Women's Initiative: Where Dreams Become Thriving Businesses

The recession has hit

I believe we can finally admit that we are in an economic recession. This morning on NPR I heard that the US job market has shrunk for the fifth month in a row, bringing the unemployment rate from 5 to 5.5 percent in the month of May.

What does this mean for microentrepreneurs and small business?

It means we need you more than ever!

Microenterprise and small business represent a huge portion of our domestic economy. Recent small business statistics published online by New Ground Publications (http://newgroundpublications.com) tell us that small business makes up 39% of the GNP, is responsible for 52% of sales and employs over 54 million people in the US!

Microenterprises have been able to create jobs during economically rough times. According to AEO microenterprise statistics (http://www.microenterpriseworks.org) microentrepreneurs in California generated more than 377, 000 new jobs and almost 80% of the job growth in the state during the last recession.

Women’s Initiative graduates are providing jobs for themselves and others. Nearly half (48%) of the graduates who start a business employ another person in addition to themselves.  The question isn’t really how microentrepreneurs will make it through the recession but how microentrepreneurs will help us all get through!

Friday Linkblogging: Microenterprise

• May 20-23 will be the first National Summit on Entrepreneurship in Anaheim California. More information is here.

• ABS-CBN News Online has an article about how a Filipino foundation is helping to break the cycle of migrant overseas labor by helping Filipinos to start businesses at home.

• The Citi Foundation and the SEEP Network are partnering on a new three-year $11.2 million international grant program "to advance the integration of microfinance inot the mainstream economies of developing countries."

• U.S. News and World Report online has some tips for how to steel your small business against recession. The main one is to keep marketing!

When money is tight, it's tempting to hold on to what you have and not worry about expanding your brand. But if you stop advertising and marketing, you'll do your business serious harm.

• Here's a terrific blog called How I Changed The World Today, about a woman's daily efforts to make the world a better place. She's been doing a lot with KIVA and international sponsorships so check it out for ideas for yourself, if you need any.

• Even the music industry is getting in on the microcredit action!

• And finally, this article in the Mercury News about Stanley Ann Dunham Soetoro, Barack Obama's mother, tells us that she spent the latter part of her life working in microcredit in Indonesia.

She became a consultant for the U.S. Agency for International Development on setting up a village credit program, then a Ford Foundation program officer in Jakarta specializing in women's work. Later, she was a consultant in Pakistan, then joined Indonesia's oldest bank to work on what is described as the world's largest sustainable microfinance program, creating services like credit and savings for the poor.

To Our Credit Microfinance Documentary

Here's a clip from a Rooy Media produced PBS documentary about microcredit in the US.

Rooy Media LLC has created over fifty programs that educate people about important social issues. This video clip is a sample from To Our Credit: Bootstrap Banking in America, a PBS documentary that profiles microenterprise development, an important new self-help strategy that shows significant promise in the fight to combat poverty in America. The

Rooy Media website has a whole microfinance section so check it out.

Brooks Times Op-Ed on Social Entrepreneurship

This New York Times Op-Ed from David Brooks talks about social entrepreneurship:

America Forward, a consortium of these entrepreneurs, wants government to do domestic policy in a new way. It wants Washington to expand national service (to produce more social entrepreneurs) and to create a network of semipublic social investment funds. These funds would be administered locally to invest in community-run programs that produce proven results. The government would not operate these social welfare programs, but it would, in essence, create a network of semipublic Gates Foundations that would pick winners based on stiff competition.

There’s obviously a danger in getting government involved with these entrepreneurs. Government agencies are natural interferers, averse to remorseless competition and quick policy shifts. Nonetheless, these funds are worth a try.

The funds would head us toward this new policy model, in which government sets certain accountability standards but gives networks of local organizations the freedom to choose how to meet them. President Bush’s faith-based initiative was a step in this direction, but this would be broader.

Furthermore, we might as well take advantage of this explosion of social entrepreneurship. These are some of the smartest and most creative people in the country. Even if we don’t know how to reduce poverty, it’s probably worth investing in these people and letting them figure it out.

They won’t stop bugging us until we do.

