Banking on Social Change: Seeking Financial Solutions for All
A propos de ce défi
Changemakers and Citi are proud to announce the three winners for the "Banking on Social Change" competition. The three winners will each receive US $5000.Read more to learn about the winners. You may continue to read and comment on all entries. We welcome your feedback!
Citi Welcome Letter
Dear Changemakers Community,
Innovation and pioneering has been our strength. At Citi, we believe the best solutions arise from the need within to excel, and to find and create financial solutions for all using innovative approaches while continuously improving on ideas that exist. Which is why we have joined with Ashoka, a leading innovator for social change, to launch the Citi-Ashoka’s Changemakers Competition: “Banking on Social Change—Seeking Financial Solutions for all.”
This competition is designed to reach the world’s entrepreneurs and to challenge them to use their substantial talents and skills to providing financial services for all. We are proud to partner with Ashoka’s Changemakers initiative to channel our collective energy toward using entrepreneurial ideas and skills as a means to create economic and social change in the broader world.
Ashoka’s Changemakers and Citi have partnered in a worldwide search for financial services projects that use the transformative power of innovation and skills to achieve real social change. We invite you to join us. Between July 16 and October 1, 2008, we invite you to share your new ideas for financial services that can bring about strong and positive economic and social impact.
Even if you do not offer a proposal of your own, we invite you to be part of the change by joining the online dialogue in which your experience and insights will be invaluable to the ever-growing field of 'financial services' for economic and social change. Through your participation in the online review discussion, you can make suggestions and recommend resources that will help refine and strengthen the strategies presented by competition entrants. Tell us what you're thinking, how you see the field, and where its challenges and opportunities lie.
We’ll need your help again between November 10-24, 2008 to vote for three winners from the finalists who will be selected by our panel of judges—a group of experts and influential leaders in their respective fields.
Together, we have the potential to create sustainable change and bring real financial solutions for all in addressing one of today’s most pressing economic issues. You may already be engaged in activities that are helping to change your corner of the world. Now bring this knowledge to a global community. We encourage you to invite others to the competition as well, so together we may uncover the creativity—and natural drive to innovate—within each of us.
CEO, Citi India
Area Head—Bangladesh, Sri Lanka & Nepal
Timeline and criteria
Welcome to the “Banking on Social Change – Seeking Financial Solutions for All” Collaborative Competition, which aims to find innovative solutions and catalyze a community of changemakers around financial transactions for social change.
For more information on entering, the online review, and voting please view the competition criteria and time line below, or contact us at email@example.com
The competition will be open to all types of organizations (charitable organizations, private companies, or public entities) from all countries. We consider all entries that:
- Reflect the theme of the competition: Banking on Social Change – Seeking Financial Solutions for All. Entries will demonstrate innovative solutions around financial transactions for social change.
- Indicate growth beyond the stage of idea, concept, or research. At a minimum, entries should be at the demonstration stage and indicate success. While we support new ideas at every stage and encourage their entry, the judges are only able to evaluate programs that are beyond the conceptual stage, and have demonstrated a proof of impact, even at small scale.
- Have the entire entry form completed and are submitted before the deadline.
- Are submitted in English or Spanish.
The winners of this Changemakers Collaborative Competition will be those entries that best meet the following criteria:
- Innovation: This is the knock-out test. The entrant must describe a systematic and/or disruptive innovation that allows financial security to become a reality for everyone. The innovation should be a unique model of change, demonstrating a substantial difference from other initiatives in the field and ready for large-scale expansion.
- Social Impact: It is important that the innovation provides a solution toward increasing financial security for everyone. The entry must demonstrate impact on the target population it addresses, either a specific underserved community or the society at large. Some innovations will have proven success at a small level, while others will have grown to engage millions of people. Regardless of the level of demonstrated impact, it is important that the innovation has a potential for application globally. This will be judged by considering the innovation's potential for scale and replication, in addition to the entrant’s ability to formulate a clear “road map” to reaching larger goals.
- Sustainability: For an innovation to be truly effective it must have a long-term plan for securing financial backing and community support. Entries should describe not only how they are currently financing their work, but also how they plan to finance their work in the future. The most successful entrants go beyond discussing whether or not they will charge for services and describe a business plan. They should also demonstrate that they have strong partnerships and support networks to address an ongoing need, and to aid in scalability and the maintenance of a clear financial strategy.
Competition Deadlines, Procedures, and Rules
Online competition submissions are accepted until October 1st, 2008 at 6pm, U.S. Eastern Daylight Time. At any time before this deadline competition participants are encouraged to revise their entries based on questions and insights that they receive in the Changemakers discussion. Participation in the discussion enhances an entrant’s prospects in the competition and provides the community and the judges an opportunity to understand the entrant’s project more completely.
There are three main phases in the competition:
- Entry Stage, July 16th – October 1st, 2008: Entries can be submitted until 6 pm US Eastern Daylight Time on October 1st, 2008, and throughout this stage anyone can participate in an online review discussion with the entrants.
- Online Review and Judging – October 2nd – November 5th, 2008: Online review and discussion continues. Simultaneously, a panel of judges who are experts in the field and a team of Ashoka staff select the 10-15 competition finalists.
