have graduated over 150 people from our FC program, built our own curriculum, and build two unique underwriting algorithms that allow us to serve the poorest of the poor.
Le marché : qui sont vos collègues et vos concurrents ? Identifiez les autres personnes qui travaillent à répondre au même besoin et indiquez ce qui vous différencie d'elles. Comment ces concurrents pourraient-ils influencer votre réussite ou votre croissance ?
Our competitors are non-profit lenders, bankers, sub-prime lenders and usurious actors such as payday lenders. We are unique because: 1) our pricing is much lower than many lenders, 2) we provide one-on-one, outcomes-based financial coaching in order to build the client's credit, increase earned income and underwrite, and 3) in addition to microbusiness loans, we are one of the few non-profit lenders that offers consumer loans of up to $2,000, and many of our loans, including our citizenship loan (which covers the $675 cost of applying) have gotten national attention.
This Entry is about (Issues)
Création de l'organisation : nous voulons tout savoir sur votre déclic. Expliquez-nous oú et quand les fondateurs se sont rendu compte que cette solution possédait un véritable potentiel pour changer le monde.
When co-founder Andy Posner was getting his MA in Environmental Studies at Brown University, he was working on innovative models for financing energy-efficiency. Around the same time, he read Banker to the Poor by Muhammad Yunus and saw how microfinance could unlock the capacity of the poor to better their own lives. After two years of lending, Andy realized that loans are not enough to move someone out of poverty, that traditional underwriting criteria don't work for the poor and that interest income alone on small loans won't cover expenses. He then developed the financial coaching-as-underwriting model while he was on vacation at his parent's house, and has since refined, tweaked and implemented the model in a way that has turned it into a first-of-its kind engine for social change through innovative financial services.
Décrivez le but de votre initiative, en insistant sur les résultats que vous souhaitez obtenir
Broadly speaking, we seek to serve 1,000 people in FY 2013.
Specifically, we track the following outcomes in Financial Coaching and lending:
a. # Of people that open bank accounts or increase utilization of bank accounts
b. Dollars saved (in a savings account and through budgeting)
c. Average % increase in credit score
d. Average increase in monthly disposable income
e. # Of people whose debt situation has been improved (i.e., lower debt-to-income ratio, debt restructure or settlement.)
2. # & Dollar value of loans disbursed
a. Broken by loan type and purpose
b. Loan performance
i. Default rate
ii. Portfolio at risk (90+ days late)
iii. How many become citizens
iv. How many get computers
Quel(s) obstacle(s) à l'inclusion financière votre solution cherche-t-elle à supprimer ? (plusieurs réponses possibles)
Manque de produits financiers abordables adaptés aux besoins des communautés défavorisées et marginalisées.
Si vous avez sélectionné «autre» ci-dessus, SVP spécifier quels autres obstacles à l'inclusion financière votre solution cherche-t-elle à supprimer:
Pour quelles communautés défavorisées ou marginalisées votre solution créera-t-elle un accès à des services financiers complets, adaptés, abordables et sécurisés?
We focus on serving low-income (80% of area median income or below) families. 55% of clients are Latino, 30% African American and the remainder Caucasian. The majority of our clients lived in the Greater Providence area, and all are under or un-banked. Finally, 55% of clients are female, 45% male.
Votre solution peut-elle être mise en œuvre dans d'autres régions du monde? Si oui, lesquelles?
We believe that once we prove our model in the 'petri dish' of Rhode Island, we will be able to scale it to many other states. Our model has several aspects that are replicable/scalable:
1) Our underwriting methodology is easy to tweak for other contexts
2) We use university students to provide financial coaching, thereby lowering costs; there are universities in all 50 states from which coaches can be recruited
3) Our financial coaching curriculum can easily be tweaked to be made relevant to other states.
Si votre solution s'avérait être étonnamment efficace, comment les choses évolueraient-elles dans 10 ans?
Our goal is to serve 100,000 people in 10 years. In so doing, we will not only make a significant dent in poverty for those clients, but we will also have empowered a large number of people whose voice is not currently heard in local, state and federal policy discussion. Also, once we have such a large network of clients with whom we have a relationship, we can leverage that relationship to offer other products/services, such as health care and environmental services, that meet their needs in an equitable manner.
