Soluciones Comunitarias

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Soluciones Comunitarias

Guatemala
Organization type: 
for profit
Budget: 
$50,000 - $100,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Soluciones Comunitarias (SolCom) is a Guatemalan-owned social enterprise established through the work of Community Enterprise Solutions. SolCom is a financially and administratively sustainable organization that leads the implementation and growth of the MicroConsignment Model (MCM). It is owned by dedicated individuals who share a common mission; increased standards of living through access.

About You
Organization:
Soluciones Comunitarias
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Section 1: About You
First Name

Greg

Last Name

Van Kirk

Country

, NJ

Section 2: About Your Organization
Is your initiative connected to an established organization?

Yes

Organization Name

Soluciones Comunitarias

Organization Phone

50278326345

Organization Address

1era Avenida Norte, 1era Calle Oriente, Antigua, Guatemala

Organization Country

, ST

How long has this organization been operating?

1‐5 years

Your idea
Country your work focuses on

, ST

Innovation
What makes your innovation unique?

Poverty is a symptom of a wider problem: lack of access and opportunity. Microcredit has offered one solution to this problem; access to capital. But so far no one has implemented at scale a model that creates access to economic, health and environmental solutions to a wide spectrum of issues, including chronic conditions such as pulmonary and gastrointestinal illnesses, vision problems, malnutrition, water scarcity, and lack of energy. Soluciones Comunitarias, which implements the Community Enterprise Solutions-designed MicroConsignment Model (MCM), has solved this access problem. Through the MCM, Soluciones Comunitarias entrepreneurs deliver essential products and services at affordable prices to the rural poor through empowerment. Through the MCM, individuals who lack opportunity and experience, primarily young women and homemakers, can start their own ventures through “sweat equity” and earn profits within the first month. Through consignment rather than loans, MCM entrepreneurs can overcome high uncertainty and are trained, equipped and continuously supported to provide solutions that were previously only addressed through donations. They address the basic needs of populations through village campaigns in an appropriate way at the appropriate price. MCM entrepreneurs “bridge the last mile” by providing solutions to health problems, save families money, help individuals increase their productivity, and help protect the environment, all while earning incomes that were previously impossible. MCM entrepreneurs get the “what” to the “who” by creating a “how”: a highly scalable distribution network that diagnoses and addresses the most basic needs of low-income families.

Do you have a patent for this idea?

Impact
Tell us about the social impact of your innovation. Please include both numbers and stories as evidence of this impact

This work began in rural Guatemala in 2003 when I sought to solve the problem of how to create sustainable and continuous access to improved cook stoves for rural villagers. Since then, because of the MCM and the Guatemalan-owned company formed to implement it, Soluciones Comunitarias, nearly 2,000 families now have stoves in their homes. Women and children are healthier and money and the environment are being saved. Over 51,000 products have been sold in over 2,000 village campaigns that have been implemented by approximately 200 MCM entrepreneurs who have earned over $70,000 in net profits. These entrepreneur earnings equal 11,000+ days of work generated. Over $410,000 in sales revenues have been generated that have all remained in the country. Over 20,000 villagers now have glasses. MCM entrepreneurs have added solutions to their basket over time and sold approximately 7,600 eye drops, 500 water purification buckets, 3,500 energy efficient light bulbs, 3,800 packets of vegetable seeds, and 900 solar lamps. After covering operating expenses all revenues are reinvested in additional product purchases. Five hubs are now being served in the country and inventory has been acquired for rapid growth to new regions. Over $1.3 million dollars in economic benefit has been created either through revenues generated, savings created or productivity enhanced. This equates to roughly 7,300 months of earnings at the local minimum wage. Soluciones Comunitarias, the self-sustainable Guatemalan company has been established which is owned by eight MCM entrepreneurs, most of whom had no previous business experience. For example, Yoly Garcia and Clara Montezuma were homemakers with limited opportunities in 2004. They are now Regional Coordinators training and leading other women like themselves and are shareholders with a stake and a say in their futures. An estimated 64,000 individuals have benefited from this work. All of this has been achieved from scratch with less than $400,000 in direct programmatic expenses. This has also provided the platform for over 200 college interns of our sister organization, Social Entrepreneur Corps, to make a significant contribution and learn how to be the changemakers of the future. The impact grows daily. This model is now being replicated in Ecuador and Nicaragua and is being launched to other parts of the world through the new Ashoka Globalizer initiative.

Approximately 350 words left (2000 characters).

Problem: Describe the primary problem(s) that your innovation is addressing

Poverty is not the problem. It is a symptom of the problem. The problem is lack of access to services and products. One solution to this problem of access - access to capital for developing world entrepreneurs - has been addressed through the micro credit revolution. Other innovative solutions have been designed and are being implemented to address the problems of access to education. Inventive models to address access to medicines for diseases such as AIDS and TB are being executed. However, an entrepreneurial model that confronts the lack of access to services and products that address chronic conditions such as pulmonary illnesses, gastrointestinal illnesses, visual problems, malnutrition, water scarcity, energy deficiencies, and the like has not been effectively implemented at scale to date. Access can only be created if the product, place, price, promotion and people are working in concert to serve the rural poor in an appropriate manner that takes into account local cultural, societal and geographic conditions. The lack of access not only affects problems such as poor health and malnutrition, but also results in a staggeringly high negative economic impact at myriad levels.

