Wokai: P2P Microfinance for Rural China
Wokai’s online peer-to-peer fundraising portal allows individual donors to finance microentrepreneurs in rural China, helping the poorest lift themselves out of poverty to self-sufficiency.
About You
Location
Project Street Address
Project City
Project Province/State
Project Postal/Zip Code
Project Country
Your idea
Field of Work
other
If Field of Work is “other” please define in 1-2 words below
Social Entrepreneurship
Year project started (or projected start date) (yyyy)
2006
YouTube Upload
Project URL (or link to any media coverage)
What is the primary problem your venture is trying to address and how are you addressing it (or planning to address it)?
Despite China’s economic miracle, hundreds of millions of Chinese people still live in extreme poverty, subsisting on less than one dollar a day, most of whom live in the rural, inland regions where basic infrastructure and services are inadequate. Wokai (Mandarin for "I start [a business]") believes that the NGO microfinance sector has the greatest potential to make an impact on poverty in China, as they not only directly serve the poorest, but also provide training and other support services to entrepreneurs.
As these Microfinance Institutions (MFIs) operate outside the formal financial system, they are potentially more transparent, accountable, and competitive than state-run programs. However, these MFI also suffer from a difficult regulatory environment and crippling financial constraints, which limit their impact and prospects for expansion. While microfinance has helped millions around the world achieve financial self-sufficiency, the total size of China’s NGO microfinance sector remains less than $200 million – far below the scale needed to catalyze change.
Wokai aims to build this scale in the NGO microfinance sector in China as a capital-contributing intermediary. Wokai utilizes an online peer-to-peer fundraising platform, which allows individual donors to directly finance microentrepreneurs, and a ‘Wiki’-like information portal allowing users to create and share user-generated content including blogs, videos, and podcasts.
Name Your Project
Wokai: P2P Microfinance for Rural China
Describe Your Idea
Wokai’s online peer-to-peer fundraising portal allows individual donors to finance microentrepreneurs in rural China, helping the poorest lift themselves out of poverty to self-sufficiency.
Innovation
Project Description
Wokai’s online peer-to-peer fundraising portal allows individual donors to finance microentrepreneurs in rural China, helping the poorest lift themselves out of poverty to self-sufficiency.
Unique and different
Specialization and Local Knowledge. Wokai is the only capital-contributing intermediary in the China microfinance landscape. We are unique in our specific focus and organizational commitment to rural China and we are headquartered in Beijing, traveling frequently to rural areas. Our core competencies include local knowledge of socioeconomic conditions and the institutional environment, and working with local actors and institutions.
Global Network. While we operate locally, we have a global presence through our network of chapters in San Francisco, Seattle and New York. Our peer-to-peer fundraising model also focuses on individuals rather than institutional donors, thus having a broader fundraising base and potential for raising awareness of China’s development needs. This also makes our operations more transparent and accountable to our stakeholders.
Project plan
Our plan is to launch our online platform in November following beta testing. Through the use of our online platform, our target is to support 14,000 new borrowers by attracting $4.2 million in loan capital (for a total of 23,000 loans) by the end of 2012.
Within the first six months after launch, Wokai will grow and strengthen our US chapters, expand our full-time staff in Beijing, begin implementing public outreach campaigns through our chapters, expand our media and net-based initiatives, and continue to develop our web platform.
Partnerships
The heart of Wokai is our network of Field Partners, local NGO microfinance institutions we support. We have signed partnership contracts with two MFIs, Chifeng Zhaowuda Women’s Sustainable Development Association in Inner Mongolia and the Association for Rural Development of Yilong County in Sichuan. We invest heavily in selecting them through a rigorous application process of onsite evaluations and due-diligence auditing of their governance, information and accounting systems, risk-assessment policies, loan portfolio and lending activities, performance and efficiency. This ensures that we work with the best organizations and promote competition. This review process continues after selection to monitor their progress and also to build capacity by introducing international best practices in accounting procedures, management information systems, and risk-control and business planning to integrate them into our online platform.
Impact
Impact
Wokai aims to increase the distribution of microloans to the poor. This uncollateralized credit allows entrepreneurs to take advantage of economic opportunities in their community, raise their income, and develop their local economy.
Wokai’s Field Partners identify and screen potential borrowers from their client pool. Borrower profiles are then posted to Wokai’s website. Individual donors around the world can browse through these profiles, select a borrower, choose an amount to donate, and then transfer money to their chosen borrower through our online payment system. When the loan is repaid in full, the donor is notified and can select a new borrower to fund. Field Partners regularly update borrower profiles to keep donors informed of new developments. Borrowers can track their entrepreneurs online as they develop their businesses, and when their entrepreneurs lift themselves out of poverty, they can have their loans be recycled to fund a new entrepreneur. This allows individual donors to have a direct impact on poverty in China and become key participants in the process of poverty alleviation.
Effectiveness
Although our online platform will not launch until November 2008, our Field Partners have a total portfolio of 5,000 borrowers, all of whom are potential direct beneficiaries.
How do you engage and impact the community?
Microfinance has several potential impacts for its clients and their communities, including better quality of life, greater food security and homeownership, increased savings and household assets, better access to healthcare and education, increased employment opportunities, female empowerment, rural development, and social capital formation.
How do you measure this impact?
We are designing a social impact assessment system to quantify the causal effects of program involvement on entrepreneurs and their communities. It may include randomized control evaluation through client surveys and monitoring, with both ‘thin’ and comprehensive approaches to data collection. We are developing a system that is cost-effective, easy to implement at the local level, and statistically rigorous.