- Voting – November 10th – November 26th, 2008: The Changemakers community votes online to select the three award-winners from the field of finalists. The Changemakers Collaborative Competition winners—the three finalists that receive the most votes—will be announced on December 1st, 2008 and will each receive a cash prize of US$5,000.
Participation in the competition provides the opportunity to receive feedback on your blueprint from fellow entrants, Changemakers staff, judges and the Changemakers community. Showcasing your blueprint and the challenges involved in creating social impact advises potential investors about how best to improve funding/investing patterns for the sector and to maximize the strategic impact and effectiveness of their future investments.
Early Entry Prize: The best entry submitted by 6:00 p.m. EST, August 15th will win a camcorder and digital camera (Equal value of US $1000). Being an Early Entry Prize winner does not preclude you from winning the competition in any way, or guarantee finalist status—all entries will be equally evaluated per the Changemakers criteria at the completion of the entry period.
Competition Winners: The top three entries will win US $5,000 each. After the judges select the 10-15 finalists from the entire competition, the Changemakers online community will vote for 3 winners from among the finalists.
Disclaimer — Compliance with Legal Restrictions
Ashoka complies fully with all U.S. laws and regulations, including Office of Foreign Assets Control regulations, export control, and anti-money laundering laws. All grants will be awarded subject to compliance with such laws. Ashoka will not make any grant if it finds that to do so would be unlawful. This may prohibit awards in certain countries and/or to certain individuals or entities. All recipients will comply with these laws to the extent they are applicable to such recipients. No recipient will take any action that would cause Ashoka to violate any laws. Additionally, Ashoka will not make any grant to a company involved in the promotion of tobacco use.
Banking on Social Change:
Seeking Financial Solutions for All
* Bolded names are for-profit or blended enterprises.
Participate Discuss   Read the Overall Framework of the Competition
The core, underlying question of the above framework is this: How can we
move the disadvantaged (both individuals and micro-enterprises) along a path of
increasing participation in the formal economy? For individuals, that means banking
the unbanked, extending access to loans to start small businesses, providing the
means to get a foothold in commerce—both as a consumer and a producer. Next,
the task is to help those craft enterprises, solo entrepreneurs and small businesses
scale and thrive. Ideally, that happens in a way such that the profits and abundance
is reinvested into local communities. These are not small or simple challenges.
This framework attempts to distill the patterns of success that leading innovators
have invented to address this core question, so that the underlying principles can
serve as guiding design principles future solutions.
While the needs of individuals and businesses might seem disparate at a first glance,
we have considered them together, noting that often, similar strategies can be used
to overcome the barriers that prevent both groups from moving along this path of
increased participation. This innovation framework is a snapshot of solutions from
around the world that apply creative approaches to providing financial solutions for
all. They encompass both not-for-profit, as well as market-driven, profitable
These are core components we identify of a problem that, if changed, could allow for a true shift in paradigm and behavior. Barriers are not market conditions or underlying causes that merely describe a situation. They must be moveable and specific to the problem.
- Non-affluent are not valued customers: Financial institutions and businesses have not traditionally seen the poor as a profitable or viable market. Banks did not believe the poor would pay back loans. Companies did not believe that margins on any products sold to the poor could result in profit. As a result, few products and services have historically been designed for the poor and their unique consumption patterns and barriers. Both of these assumptions have be ultimately proven to be false, insights which have spawned the fields of microfinance and so-called “base of the pyramid” initiatives.
- Lack of access to markets or products: For both low-income individuals and businesses owned by micro entrepreneurs, access to banking services and financial markets is an ongoing issue. Individuals often lack geographic access to banking services; the rural poor are particularly overlooked and “undesirable” to traditional banks, particularly because their incomes can rest solely on agricultural cycles, which are seen as unreliable. Small businesses that serve the poor, which often operate as informal economy businesses without official documentation, lack direct access to the markets into which they sell, a fact that often costs them much in “middle man” fees. They also are removed from supply chains that would allow them to scale, be more flexible in their offerings and grow beyond a hyper-local focus.
- Social benefit businesses not deemed investment worthy: For businesses that serve the poor, many of which originate in the communities they serve, there is a belief that producing a social benefit (and by serving an undesirable clientele) precludes them from becoming hugely profitable, or worth the investment of a returns-minded investor. As the non-profit sector is more traditionally geared to charity (particularly prior to the microfinance wave) these businesses languish in a grey zone, unattractive to capital markets on either side of the profit divide.
- Lack of skills and incentives to join formal economy: Both people and businesses lack the basic skills and motivations to participate in the local economy. For unbanked individuals, literacy can be a key barrier, along with basic unfamiliarity with how financial instruments work or what benefit they might provide. Almost all investments are also geared toward a return or pay-off that is down the road, which, to people living in a day-to-day subsistence mode, is impossible to contemplate or justify. Businesses often lack basic bookkeeping skills and the documentation to allow them to take out loans to expand or improve their offerings.
These are insights we distill from the work of leading social innovators. They do not encompass tools (such as technology or education), nor do they name specific organization-level approaches. They are clarifying insights that identify levers of change.