The pieces for solving this access problem already exist. Stoves, water filters, reading glasses, solar panels, and hundreds of other products abound. All that is needed is a way to get them to the rural communities that most need them. There is no lack of human capital or local entrepreneurial spirit. Local transportation networks already reach vulnerable communities. Infrastructures including those set up by micro credit organizations have been established by international and local organizations throughout the developing world. But what has been missing is a model that puts the pieces of the puzzle together, one that starts by asking what villagers need and then works to create an effective system to address those needs.

Actions: Describe the steps that you are taking to make your innovation a success. Include a description of the business model. What might prevent that success?

Soluciones Comunitarias is already successful. There are currently approximately 70 individual entrepreneurs and 10 organizations working as MCM entrepreneurs for SolCom conducting between 35 and 50 village service campaigns every month selling near-vision glasses, protective glasses, cases, cords, water purification buckets, improved cook stoves, energy efficient light bulbs, vegetable seeds packets, and solar chargers/lamps. One of the most compelling differences between credit and consignment is related to risk and uncertainty. Credit works in risky markets; the MCM works in uncertain markets. The MCM’s power lies in its ability to create first-time sustainable access for new products in new markets through new entrepreneurs. SolCom now earns revenues of approximately $6,200 per month and has 11 staff members, who earn a combined $2,400 per month. These numbers continue to grow as new product and services are added. The model utilizes a rotating capital mechanism with exceedingly low start- up costs.
Within the MCM the team of stakeholders is leveraged do what each does best, fill in the knowledge and competency gaps of the others, and contribute to implementation, expansion and improvements on an ongoing basis. All activities and performance are measurable on a daily, weekly or monthly basis. This holistic approach allows for in-time support, response, modification and impact measurement. One of the most profound impacts of the MCM is qualitative and less tangible. The MCM provides a mechanism whereby the villagers and entrepreneurs feel a sense of dignity and pride that cannot be easily measured but rather very simply observed. As entrepreneurs gain confidence in their business skills, they are better able to care for their families. The entrepreneurs, many of whom are initially timid and semi-literate, become recognized as community leaders and develop a sense of purpose. Additionally, villagers are able to “vote” for what they truly need and want through payment with their limited resources and feel a sense of dignity by purchasing solutions, which has much greater significance the simply receiving a donation.

The one main competition to the model is donations. However, these do not last. This was the very impetus for the model.

Results: Describe the expected results of these actions over the next three years. Please address each year separately, if possible

In 2008 SolCom entrepreneurs supported by SolCom sold roughly 12,300 products. In 2009, these entrepreneurs sold roughly 13,200 products. This was achieved with an average of 65 entrepreneurs adopting new products, services and marketing techniques. SolCom MCM entrepreneurs first began offering improved cookstoves (the genesis of the model). In 2004, near vision glasses were added. In 2005, sunglasses and protective glasses were added. This was followed by eye drops (2006), water purification buckets (2008), energy efficient light bulbs (2008) and vegetable seed packets (2008). This basket of solutions has now been fully integrated.
During the next year, SolCom expects to increase the number of entrepreuers to 100. We would expect sales to increase to approximately 17,000 products. In addition, solar chargers and lights were added in February. There are now over 2,000 in inventory in Guatemala. Based on incredible initial success SolCom expects to sell 100% of these within the next six months. Fortunately, given the history of sales, debt financing was acquired to purchase this inventory. This new product and new financing mechanism should create great leverage moving forward.
During the subsequent two years SolCom aims to add up to three new products to the mix and employ an additional 50 entrepreneurs. This will be dependent upon resources and opportunities. SolCom will also seek to establish a complementary retail distribution strategy.
The projected growth over the coming three years should put SolCom on very strong financial footing.
Additionally, CE Solutions is expanding the SolCom initiative to other countries in part through the Ashoka Globalizer initiative. SolCom is not expected to be a "stand alone" business per se in other countries but rather an add-on social enterprise business unit. We are currently working with Ashoka Fellows in Ecuador and Argentina in this form and have conducted a feasibility study in South Africa. However, creating a new entity is only one way to implement the MCM driven SolCom social enterprise model and grow it sustainably. Any organization in a developing country that focuses on serving rural constituents can start a venture. If an infrastructure already exists, the training and initial product purchases are the only up-front costs. From then on, costs are associated with revenues and are variable. An organization can identify, train, equip, and support five entrepreneurs or fifty. It can conduct village campaigns three times a month or once every three months. It spends money only when it offers activities.
Globally, CE Solutions is focused on model replication with local strategic partners, with the goal of completing up to four global pilot projects per year.

How many people will your project serve annually?

More than 10,000

What is the average monthly household income in your target community, in US Dollars?

Less than $50

Does your innovation seek to have an impact on public policy?

