The Great Divide – II

23 February 2012

I’m in Toronto today for a board meeting of FINCA Canada. We established both FINCA Canada and UK principally as fundraising and networking vehicles, and have discovered that each is a very different environment than the US. Translate: the culture of individual giving is more highly developed in the U.S., for whatever reason. Some attribute this to the fact that in Canada and UK people delegate these “social” functions to their government, whereas in the US we try to keep the government’s role minimalist and expect non-profits to take care of the poor and indigent.

The economic crisis has presented us with an opportunity to rethink these roles, as well as that of the straight up private sector, in meeting society’s basic needs. It’s an interesting time to be working in the Social Enterprise space.

I’m about a third of the way through David Roodman’s “Due Diligence: An Impertinent Inquiry into Microfinance”, and so far find it a good read presenting — despite the expectations raised by the subtitle — little to quarrel with. One exception is when he discusses the ‘why’ behind the decision we practitioners took to put credit (vs. savings or microinsurance) at the forefront of microfinance (and indeed took a while to even use the MF word, billing what we did as ‘Micro Credit’). David’s hypothesis (I don’t know if that term applies to something that can be easily verified by talking to the people who made those decisions) is that it was the ‘practicality’: credit was easier to do legally (unlike savings and microinsurance, although that didn’t stop us in the early days from doing both), and it provided a vehicle to reach breakeven. Wrong on both counts. We did credit because it “primed the pump”, allowing the beneficiaries to immediately generate an income stream from an investment that would not have been possible in the absence of a critical, minimal mass of capital. With regard to reaching the BEP, we really weren’t thinking in those terms. Most of us were surprised — I know I was — when we realized that our nascent portfolios were beginning to generate ‘real’ money, and lessening the pressure on us to fundraise donations.

Well, onward to the next section, which, judging from the following quote, I suspect I may have more substantive differences: “In practice….social science research makes simplistic generalizations about variegated experiences using incomplete data about the world as it is and untestable assumptions about the world as it would have been.” Yeah, and the scientific part?

Rupert Scofield


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