- Leverage the stake individuals have in financial success of the group: As microfinance has proven through its innovation of lending circles in which each person is accountable for the debts of others, there is value in setting up structures that tie incentives to group success. Many entrepreneurs are finding ways to vest individuals and businesses in their communities by aggregating their demand locally. Others take a “do-it-yourself banking” approach, asking the lending circle to provide its own funds for a loan or investment pool.
- Prove that social return doesn’t preclude financial gain: This strategy has worked both in terms of drawing individuals to an investment vehicle (like Kiva.org) as well as from the perspective of persuading institutions that social return is not the only value involved in for-benefit companies. Coupling real financial return to lending to the poor, through micocredit and other vehicles, has allowed the amount of money being poured into the cause of relieving poverty to expand exponentially. Finding ways to leash market-solutions to social causes is pivotal to scale and sustainability.
- Lower the entry threshold: Simply addressing the entry point barriers to services and participation is key. Removing geographic barriers by allowing mobile phone access or “doorstep service” is one form this innovation takes. Others include eliminating traditional financial barriers, such as collateral requirements, minimum balance thresholds, etc.
- Turn hidden value into alternative markets: Many innovators have found ways to assign value to previously unmonetized assets to drive a new form of commerce, or spur participation in the established economy. Residents in squatter villages located on prized city property can be compensated by developers for their occupancy to pave the way for re-location and re-development. Communities can strike agreements to honor units of time, invented currency or units of labor to stimulate commerce. In the case of Root Capital, Ashoka Fellow Willy Foote uses contracts from large corporations to purchase future corps of coffee farmers as collateral for loans to these mid-sized businesses.
- Aggregate demand or supply to influence market: One poor consumer or one small business is too small of a voice to sway markets. Aggregated, this voice is louder and hugely powerful. In South Africa, aggregating the buying power of shanty town minimarts – and their reach to consumers – is allowing them to scale as a cooperative “chain” of sorts. Sites like Prosper.com aggregate the needs of borrowers to allow an ebay-type market for person-to-person loans.
- Shorten timeline on individual “returns”: One of the primary hindrances for the poor in participating in the formal economy is that any benefit from decisions that take the long term into account invariably hamper their ability to survive in the now. Programs that shorten the timeline on that payback, whether it is an immediate credit to be used for health insurance, or a cash payment to reward the decision to keep a child in school rather than employ him on a farm, all provide some opportunity for longer term planning and investment.
Short Descriptions of Mosaic Cases
Kapilananda Mondal (Ashoka Fellow 2002, India): Kapilananda Mondal has
demonstrated that with the right incentives, rural individuals from all income levels
can become regular savers and viable borrowers. His idea is to provide safe and
convenient savings and loan opportunities for poor and low-income households
and businesses in rural areas. Rather than relying on grants or any kind of external
financing, rural areas can generate needed investment capital from within their own
communities. For rural microbanking to work, Mondal sees that saving needs to be
habitual. Incentives like cash prizes and travel awards can be creatively used to
encourage this behavior. Conventional banking-related products such as insurance
can and should be marketed as services to rural banking customers, regardless of
income level. Mondal’s system includes “doorstep” service—an infrastructure of
field staff to collect payments and disburse loans at the client’s doorstep—to make
it easier for rural villagers to save. In addition to helping people replicate his idea,
Mondal is expanding his current operations to 250 villages over the next five years.
The Grameen Bank: is based on the voluntary formation of small groups of five
people to provide mutual, morally binding group guarantees in lieu of the
collateral required by conventional banks.
The assumption is that if individual borrowers are given access to credit,
they will be able to identify and engage in viable income-generating
activities - simple processing such as paddy husking, lime-making,
manufacturing such as pottery, weaving, and garment sewing, storage and
marketing and transport services. Women were initially given equal access to
the schemes, and proved not only reliable borrowers but astute
entrepreneurs. As a result, they have raised their status, lessened their
dependency on their husbands and improved their homes and the nutritional
standards of their children. Today over 90 percent of borrowers are women.
From fewer than 15,000 borrowers in 1980, today the membership has grown to
more than 2.34 million members (2.24 million of them women) in 38,957
villages. Group savings have reached 7,853 million taka (approximately USD
John De Wit (Ashoka Fellow 2006, South Africa): De Wit has adapted ideas
associated with microcredit to the needs of small-business men and women in rural
South Africa. The Small Enterprise Foundation uses a group-based methodology
adapted to the traditional rotating savings associations prevalent in South Africa
called “magodisano” or “umgalelo” to provide rural micro-entrepreneurs with access
to credit. The Foundation will demonstrate a new model of group-based savings and
loans that is responsive to the largest problem facing micro-enterprise programs
everywhere: expansion. A small business operator who requires a loan for his or her
business initially invites four other people to form a group or “stokvel”; all of these
people operate small enterprises and want loans for their businesses. The group
begins to hold weekly meetings, first participating in three induction and training
sessions. After successfully completing the training, all of the group members may
VirginMoney US: Originally launched as CircleLending, this service, aquired by
Richard Branson’s Virgin, formalizes and manages loans between family and friends.
The service allows individuals to pick their own interest rate and loan terms, with
those interest payments accruing to the loaning friend or family member.