Que faut-il modifier pour y parvenir?
Making this change requires that CGF acquire the requisite up-front capital to build our infrastructure and human capital so as to be able to scale. Also, policy changes will have to be made at the federal level, for instance restructuring unemployment and welfare so as to get rid of the current disincentive to increasing income because doing so eliminates the cash benefits. Finally, the federal and state governments will have to increase spending on job training, change regulations so that banks aren't too big to fail, expand access to food stamps and low-cost health insurance, and ensure a level playing field so that all can benefit from economic growth (which will most likely entail restructuring the tax code).
Jusqu'à ce jour, quels résultats a obtenu votre projet ?
• 100% of clients that needed to open a checking account have done so
• the average amount of money automatically transferred to savings is $660; however if you just look at those that actually set up automatic transfer, the number is $1,100
• 90% of clients that were eligible to set up direct deposit of a paycheck into their checking account did so
• 82% of clients that needed to open a savings account did so and actively used it
• 75% of clients that needed to applied for a job and at least secured an interview after coaching
• 60% of clients that needed to do so disputed an error on their credit report and had it fixed
• 50% of graduates that wanted a loan were approved for one
• 81% of graduates reported that they were able to reduce expenses as a result of coaching
$220K lent to the community w/ a 90% repayment rate
$275K returned to the community through tax prep
150 financial coaching graduates
Quelles sont vos prévisions en termes d'impact au cours des cinq prochaines années ?
Serve 25,000 people with financial coaching, loans and tax prep. Achieve an average increase in credit score per client of 80 points, and an increase in savings of $2k. Maintain a 90% repayment rate. Expand financial coaching to include health outcomes. Enable 60% of clients to move out of poverty after 5 years with CGF.
Quels sont les obstacles qui risquent de freiner votre projet ? Comment pensez-vous les surmonter ?
The biggest barrier is the up-front cost of growth, which fundamentally requires an investment in data/technology systems and in human capital. Additionally, regulations designed to prevent banks from preying on the poor may hinder our ability to serve the poor. Finally, the prevalence of predatory lenders may make it hard for CGF to gain market share.
Les meilleures propositions possèdent un programme solide détaillant leurs prévisions pour atteindre et suivre leurs objectifs de croissance. Identifiez vos objectifs à 6 mois pour accroître vos résultats
Définissez les trois tâches principales à accomplir pour atteindre ces objectifs à six mois
Build data systems
Raise 200,000 in grant money.
Train 10 new financial coaches to handle more clients
Et maintenant, voyez les choses en plus grand ! Identifiez vos objectifs à 12 mois
Définissez les trois tâches principales à accomplir pour atteindre vos objectifs à 12 mois
Continue building out our data systems
Do a regression analysis to refine and improve our underwriting algorithm
Quels sont vos différents partenariats ?
We work with a wide array of social service agencies, the office of the general treasurer and broadband rhode island. Additionally, we partner with employers and local school districts so as to offer our suite of products and services to families and employees.
Actuellement, votre projet cible-t-il d'autres populations, lieux ou marchés spécifiques ? Si oui, lesquels et pourquoi ?
We focus exclusively on low-income families, and predominately on minorities and people of color. We also focus on the Greater Providence area, because the majority of low-income families in RI live in that area. Because people of color are the most likely to live in poverty and lack access to financial services, we have chosen to focus on them.
Quel environnement et quels facteurs organisationnels internes font la réussite de votre projet ?
Capital Good Fund has a culture that we like to describe as what happens when silicon valley meets a soup kitchen. In other words, we combine a spirit of entrepreneurship and innovation with a deep seated dedication to social justice that allows us to innovate while staying true to our mission. Our youth and willingness to receive help from more experienced board members/advisors allows us to be bold and smart at the same time.
Expliquez plus en détails les besoins et les offres indiqués ci-dessus ou proposez un type d'aide non mentionné dans la liste
I believe that in order to achieve significant social change I must give my time to others looking foster change. In that vein, a spend a lot of time giving speeches, mentoring social entrepreneurs and sharing my ideas/thoughts/innovations with others.