Not sure why this is an opinion rather than a news report, but Brooks is certainly self-fulfilling his prophecy when he says that "Fashions in goodness change, just like fashions in anything else, and these days some of the very noblest people have assumed the manners of the business world — even though they don’t aim for profit."

First Lady Visits Women's Initiative!

We had an exciting week last week. California's First Lady Maria Shriver visited our Oakland office and three client sites, including Svea Vezzone's Swarm Gallery, where we held a reception in her honor.

The visit was organized to announce Shriver's statewide initiative or invest in women entrepreneurs, called "We Invest." Shriver committed $100,000 to Women's Initiative to support 100 women's training.

The Oakland Tribune had a great article about it:

"When you give a man a loan, you help him. When you give a woman a loan, you help her children, her family and her community," said Shriver, explaining that it was in the women's nature to pass the good along.

... The event was held at SWARM Gallery on Second Street, the business of Svea Lin Vezzone, a graduate of the Women's Initiative. Before she made her appearance at the gallery, Shriver visited the businesses oftwo other graduates, Sheron Campbell, the owner of World of Braids, and Allison Barakat, the proprietor of Bakesale Betty who employs 75 workers.

Shriver, dismissing the many praises being showered upon her when she took the stage, reminded her audience that she had never started a business as they had.

"I'm completely in awe of you," she said.

The Women's Conference is an annual event launched by the governor that unites 60 world leaders with 14,000 women in one arena to share stories of success and life lessons.

... The launch of WE Invest was announced at the Women's Conference in October. Shriver said she picked Oakland for the launch venue "because I've wanted to do something in Oakland. I wanted to start in a place that really needed it."

We're not sure what to be more excited about: the money (which will help us help 100 more women with trainings and loans), the publicity (which will help bring in both support and new clients), or getting to meet the first lady!

Wednesday Linkblogging: Microenterprise

• Entrepreneur.com has an article about microentrepreneurs. The second page of the article links to resources for microbusiness owners.

One blessing of microenterprise is that it gives people a taste for entrepreneurship; many like the life so much, they go on to run a string of small but successful enterprises. Makela began his first elder-care center in Grand Rapids, Minnesota, and operated it for five years. Then he and his wife decided business ownership had lost its luster and sold the center. But after only a year or so, they found they missed the flexibility and independence of running their own show and found an existing center they could take over.

"This type of business is certainly not for everyone," says Makela. "We both work almost every day for at least part of the day. But, at the same time, we have a lot more time and money for our hobbies, recreation and our [children] than most people do." Those attractions are what keep microbusiness blooming despite the obstacles.

• Speaking of the wonderful Entrepreneur.com, they have a searchable Small Business Encyclopedia online, and their blog has posts about home-based businesses, among others.

• Independent Bangladesh has a problem with microfinance:

The non-government organisations that run micro-credit business have failed to help the ultra-poor come out of poverty trap and get self-employed with dignity, resulting in scourge like monga — seasonal joblessness, economists have said.

They also criticised the government’s manpower training bureau and overseas recruiting agencies in the private sector for failing to create job opportunities for the northern poor.

... ‘Yes! Micro-credit can pay dividends to moderate poor and be effective only if the economy grows in a healthy manner.’ Both Muzaffer and Akbar termed the monga ‘nothing but a poverty syndrome’, let alone a seasonal distress, because income opportunities have not been created.

"Monga" means famine, by the way.

• Terrible, but perhaps inevitable news: unlicensed Microfinance institutions in Bangladesh are swindling the poor.

No NGOs are allowed to do microfinancing without the licences from MRA under a law that came into effect on 27 August 2006.

“We've no mechanism of our own to detect NGOs engaged in micro-financing without licences,” a top official of the MRA said in the wake of recent scandals.

In the last couple of weeks, some NGOs disappeared with around Tk 500 crore after swindling poor villagers in northern districts.

... According to government statistics, there are some 49,000 NGOs registered under the Social Welfare Department, about 10,0000 under the Cooperative and Joint Stock Companies and another about 2,000 under the NGO Affairs Bureau.