Jarek Dominiak (Ashoka Fellow 2001, Poland): To steer people through the
economic transition underway in Poland and to give them the information and tools
they need to support a market economy, Dominiak teaches people about financial
systems and management. Based in Wroclaw, his investors’ association stimulates
the growth of small investors’ clubs throughout Poland that bring together people
who want to know more about the new economy and their role in it. Initially,
participants contribute a small sum of money to the club pool. Then, by joining their
contributions and working together to pursue smart investment opportunities, they
gain confidence through hands-on techniques and learn concepts that apply to the
national economy as well as their individual households. By making joint investment
decisions, club members
Jean Claude Rodriguez-Ferrera (Ashoka Fellow 2006, Spain): Rodriguez-
Ferrera is creating self-managed finance groups throughout the country. Each group
of 30 carries out its own small saving and loan programs. The groups are called Self-
Managed Financial Communities (CAFs). Although they share a common
methodology and network, each agrees on its own rules of operation and
coordinates is own activities. Besides providing access to credit, the CAFs encourage
saving money. To join a group, each member is required to initially buy a number of
“stocks” in the group; the amount purchased determines his or her capacity for
credit. This capital allows each member to request small loans for which they pay a
certain amount of interest determined by the group. The interest paid by the
members who request loans provide a profit for the other members of the
Salomón Raydan (Ashoka Fellow 2000, Venezuela): Raydan’s community
banks, or Bankomunales, are designed on a new savings and credit model by which
community members provide the capital for their own loans through the purchase of
shares, on which they earn returns. The banks are managed by the shareholding
community members. These members determine interest rates, time periods for loan
repayment, maximum loan amounts, repercussions for late payments, and all other
standards for the banks’ operations. As a bank matures, the members have the
option of soliciting outside funds, using their own capital as a guarantee. Outside
funds, however, are never to amount to greater than 50 percent of the bank’s funds,
so that the control always remains in the hands of the communities themselves.
Kiva.org: Kiva is the world’s first person-to-person micro-lending website,
empowering individuals to lend directly to unique entrepreneurs in the developing world. Kiva partners with existing expert microfinance institutions with access to
outstanding entrepreneurs from impoverished communities world-wide. Kiva’s
partners then upload their entrepreneur profiles directly to the site so individuals
may lend to them. Kiva provides a data-rich, transparent lending platform, creating
an interpersonal connection between lender and borrower, at much lower overhead
costs due to the instant, inexpensive nature of internet delivery. The individuals
featured on Kiva’s website are real people and entrepreneurs who need loans and
are waiting for socially-minded individuals to lend them money.
Chittenden Bank: Vermont bank’s Socially Responsible Banking program gives its
non-commercial customers the opportunity to be social investors. Customers can
choose to deposit money into an account that gives them a lower-than-market
interest rate so that the bank can offer lower interest rate loans to small family
farms, conservation groups, and educational institutions. The customer gets a say in
where that money goes, enabling the community to support the things that are most
important to them.
responsAbility: ResponsAbility’s vision is a world in which developing countries are
no longer considered as mere aid-recipients but as high-potential economies with a
thriving and diverse entrepreneurial base, strongly supported by innovative
microentreprises and Small and Medium Enterprises (SMEs). ResponsAbility bridges
the gap by offering adequate financial services and new financial products for
institutional and private investors to bridge the gap between the financial and
development cooperation markets. ResponsAbility is a private sector initiative with
partners that represent the main segments of the Swiss financial market - Credit
Suisse, Raiffeisenbanken, Baumann & Cie Banquiers, Alternative Bank ABS - and the
Andromeda Fund, a Social Venture Capital Fund.
Triodos Bank: Triodos Bank is a leading values-driven bank in Europe. Established in 1980, the bank has pioneered a radical, commercially successful approach to money that value people and planet, as well as profit. Since 1994 Triodos Bank has contributed its unique expertise in sustainable and transparent banking to the microfinance sector worldwide, through management of different specialized microfinance investment funds. The rationale behind the decision to take up this role was a strong desire to contribute to a better sustainable world through positive action and from a banking competence. In total the Triodos microfinance funds have provided finance to about 80 microfinance institutions, working in 35 countries. The funds are shareholder in 18 prominent microfinance institutions. As of June 2008, the total assets under management in microfinance amounted to EUR 140 million. Triodos also manages funds that invest in renewable energy and fair trade in developing countries.
John Sage (Ashoka Fellow 2006, USA): Sage’s Pura Vida is a test case creating good
by using capitalism to empower producers, motivate consumers, inspire business
leaders, and serve the poor. Pura Vida Partners, a 501(c)(3) nonprofit organization,
launched PuraVida as a wholly-owned fair trade, organic beverage company. Like
other fair trade companies, PuraVida targets consumers who want to buy products
consistent with their social values, and ensures that producers of its coffee are paid
a rate that empowers, rather than exploits. Unlike other such social enterprises,
PuraVida operates the nonprofit and the for-profit as a “blended” organization. The
staff, messaging, social benefit, and fund raising elements of PuraVida Partners are
blended so closely with PuraVida that the company’s growth also provides
unrestricted capital to the social benefit organization. His blended bond gave
investors a way to make a 6 percent return on their investment that was in-turn
donated to a nonprofit of their choice—most often Pura Vida Partners, which funds
community development and education projects in Costa Rica, Nicaragua and is
expanding into other producing countries such as Ethiopia and Indonesia.
