Last week, I attended the Microfinance USA 2010 Conference as one of more than 200 student conference attendees. I sat in on “Student-Led Microfinance Clubs”, a panel of individuals working to empower students to be a part of the microfinance movement. The panel was comprised of university faculty, university students, and recent graduates and I had the chance to chat with each of them afterward. I’d love to share with you what I learned from them during the panel and through individual conversations.
Melissa A. Paulsen of Notre Dame University’s Social/Micro Venturing Program
Alex Dang of Global Brigades and Opportunity Fund
Rohan Mathew of The Intersect Fund
Paloma Pineda of The Elmseed Enterprise Fund
How did your programs get started and where are you now?
Melissa A. Paulsen began by explaining that her course at Notre Dame combines one semester of learning about academic theory behind microfinance, and the theories reinforced by fieldwork in technical assistance. This work is all done by undergraduates and although she initially expected an enrollment of 20 or so students, 64 students enrolled!
Alex Dang organizes Global Brigades university chapters. He first got involved while a student at UCLA, and he explains that they expanded from public health clinics to business advising, law, and architecture programs to engage students from interdisciplinary fields to get involved. They have sent 14,000 students to the Honduras and Panama, and worked with the Peace Corps. One of their pilot programs was creating financial literacy programs locally.
Rohan Mathew’s Intersect Fund was founded when he realized that just a couple blocks away from Rutgers University, multimillion dollar company headquarters, and hospitals was a completely different neighborhood. They’ve made 19 loans with a 100% repayment rate so far, and offer $500-5000 loans with no business plan required for the loan application. Increased efficiency internally allowed the organization to offer a loan decision within 7 days of the completed loan application submission.
Paloma Pineda also said that Elmseed was started because of tensions in “town and gown relations”, that is, relations between universities and local cities. Elmseed offers consulting, business training courses, and $2000-4000 loans. Staffed by 25 students, they serve about 20 clients.
So what are the different types of models of student-led microfinance clubs? What works best?
As Rohan Mathew explains, there are three:
1. A cocurricular program integrated in the university, like the course at Notre Dame
2. A separate (501)(3) organization with full-time staff and not officially affiliated with the university, like Intersect Fund
3. An entirely student-run extracurricular organization, like Elmseed
There’s really no way to determine what works best, Mathew says. The model that works best for one institution may not work best for another. It may be best to find what works in one’s own institution through trial and error and to follow the advice of a carefully selected board of advisors.
What about fundraising?
Corporate sponsorshop for financing was the best way to go for Mathew. Individual donor fundraising was ideal for Dang because it also raised awareness and engaged more students at the same time. Pineda uses a combined strategy of foundation grants, corporate sponsorships, and individual donor drives. Pang says alumni are also a good source of start up seed financing. All agree that university funding is a good source for start up funds, but organizations must develop sustainable financial models and their organizations now take little or no money from their universities.
I’m a high school senior and I’m gearing up to go off to college. I’m so inspired that there are so many opportunities available for students to mold the future of microfinance. I first got knee-deep in engaging students in microfinance through Stanford’s Gumball Capital and I’m excited that there are student microfinance organizations that serve niche beneficiaries: a program at UNC works with the homeless and those at risk for homelessness in microfinance and a program at Brown offers loans for citizenship. With plenty of business cards in hand, I left this session feeling not only energized but also empowered for my efficacy in the field of microfinance.