• India is facing a loan crisis:

With rapid economic development, for years the banks have easily granted small loans, raking in very high rates of interest. Now many professionals, small businessmen, and farmers are no longer able to pay. Experts: the phenomenon is contained, but there is the risk that it could expand.

... In February, the government said it will cover 15 billion dollars in debts held by farmers.  Many have observed that this will not so much help the rural population - which is in any case strangled by rising costs for fertilisers and petrol, and by the pollution of irrigation water - as it will the credit institutions, which will immediately recover the entire value of loans with difficult prospects of repayment.

• Kiva.org has fellowships and sends their fellows out to the field ... from whence they blog! It's a pretty extensive blog. Check it out!

Monday Linkblogging: Microenterprise

• Bill Clinton addressed a fundraising group in Toronto, speaking about the Clinton Giustra Sustainable Growth Initiative, which includes microenterprise development in Latina America. He said:

"The world is bedeviled by three great crises: persistent and growing inequality in economic opportunity, education and healthcare; the insecurity caused by our interdependence, making us all vulnerable to terrorism and weapons of mass destruction; and, the unsustainability of our current developmental course because of the threat of global warming

... Ironically, addressing the problem of inequality will help us to deal with the other two crises. It will remove the resentments and hatreds and divisions that fuel so much of the violence in the world. And if we have a truly sustainable economic process, it will reduce the threat of climate change."

You can watch the speech here.

• Food for thought: the Christian Children's Fund participated in a panel about youth and economic development in which they addressed the need for specialized microenterprise programs for youth.

Miller emphasized the need for youth specific programs such as early parenthood and HIV/AIDS. “Micro-finance and self-employment in the informal sector offer an opportunity that is appropriate in post-conflict and other challenging environments where formal employment opportunities are limited,” Miller said.

Miller says there is often a mismatch between the skill sets of youth and the skills needed by businesses in the formal sector. As a means to bridge that gap, Miller highlighted the importance of pairing vocational skills training with broader life-skills, such as resource management, communication, confidence building and decision making.

• A  new link for our blogroll: USAID's Microlinks.

microLINKS is a dynamic knowledge-sharing Web site designed to improve the impact of USAID-funded microenterprise programs and activities. Created through USAID’s Accelerated Microenterprise Advancement Project, microLINKS allows the Microenterprise Development office to share cutting-edge research with microenterprise development and financial services practitioners, USAID Mission staff, and other interested individuals and organizations while also serving as a meeting place through which visitors can share their own experiences and knowledge.

• Those of you businesspeople selling online in New York should be aware that the state is planning on taxing online entrepreneurs:

If you offer an affiliate program for websites to sell your products, you might want to become aware of a plan afoot by the State of New York to tax you.

If you sold $10,000 worth of products to those in the state of New York and had one Web affiliate in New York, under the proposed plan you’d be required to collect and remit sales tax to local taxing authorities in the state.

That could add a significant bureaucratic burden.

• Selena Maranjian of Mutual Funds blog has a great post about what form your money should take. She quotes an article on microcredit by in the Wilson Quarterly by Karol Boudreaux and Tyler Cowen, which states:

A cash hoard kept at home can be lost, stolen, taken by the taxman, damaged by floods, or even eaten by rats. ... Under these kinds of conditions, a cow (or a goat or pig) is a much better medium for saving. It is sturdier than paper money. Friends and relatives can't ask for small pieces of it. If you own a cow, it yields milk, it can plow the fields, it produces dung that can be used as fuel or fertilizer, and in a pinch it can be slaughtered and turned into saleable meat or simply eaten.

She goes on to point out that while in the west, people keep their money in more cash forms, they can also lose it by spending. Check out the post for great ideas on ways to turn your money into ... more money, rather than spending it.

• And finally, the Mail & Guardian Online has a terrific article about Muhammad Yunus' turn toward "Social Business"

Grameen is one of the most famous brands in Bangladesh; there are 27 Grameen companies ranging from the country’s biggest phone firm to one supplying affordable healthcare. All aim to alleviate poverty and, in time, the plan is to convert them into social businesses. Among all this innovation, Yunus’s step has faltered only once. A year ago he announced he was going into politics to deal with Bangladeshi corruption, only to withdraw two months later, horrified by what he describes as “dirty, violent and greedy” politics. The bruising experience has reinforced his lack of faith in the state and the political process to meet the needs of the poor; instead he emphasises the entrepreneurial skills of the poor.