Alou Keita (Ashoka Fellow 2006, Mali): Keita has created one of the most
successful of Mali’s community managed village banking networks, providing
savings, credit and banking facilities for village communities. Unique among other
village finance offices, the input of capital from migrant workers in France allows the
banks to strengthen villages which have been weakened by emigration and the ripple
effects of rural poverty. One of Keita’s key innovations is a money transfer service for
those living abroad which offers an effective response to the challenge of sending
money home to remote villages.
Keita’s village banks (officially known as village finance offices or “caisses”) differ
from many other microfinance establishments. They are the only financial institutions in the region of Kayes, Mali, that are completely managed by villagers
and do not require a minimum amount of savings in order to qualify for credit.
Wizzit: There are a wide variety of facilities operating in the mobile banking space,
but Wizzit distinguishes itself from competitors by not requiring its customers to
have a bank account in order to use it. Wizzit also sets itself apart by being
compatible with many early-generation cell phones, including pay-as-you-go
phones, frequently used by low-income residents. Account holders are issued debit
cards that can be used at any ATM or retailer. The company employs more than 800
younger people who are often unemployed college graduates to help new
customers open accounts. One of the company’s specific targets is to reach the 16
million under- and un-banked South Africans who make up the majority of the
population there. Increasing the flexibility of mobile banking enables more people to
participate and offers the potential for increased income.
Caixa Eeconoica: This organization works by banking the unbanked quickly and
efficiently through retail partnerships. In Brazil, millions of unbanked residents have
been given affordable, easy access to financial tools through a widespread banking
correspondent network. The second largest bank in the country, Caixa Econômica
Federal (CEF), formed a partnership with a national chain of lottery shops Casas
Lotéricas. The partnership was originally formed out of necessity—the federal
government had tapped the bank to distribute social benefits across the country;
the lottery houses were given special permission to offer services on CEF’s behalf as
banking correspondents. Residents 16 and older need proof of residence, their tax
number, and an ID to open an account. More than half of all invoices for public
utilities in the country are paid at these lottery houses. Most government social
benefit program payments are made to residents on magnetic cards that they can
use at the kiosks. Other banks in the country have formed successful
correspondent banking partnerships with pharmacies, grocery stores, and retailers.
Tio Networks: TIO Networks Corp. is a startup financial services company that
powers the “Walk Up Financial Services” marketplace with thousands of leading edge
automated self-service and clerk assisted solutions. TIO owns the largest and most
convenient national network of cash accepting ATMs for bill payment and prepaid
services for the ‘cash preferred’ consumer marketplace in North America. TIO
symbolizes fast, convenient, safe and secure access to key financial services. All
transactions are done on kiosks, reducing costs and removing any social hesitation
that might be involved in visiting a bank branch.
Lílian Do Prado Silva (Ashoka Fellow 2007, Brazil): Silva supports youth
entrepreneurship in the field of organic family agriculture, offering access to credit
and formal guidance in the implementation of businesses. Her strategy of requiring
no collateral helps young people build on their agricultural heritage and contributes
to economic stability in the community, which loses fewer young people to urban
centers for jobs.
Joseph Sekiku (Ashoka Fellow 2007, Kenya): By educating small farmers about
production chains and larger markets for their produce, Sekiku gives them new
opportunities to increase their profits and improve their livelihoods. He also equips
them with the tools to take advantage of these opportunities, teaching them the
basic entrepreneurial skills to turn surplus into quality products. These include use
of new technologies such as fruit driers and processors that lengthen the shelf life of perishable farm products, enabling farmers to sell products when the market is
good. Finally, Sekiku opens access to new markets by linking farmers to Tanzanian
and international markets through a partnership with Ashoka Fellow Adrian
Mukhebi’s Kenyan Agricultural Commodities Exchange.
Aysha Saifuddin (Ashoka Fellow 2007, Pakistan): Saifuddin formed Kaarvan, a
shareholder company, to strengthen women producers’ economic power by
improving their product quality and diversity. Kaarvan then connects producers
with a distribution network of retail outlets selling to local high-end markets.
Saifuddin is currently linking international companies with production houses as
possible outsource centers and has plans to enter into the vibrant cotton sector.
Winnie Lira (Ashoka Fellow 2002, Chile): Letelier recognized that demand for
original, top-quality products was growing as Chilean consumers are presented with
more consumer options. Microsized businesses were unable to compete with large
companies and have traditionally suffered from formal barriers like complicated
paperwork and licensing. These obstacles have had the greatest effect on women
entrepreneurs, whose products are generally considered to be low in quality and
appeal. Winnie encouraged poor women to tap into increasingly sophisticated
markets by organizing the women, then training them both to identify new work
opportunities and to create competitive advantages for themselves. She emphasizes
product value, market penetration, income-generation strategies, and access to
Central Coast Local Exchange Trading System: In an area of New South
Wales, Central Coast created a new form of currency that can be used in parallel with
the national currency. The local currency, called Shells, is one kind of Local
Exchange Trading System or Local Energy Trading System (LETS). The idea behind
LETS is to promote self-sufficiency in a community by tapping into residents’ energy,
skills, and time instead of their financial wealth. There are various LETS systems
throughout the world. In this particular system, first-time traders can start without
Shells on the assumption that they will earn them, encouraging participation. From
issues associate with rapid development, Central Coast has experienced disputes
over the water supply, and high unemployment. Shells allow people who are
unemployed to gain access to goods and services they might not otherwise be able
to afford, and in the process fosters community development.
