Today’s blog post is from Soles4Souls’ CEO, Buddy Teaster:
I have to admit to being a little bit of a policy geek. I like to think and talk about what needs to be in place to make a program like micro-enterprise work. For us, that means not just coordinating shoes and clothing and logistics, but
cultivating an environment on the ground that helps support the smallest of business owners in their quest to be self-sufficient.
Consequently, a recent article in the Stanford Social Innovation Review really caught my attention. Titled ”Clients Must Come First In Microfinance,“ it’s an in depth look at the differences between institutionally focused organizations and client focused ones. As you might expect, the first type tend to pay attention to their rules, payback and default rates, etc. All of those things are incredibly important. Without managing these important metrics, there won’t be microfinance institutions (MFIs) of any kind and that is likely to be catastrophic for many micro-entrepreneurs.
However, this approach often misses the mark by not understanding whether or not the MFI is actually making a dent in ending poverty for its clients. For example, non-financial issues (like a health crisis or a supportive social group or improved financial literacy) are often much more indicative of whether or not the MFI’s clients are really making progress.
Client focused MFIs take a more comprehensive view of how they support their clients – and often include financial education, management training, value chain support, and social services. Soles4Souls doesn’t provide microfinance services, but we can play a critical role in improving the value chain that the authors reference. Being a trusted partner that consistently delivers quality products at fair prices, can have nearly the same impact as providing more credit!
I love the stories we share on this blog and through our social media channels. I know those photos, videos and words powerfully communicate our work. But I encourage you to take a minute to dig a little deeper and get a little glimpse of the behind the scenes thinking that often informs programs and policies that can hinder or help our bigger efforts. 15 minutes on this article, as but one small example, will help you understand even better how important it is to get involved and making a difference. You can also view our latest video, featured below. It breaks down our micro-enterprise efforts even further.