Obstacles
A primary challenge for Wokai is acquiring funding for its operational and organizational development. An additional challenge is China’s opaque legal and regulatory environment. Wokai’s staff, however, are highly proficient in Mandarin and Chinese culture and have the ability to successfully navigate both the Western and Chinese world.
This Entry is about (Issues)
Sustainability
Financing source
(or how do you expect your initiative will be financed)
Wokai is currently financed through grants and US chapter fundraising. With the launch of the online platform, Wokai will rely primarily on the proceeds from the activity on its website to fund operational costs. After the donor chooses to support a microentrepreneur, an optional 10% donation to Wokai operations will be presented at the time of checkout. Wokai will achieve our goal of financial self-sufficiency by lowering the ratio of operating costs to loan contributions over time. Wokai's internet-based system and low cost marketing techniques allow our organization to attract and handle a large volume of contributors without significant increases in cost, thus benefiting from economies of scale.
Wokai will also pursue non-traditional and traditional fundraising techniques. US chapters will hold various forms of fundraising events (such as walkathons, exhibitions etc), and initiate contribution matching campaigns in which we will look for individual donors and corporate sponsors who will match the funds raised.
Aside from financial sustainability, how do you plan to grow and sustain your project?
Wokai will grow and sustain itself utilizing the peer-to-peer fundraising model, by collecting many small contributions from individual donors, aggregating that capital and transferring it to China to serve as loan capital for microentrepreneurs. In peer-to-peer fundraising, Wokai relies on many individuals instead of a few large donor organizations. We reach out to friends, family, and the local community. In addition, online marketing plays an integral role in spreading awareness about Wokai. Such online marketing mechanisms include blogs, information portals, Google references and social networking sites such as Facebook and My Space. Lastly, major media vehicles also offer great exposure and build name recognition on the national and local scale. Wokai has been featured on ResponsibleChina.com, WorldChanging.com, and other development publications.
Finance details
I (Casey Wilson, Chief Executive Officer) am 24 years old, as are my executive staff Naomi Cookson (Chief Operating Officer), Zhang Sheng (Director of Partnerships) and Leslie Forman (Director of Social Media). Wokai is a youth-led, youth-driven organization: Most of our ~80 staff and volunteers are in their early twenties.
Creative funding
Our fundraising team and chapter networks constantly brainstorm new ways to raise funds and attract donations. For example, the New York chapter recently organized a charity scavenger hunt in Manhattan Chinatown and a panel discussion at the China Institute, and has an upcoming fundraiser at the Gotham Comedy Club.
How did you hear about this competition?
Fundraising team member Pin-Quan Ng from Columbia University, who focuses on social enterprises and Base of the Pyramid development, identified this opportunity.
Other non finance needs
As Wokai relies on online advertising and virtual marketing, assistance with publicity and raising awareness of our work and cause are crucial.
The Story
Motivation
When we were on a technical assistance trip to one of our Field Partners, we spent more than a day in the office going over accounting, finance, governance and systems, before heading out for a day in the field meeting microentrepreneurs, or shall I say tromping around in the mud visiting people living on rice in mud shacks. I wanted to bang my head against the wall with all of the office stuff. We were analyzing sustainability, transparency, incentive systems, risk, etc. and I was thinking ‘what does any of this have to do with poverty alleviation?’
When I got out into the field, I spent time with the borrowers and was reminded of how amazing microfinance actually is. What matters and what people will want to support is nothing like the technical term “microfinance” (the financial sector, risk, etc), it’s a small loan to a poor person that helps the recipient improve her own life. Along with access to credit, each microentrepreneur gets support and training from her loan officer and fellow borrowers that ensure her success. Over time she will be able to send her children to school, build a home for her family, and grow a new sense of confidence and pride in herself.
It’s about people and it’s about trust. Contributors give because they can connect with microentrepreneurs and Field Partners succeed because loan officers connect with borrowers. What gets microentrepreneurs to pay back is not how good the MFI is at creating financial models, it’s how much understanding and trust the loan officer can build with her clients. Of course, the financial sustainability part is essential to MFIs succeeding and expanding, but that doesn’t have a lot to do with what the contributor is giving to. That’s the stuff in the background. That’s them doing their job.
Awards
Wokai has been awarded the Echoing Green fellowship for social entrepreneurship and the Tech Museum Award for technology benefiting humanity. We have presented to the China Association of Microfinance, at the 2008 Asia Microfinance Forum, and the Online Giving Marketplaces Conference at Stanford.
Broader context
Wokai believes in empowering individuals to make a difference, not just our client microentrepreneurs in rural China, but also our volunteers leading chapters and managing projects. As a youth-led, youth-driven nonprofit organization, Wokai contributes to the broader youth and social change movement through leading by example and pushing the boundaries of what is possible for a group of motivated young people to achieve. We also provide opportunities for youth to get involved at the level that suits them, whether as individual donors, volunteers, or even just to learn more about microfinance in China.
Ongoing
This field has not been completed. (166 words or less)
What is your age?
24
How did you hear about this competition?
This field has not been completed. (166 words or less)
- Login to post new content in this forum.
Comments
I have been very impressed by the young women involved in Wokai. Many people may think that microfinance is already an established category around the world, but Wokai shows that rural China has been left out of many microfinance efforts. There are thousands of entrepeneurs in rural China who deserve a chance to make their lives better. Wokai can make this happen! Kudos to all involved. You have my vote for the Staples "Change the World" award.
Hi everyone,
I just wanted to let our community know that there was a misunderstanding about this entry and we had to temporarily take it down from the website until we had some time to figure out the details. Everything is worked out now and the entry is back online.
Thank you for your understanding!
Romina Laouri
Ashoka's Youth Venture
Post new comment