Moussa Kane (Ashoka Fellow 1998, Mali): Kane has organized Mali’s informal
economy into a formal association that compiles data on the informal sector and
provides basic services to impoverished entrepreneurs. The association provides
startup equipment and in-kind loans to entrepreneurs and offers business and
financial training to help small ventures succeed. His organization is the first
company of its kind in Mali to be owned by its dues-paying members, and it is
financed and run entirely by members of the informal sector.
Darin Gueneskera (Ashoka Fellow 2003, Asia): Gueneskera started a stock
exchange market, a variation of modern stock exchanges, by which the poorest—the
inner city slum and shanty dwellers—can value or trade their main item of wealth.
Gueneskera started by persuading the government and other development
organizations to play a new role. He persuades and trains welfare officers to become
marketing personnel who promote his idea to the poor. He then sells their real
estate and purchases for them new, modern apartments of their preference. The
government’s role then changes to that of monitoring a market economy - ensuring
transparency and regulating new development plans for neighborhoods inclusive of
the poor, approving the establishment of land and real estate trusts, and registering
ownership titles to homes.
The program creates for slum dwellers a transferable asset in the land they occupy
and which they transfer to a trust. In exchange, they receive entitlement certificates
to purchase an apartment in a new building. These certificates are a vote for the
building of their choice. They are redeemed by exchange for title to a condominium
apartment in the new building. They also own a share of the common areas that may
include commercial shops, a preschool, and more. Accordingly, they become
stakeholders in urban regeneration.
Willy Foote (Ashoka Fellow 2007, USA): Foote is transforming lending to the rural
poor by making loans based on producers’ future sales rather than their existing
assets, thereby redefining risk assessment to value emerging ethical supply chain
relationships. This shift makes them bankable and proves the business case that
rural communities are profitable investment opportunities for mainstream financial
institutions. Through his US-based organization, Root Capital, Foote is getting his
lending methodology adopted by local and global banks. Root Capital expects to
break even with $40 million under management in 2009. This level of profitable
lending activity will effectively define a new asset class capable of exploiting the
growing market for fair trade and green goods specifically to counter rural poverty. In addition, Root Capital is helping to bridge the gap that currently exists between
microfinance and large scale banks.
Joaquim De Melo (Ashoka Fellow 2004, Brazil): After years of working on projects
to improve life in the favelas, de Melo began innovating within the finance sector and
has developed a new banking model that works both socially and financially. He
launched the People’s Bank, which feeds the network of local solidarity with a
parallel currency, facilitating the sale of products made in the community, making
incomes circulate within the neighborhood, and thereby promoting economic
growth. Armed with a detailed map of local production and consumption, de Melo
offers lines of microcredit for those wishing to produce to meet local demand and
another line that finances those who wish to purchase from local producers and
merchants. The goal of the strategy is to create a sustainable and virtuous local
economic circle, as well as to prepare this excluded population for life in the wider
Celso Grecco (Ashoka Fellow 2006, Brazil): Grecco harnesses the structure of
existing financial markets to generate new avenues for social financial investment.
Celso has created a Bolsa de Valores Sociais (BVS), or Social Stock Market, that
operates within Brazil’s largest stock exchange, Bovespa. Celso offers investors a
portfolio of certified, credible social investment opportunities. Investors measure
their return in social impact, holding citizen organizations (COs) accountable
through regular progress reports. All 30 organizations initially posted for
investment have been fully funded, representing US$2.2 million.
Marcelo Mario Caldano (Ashoka Fellow 2003, Argentina): Caldano’s plan relies
on a new kind of currency to build and sustain schools, public institutions, and
citizen sector organizations. Rather than paying cash to support their school,
participating members contribute work hours–which are calibrated to an average
wage–and work together to deliver services. In turn, classrooms get swept,
electrical wiring gets installed, school lunches get prepared and served,
administrative and clerical tasks are completed, curricula get written–and most
importantly, children get an education. Private businesses also pay into the system
through donations of equipment and services that families can then buy.
Cadano’s idea not only provides the needed resources, but also initiates an
important mindset shift: value is ascribed to the nonfinancial contributions of each
member. The results are dramatic. In one community where 80 percent of the
population is too poor to participate in the formal economic system, Caldano’s
system has resulted in a self-sustaining school that serves one-third more
students. The community is busy supporting the school and developing plans for
other services as well. Having demonstrated the success of his approach, Caldano is
working to introduce the model in communities throughout the country and apply
the concept to other areas of social need.
Felipe Vergara (Ashoka Fellow 2006, Colombia): Vergara is applying a simple
principle to the field of education finance: profit attracts capital. Through Lumni,
Felipe is managing the first profitable education investment funds, and in the
process is testing, refining, and demonstrating the tools that other groups will need
to do the same.
The cornerstone of Vergara’s innovation, the “human capital contract”, eliminates
the risks to both students and investors that otherwise deter private investment. In
exchange for education financing, these legally binding agreements require students
to pay a fixed percentage of their income over a pre-determined number of months
after graduation. For students, human capital contracts do away with both the need
for collateral and the threat of burdensome debt associated with traditional loans.
