SOCIAL TOPICS (Archive): COMMUNITY DEVELOPMENT INVESTING

Published, March 1999

       With millions of people subsisting on the equivalent of a few dollars a day, microlending has become a tool for providing an opportunity to permanently change the lives of the world’s poorest citizens.

       Acción International has been in the vanguard of support for microenterprise in Latin America. Twenty-five years ago in Brazil, Acción issued the world’s first microloan. Today, through its 19 microlending affiliates, including banks and nonprofits in several Latin American countries, the number of active clients served by Acción has grown from 13,000 in 1987 to more than 380,000 at the end of 1998. Using technical assistance and training teams provided by Acción, member affiliates develop expertise in lending methodology, financial analysis, organization development and marketing and business planning. In 1997 alone, Acción’s affiliates loaned $503 million to poor and low income business owners, an increase of 27 percent from the previous year. The 1998 loan figures are being gathered as this is written and will certainly reflect Acción’s continued commitment to expanding microenterprise in Latin America.

       USTC’s Community Development Investing Service provides our clients the opportunity to participate in Acción’s Latin America Bridge Fund; the Fund provides loan guarantees that link Acción’s affiliates to commercial banks and, therefore, help the affiliates obtain the monies necessary for funding microloans. Without these loans and unable to obtain conventional financing for their businesses, borrowers’ only other recourse for financing is a local moneylender and his exorbitant interest rates.

       Banco Solidario, a commercial bank formed in Ecuador in 1996 through a collaboration of social activists and bankers, became an Acción member affiliate in 1997. The bank commits itself to serving the financial needs of individuals who represent 70 percent of Ecuador’s population — microentrepreneurs active in small and informal business enterprises. Already, Banco Solidario has 13,472 microenterprise clients and a $4 million microenterprise portfolio with an average loan balance of $296.

       Through the Acción network, loans have been made by Genesis Empresarial to a small grocery owner in Guatemala to purchase refrigerated cases to expand her inventory; by FUNADEH to a shoemaker in Honduras to purchase raw materials; and by Fundación Ecuatoriana de Desarrollo to an Ecuadoran vendor to increase her inventory in a local marketplace stall. Acción’s success is measured by its ability to foster permanent financial stability to the microenterprise system of Latin America.

       In an effort to share its experiences and models for building successful micro-enterprises with others throughout the world, Acción has greatly increased its popular publications. These useful training guides are available to groups interested in developing similar programs. You can also learn more about Acción by visiting its new website at www.accion.org.

       Walden/USTC’s Community Development Investing Service is marking its two year anniversary this month. It gives us great joy to work with our clients and the many community development banks and loan funds included in this service. We share in their commitment to social change and justice.

       Walden/USTC began its Community Development Investment Service in 1996. Twice a year, we provide our clients with a choice of pre-selected community development loan funds, banks and credit unions that target international, national, regional or local projects, primarily in affordable housing and small businesses. All investments are client directed and are registered in clients' names. In the spirit of our clients’ willingness to accept a below market rate of return, Walden/USTC does not charge a fee on below market investments unless they exceed 5% of a portfolio.