This kind of thinking finds an enthusiastic audience, particularly in the US, as it appears to offer a capitalist answer to development without asking for increased aid. Yunus insists there is still a need for aid.

Women's Initiative in Contra Costa Times

Okay, we're ready for our close-up.

We're feeling very rock-star-ish this week with our second major newspaper article in as many weeks! The Contra Costa Times posted their article on us today on the internet. You can read it here.

The Women's Initiative, a Northern California nonprofit training organization that's 20 years old this year, has helped low-income women start or expand more than 1,600 businesses in Northern California. Until the Concord center opened in December 2007, however, Contra Costa clients had to travel to Oakland or San Francisco to take classes, or gather in makeshift classrooms.

Now, they can take advantage of the new, immaculate center near Willow Pass Road close to downtown, where flowering plum trees are visible through the wide windows and the orange motif of the organization is reflected on the walls. Most of the center's funding came from a Small Business Administration grant of $150,000 a year for the next five years, said Maria LoValvo, Contra Costa regional team leader.

The program that jump-started Nelson's new career costs low-income women $100 or less for a 20-session program that

teaches how to create a business plan, find target markets, handle the books and "everything else about how to start and operate your own business," LoValvo said.

Women are a powerful entrepreneurial force in American business. Two in five of all the businesses in the United States are privately held, and 50 percent or more are women-owned firms, according to the Center for Women's Research. These generate $1.9 trillion in annual sales and employ 12.8 million people nationwide.

Mercy Corps Northwest Microloan Process

This video shows the process a woman fashion designer goes through to get a microloan from Mercy Corps Northwest, a pacific northwest microfinance nonprofit.

Mercy Corp Northwest client Anna Cohen is featured in an television segment produced by WNET, New York and American Public Television. The segment focuses on the role microenterprise support organizations like MCNW can play in helping new companies get off the ground. The film crew followed Anna and her new fashion design business through the loan application process and also features interesting clips of her production and marketing efforts.

This can give you a good idea of how some nonprofit microfinance organizations work in the United States.

Yunus' "Social Business"

Grameen Bank founder and microcredit guru Muhammad Yunus published an article in the Christian Science Monitor last week titled, "How Social Business Can Create A World Without Poverty."

The article lays out Yunus' ideas about "social business." The term might seem, at first glance, similar to what is described by the catchphrase popular in the US, "social entrepreneurship." But Yunus emphasizes that "social business" is not about profits; it only emulates the structures of profit-making businesses to become self-sustaining.

A social business is not a charity. It is a nonloss, nondividend company with a social objective. It aims to maximize the positive impact on society while earning enough to cover its costs, and, if possible, generate a surplus to help the business grow. The owner never intends to take any profit for himself.

... Traditional philanthropy and nonprofits generate a social gain, but they do not design their programs as self-sustaining business models. A charitable dollar can be used only once. A dollar invested in a self-sustaining social business is recycled endlessly.

A social business is designed to be both self-sustaining and to maximize social returns like patients treated, houses built, or health insurance extended to people who never had this coverage. An investor in a social business retains an ownership interest to hold management accountable and to get the investment back over time, but no dividends are expected, and any profits should be reinvested in the business or used to start new similar businesses.

I think this is a super-interesting discussion and falls in with the Pierre Omidyar philosophy of philanthropy. 

For example, one could say that the City of San Francisco gets its money back from the lease grants it offers through taxes the new businesses are paying. The same is true of Women's Initiative's loan program: the revolving loan fund puts payments back out into loans immediately.

But how would we begin to get our money back from Women's Initiative's training program?  Becoming partners in the client businesses?  How do you serve the very poor and become self-sustaining? 

At first sight it seems that the “social business” model is limited in who and what can be served.  This is a question that as time goes on would be important to resolve as more and more people are going to want to spend their philanthropy dollars where they can get them back.

--- Pemala Mejia, Women's Initiative Executive Projects Manager