The effect makes unemployment and underemployment less ominous, but also
Timebanks.org: TimeBanks’ mission is to expand on a movement that reforms
economic and social systems, policies and practices so that they empower human
beings to contribute to each other’s well-being through reciprocity. Like other
alternative currency systems, the Time Dollar maximizes the exchange of skills and
services in a community. Communities that use Time Dollars rely on localized Time
Banks to keep track of hours one spent and hours one has available to spend.
Timebanks.org offers tools and advice to make the system easier for communities to
implement, ensuring more success.
Timothy Jenkin (Ashoka Fellow 2007, South Africa: Jenkin gives marginalized
South African citizens, excluded from the formal economy, a functioning economic
system of their own. He has successfully adapted to South Africa an alternative
currency scheme based on the value stored by users, rather than commodities (like
gold or silver). Jenkin’s online platform, the Community Exchange System (CES),
allows township residents to purchase and sell goods as well as accumulate savings
and access other banking services. By computerizing transactions and having users
maintain their own accounts through computer kiosks or cell phones, Jenkin
reduces administrative costs. Unlike most alternative currency regimes that have
limited capacity to spread, CES’s online technology infrastructure gives it the
potential for promotion in all segments of South African society, reconciliation with
government tax systems, and eventual adoption by currency schemes worldwide.
Douglas Racionzer (Ashoka Fellow 2004, South Africa): Racionzer established
Emerging Market Services (EMS). As a larger operation with more buying power, EMS
is able to negotiate bulk discounts with food companies like Nestle that usually deal
only with large supermarkets, and secure contracts with advertisers to place
colorful signs on shop walls that bring in revenue and help legitimize the shops as
real businesses. When meeting with suppliers and advertisers, Racionzer emphasizes
that the market footprint is not a single township or small collective, but nearly
three million people in the 24 townships where EMS now works.
Prosper: America’s largest people-to-people lending marketplace, was
created to make consumer lending more financially and socially rewarding for
everyone. The way Prosper works is intuitive to people who have used an online
auction. Instead of listing and bidding on items, people list and bid on loans using
Prosper’s online auction platform. People who register as Prosper lenders set the
minimum interest rate they are willing to earn and bid in increments of $50 to $25,000
on loan listings they select.
In addition to criteria commonly used by institutional lenders, such as credit scores
and histories, Prosper lenders can consider borrowers’ personal stories,
endorsements from friends, and group affiliations. Borrowers create loan listings for
up to $25,000 and set the maximum rate they are willing to pay a lender. Then the
auction begins as Prosper lenders can bid down the interest rate. Once the auction
ends, Prosper takes the bids with the lowest rates and combines them into one
simple loan to the borrower. Prosper handles all on-going loan administration tasks
including loan repayment and collections on behalf of the matched borrower and
lenders. Prosper generates revenue by collecting a one-time 1% to 3% fee on funded
loans from borrowers, and assessing a 1% per annum loan servicing fee to lenders.
Backed by Accel Partners, Benchmark Capital, DAG Ventures, Fidelity Ventures,
Meritech Capital Partners, and Omidyar Network, Prosper has raised $40 million.
Bruce Cahan (Ashoka Fellow 2007, USA): One of the biggest problems plaguing
the social sector worldwide is the lack of recognition and measurement of social
benefit. Bruce Cahan’s work on “Sustainable Resiliency” (SR) creates a coherent
framework for the identification, measurement, and valuation (monetization) of
social benefit and social externalities. His SR bank measures the ability of a region or
city to cope with change, looking at different areas of social concern from global
warming to disaster preparedness. The bank translates this measure into monetary
terms, giving the financial services industry a practical tool for understanding how
investing in sustainability and resiliency is good for business. Cahan has worked with
the City of New York where he successfully lowered the municipality’s borrowing
rate. Together, his SR Bank, a broad set of partnerships, and investment in geospatial
technology allow Cahan to begin shifting the way debt and capital markets
value investment in long-term social benefit.
Vineet Rai (Ashoka Fellow 2006, India): Rai is working to create a sustainable
change in rural India through the provision of venture capital financing and
management support to socially-conscious, environmentally friendly, commercially
viable ventures that currently have limited or no access to established financial
institutions. Rai scouts rural innovations and appropriate technologies that can be
leveraged to create viable and sustainable micro enterprises—which in turn spurs
economic activity, creates jobs and improves quality of life in rural India. He
establishes close partnerships with rural incubators, citizen organizations and
government agencies working in the rural sector. He invests in these incubators and
provides financing to support the commercial scaling-up of rural ventures and
appropriate technologies with potential for replication throughout rural India.