No

If your innovation seeks to impact public policy, how?

Approximately 150 words left (1200 characters).

Sustainability
What stage is your Social Enterprise in?

Operating for more than 5 years

Does your organization have a board of directors or an advisory board?

Yes

Does your organization have a non monetary partnerships with NGOs?

Yes

Does your organization have a non monetary partnerships with businesses?

No

Does your organization have a non monetary partnerships with government?

Yes

Please tell us more about how partnerships could be critical to the success of your Social Enterprise

SolCom primarily benefits on a strategic level from CE Solutions and Social Entrepreneur Corps. The SolCom implementation of the MCM is based upon the creation of mutually beneficial partnerships with not only the women and organizational entrepreneurs but with myriad other entities. It is a model that leverages strengths and mitigates the weaknesses. All stakeholders play a role. For example:
Local organizations: Local organizations can themselves act as entrepreneurs and receive kiosks of products to place in their locales. Since the organizations already have existing rural beneficiaries they work with who can purchase the MCM solutions, this structure creates incredible leverage. Similar to the effect it has on local women, the MCM results in income generation for local organizations as well as an increased status within the community. These positive results compliment the local organization’s success in helping the local constituents. It helps them to more sustainably provide their primary services.
Product and service innovators: By fueling an MCM initiative with solutions that address the villagers’ needs, product innovators and manufactures accumulate sales and receive constructive feedback on pricing and product parameters.
Village mayors and pastors: Like the women entrepreneurs and local organizations, village mayors and pastors derive prestige in communities and help their constituents through promoting the SolCom MCM work. When village leaders help their constituents surmount a standing problem in the community, they are seen more highly in the eyes of the villagers.

We would like to learn more about how your initiative is financially supported. Please explain your business plan/revenue model

SolCom was started with donations from CE Solutions which has also subsidized its growth. Although donations may be used for further growth, the company is now financially self-sustainable. As well, CE Solutions sister organization, Social Entrepreneur Corps provides revenues through paid student internships. This is continuing and growing. Social Entrepreneur Corps provides human and financial capital on a consistent and predictable basis through engaging university interns who pay to learn from and support the MCM work in the field. This will contribute over $120,000 to operational costs in 2010 for Guatemala, and is the engine for expansion in Ecuador and Nicaragua. This allows us to be nimble in our expansion. We have strategic relationships with universities including Notre Dame, Columbia, Duke, the University of Connecticut, William and Mary, Miami University (Ohio), and Franklin and Marshall.

In short, the sales of the products on the ground grow on a variable basis to pay for the variable costs whilst providing essential access and income. And the income from Social Entrepreneur Corps pays for operational costs on an ongoing basis. These two revenue streams in concert minimize the need for donor funding.

The Story
What was the defining moment that led you to this innovation?

The MicroConsignment Model, which predicated the need to create Soluciones Comunitarias, first emerged when I donated profits from tourism businesses I started in Nebaj, Guatemala to a wood-burning stove project. This donation supplied stoves to ten families in the village. Like millions of Guatemalans, these families had always cooked campfire-style on their dirt floors. Cooking this way is extremely energy inefficient, it harms the health of family members, and destroys the local environment. Relief agencies had determined that locally-manufactured concrete stoves could immediately and dramatically reduce energy costs and improve the health and safety of Guatemalan families. But once that money was spent, no one else would get a stove. I realized that many more people could obtain a stove if distribution was built on a sustainable model. In response, I developed what I then called “the stove model”. Ignoring the widespread opinion that no one would buy a stove, I decided to find a way to make stoves continuously available and affordable.
In March 2004, VisionSpring contracted with us to help them find an effective way to distribute reading glasses to low-income villagers in El Salvador. After considerable analysis, we concluded that the “stove model” could mitigate the challenges VisionSpring was confronting with its microcredit model. Although I didn’t name it until a year or so later, this is effectively when the stove model became the MicroConsignment Model. We realized that the MCM could deliver myriad products and services that addressed health, economic, and environmental, needs for remote villagers.

Tell us about the person—the social innovator—behind this idea.

Greg Van Kirk is an Ashoka Lemelson Fellow and the-co founder of The New Development Solutions Group. This includes Community Enterprise Solutions, Social Entrepreneur Corps and NDS Consulting. These are all ventures whose mission is to design and implement innovative responses to long-standing development challenges. Greg also works part time as “Social Entrepreneur in Residence” at Columbia University. He and his team are now focused on expanding the reach of their innovative “MicroConsignment Model” globally. Greg began working in rural small business development as a Peace Corps volunteer in 2001. He has served as an economic development consultant for organizations such as USAID, Chemonics, Columbia University, Vision Spring, Soros Foundation, Church World Service, OneRoof, Fundacion Solar, Fundacion Paraguaya, IDB and Water4People. Greg worked in investment banking for five years before arriving in Guatemala. Two deals he led at UBS during this time won "Deal of the Year" honors from "Structured Finance International" magazine. Greg currently lives with his family in New York City.

How did you first hear about Changemakers?

Personal contact at Changemakers

If through another source, please provide the information