Maria Christina Zepeda Porres (Ashoka Fellow 2001, Mexico): Porres’
organization, Siembra, selects women in a village, each of whom already weaves high
quality carpets to sell on the local market. With a loan from Siembra, these individual
entrepreneurs join forces to create a larger, more productive and efficient
enterprise. Siembra provides management training, and links the factory to large
buyers, such as stores in Mexico City. The factory makes it easier for women to
establish a brand name and reputation, and to secure ongoing contracts. Because
the factory is a cooperative, every worker is an owner. Siembra promotes a savings
program called GEMS (Groups of Entrepreneurs Saving Money),where each member
must put money in the bank, saving as much or as little as she wants. By putting
aside something every month, women increase their power in the family and status in
José Días (Ashoka Fellow 2007, Brazil): Días is helping small rural communities in
Northeastern Brazil to survive seasonal droughts by developing communal lending
pools that loan directly to individual farmers. The loans, made through his
organization, Center of Popular Education and Syndical Training (CEPFS) are used for
installing cisterns and other water conservation technologies.
Fidela Ebuk (Ashoka Fellow 1993, Nigeria): Since the 1980s, microcredit explosion
throughout the developing world, many have worked to scale up widespread African
traditional local savings associations with mixed results. Ebuk has developed an
original and effective approach that scales up women’s savings through small-scale
business credit, but with a distinctive twist. Ebuk’s savings and credit projects are
geared heavily toward promoting community health. This health orientation anchors
two fundamental dynamics of her approach. First, it provides the vision that unites
the women around a community-wide objective (as distinct from the individual
objective) at the core of the traditional savings group. Second, it contains a number
of specific economic activities such as health insurance and bulk medicine
purchasing that provide tangible benefits to individual members and communities
Pradeep Ghosh (Ashoka Fellow 2004, India): While social security is nothing new,
Ghosh is making it available for the first time to India’s most impoverished
communities. Ghosh’s innovative system capitalizes on the collective bargaining
power of communities, and therefore provides financial security for individuals
without the financial burdens that traditional social security models require (such
as taxes or spending cuts). Indian communities negotiate agreements with essential
service providers whereby in exchange for a large and regular client base,
vendors/providers offer a discount on their goods and services. The amount
discounted feeds into a savings account and pays for premiums on health and life
insurance and other safety nets. The model thus enables the poor to utilize one of
their greatest assets: the collective strength of community; and provides them with
a (financially) painless mechanism to participate actively in protecting themselves
Chandra Ghosh (Ashoka Fellow, 2007, India): In response to India’s great
microfinance boom failing to include the “poorest of the poor” in its poverty
alleviation programs, Ghosh’s ‘trickle-up’ program is aimed at graduating the
poorest to regular microfinance first and then, to formal financial programs. To help
them make the transition smoothly and manage their debt successfully, Ghosh has
incorporated support services addressing crucial needs like health, education,
business training, and insurance in his much-below-the-poverty-line financial
services program. Tested and refined two years ago with 25 destitute women, the
pilot succeeded in helping these women create sustainable livelihoods and reach
income levels of Rs 2000 per month from the earlier Rs 300. Ghosh operates
through the internationally recognized microfinance institution Bandhan, with 343
branches covering about 10,000 villages and a client base of nearly 600,000
Opportunity NYC: This pilot “conditional cash transfer” program is a collaboration
among New York City government, the Rockefeller Foundation, The Starr
Foundation, The Robin Hood Foundation, the Open Society Institute, and AIG. This is
the first CCT program in the United States. The program works by giving the poorest
New Yorkers money every time they make responsible choices. It rewards people for
a modest list of behaviors, such as children with good attendance and families that
get annual health checkups. The idea is to alleviate difficult choices faced by the
working poor, such as the choice between making a doctor’s appointment and
getting paid for a two-hour shift.
Eligible applicants are entered into a lottery to be chosen since this is just a pilot.
They must show proof of citizenship and other things, like marriage, school
enrollment, attendance, grades, health care, etc., depending on what good behavior
the family is planning to be paid for. This program does not affect a family’s welfare
status/payments if they currently receive them. The project is in its infancy, but 1,431
families received their first cash transfers for completing specific activities. Families
earned an average of $524, for a total of $740,000, in the program.
|"A holistic approach to micro-insurance - breaking the cycle of illnesses and debt"||Mukti Bosco|
|Refuge to Return: Building the Institutions for Development during Emergency Relief||Enamul Haque|
|Banking: Do it yourself (Bankomunales)||Salomón Raydán|
|Modelo comunitario de financiamiento para provisión de servicios de infraestructura y mejoramiento habitacional en la base de la||Gabriel Lanfranchi|
|El Arca Productores + Consumidores. “Un sistema sustentable de integración económica”||Pablo Ordoñez|
|Pioneering Rural Finance||Lubna Nabi|
|A Virtual Trading Floor for linking poor farmers to markets||Adrian Mukebi|
|"Sampoorna suraksha" Social security for all occasions.||Manjunath Lingadahally|
|Free Social Security to Disadvantaged and Rural populations.||Pradeep Ghosh|
|Value Chain Finance for smallholder farmers: pioneer mainstreaming and mainstream pioneering||Koert Jansen|
|"Pragathi Bandhu" Small farmers come together to share and learn.||Manjunath Lingadahally|
|The Registered Disability Savings Plan||Eileen Knowles|
|TIO - Building a network of financial services for the unbanked consumer||Jean Nairon|
|Chief Innovation Officer, Citi|
|Founder-President, PlaNet Finance|
|Executive Editor , Times of India|
|President and Deputy Chairman , Soros Fund Management LLC|
|Country Manager, Nokia|
|CEO South Asia, Citi India|