Full story here.

Mr Seiler is inspired by Muhammed Yunus, founder of Grameen Bank, the Bangladeshi lender. Now microfinance is turning full circle: in 2008, Grameen established posts in New York and Berlin, for those who fail conditions imposed by high street banks in those countries. Amadeo Giannini would understand.

Building wealth with tens of thousands of small accounts

By Brendan Maton

Published: January 4 2009 18:27 | Last updated: January 4 2009 18:27

Leo Seiler is fond of telling the story of Amadeo Giannini, a microcreditor who over 100 years ago saved many farmers and small merchants when their region was racked by a severe earthquake and fires.

While other banks in the region struggled to provide extra finance in the aftermath of the quake – not least because the fires kept their vaults and the money therein too hot – Mr Giannini ran his simpler operation from his own rural home, making loans to those who travelled on foot or by horsecart to ask for credit in person.

The region in question was San Francisco and the date was 1906. The loans helped rebuild the city. Mr Giannini’s bank later bought the bonds that financed the building of the Golden Gate Bridge and his acumen in the world’s fastest-growing economy eventually saw him become chairman (and indirectly controlling shareholder) of Bank of America.

Mr Seiler himself is something of a self-made man. Like Mr Giannini, he was born into a comfortable family, but had to work during the summer holidays. His first job was as a gofer at Raffeisen Capital Management in Vienna. Although he was not a trainee portfolio manager, he asked the right questions. Twenty-three years later Seiler Asset Management looks after several billion euros on behalf of wealthy clients.

In discussing his life, Mr Seiler abhors the word “career”. “It comes from the word for ‘racecourse’. I don’t want to be like an animal running round in circles.”

He prefers to be smarter with his energy, travelling across various time zones promulgating various projects but most notably, the Dual Return Vision Microfinance Fund, a separate venture from SAM.

Mr Seiler says Dual Vision is Europe’s biggest “pure” microfinance fund. Pure means all debt; the fund’s €80m (£77m, $112m) capital goes straight to microfinance institutions and, thence, to needy entrepreneurs, farmers, shopkeepers and small businesses.

For investors familiar with 50-200 holdings in a portfolio, it comes as a revelation to see almost 95,000 businesses served, and possibly 195,000 individuals. These data appear prominently on the fund factsheet.

Mr Seiler is adamant that this form of financing is more useful than socially responsible investing. “I hate the word ‘ethical’. SRI just seems to pick ‘best-in-class’: so you get the best-in-class oil company; the best-in-class chemical company. I don’t know if what we are doing is ‘ethical’. I do know that it is a practical solution to one problem.”

One might argue that microfinance is a practical solution to hundreds of thousands of problems, given that it is trickle-down investing. Microfinancing could grow from $5.5bn at present to as much as $250bn, according to responsible-investor.com.

Mr Seiler cautions, nevertheless, that most of the world’s poor cannot be reached this way. “I would say there are only 500m-700m people who live in societies that are sufficiently stable for microfinance to flourish,” he says.

That leaves billions more reliant on charities, non-governmental organisations and fortune. Dual Vision does not, for example, invest any money in Africa. Mr Seiler cites the high level of corruption and rarity of African microfinance institutions (MFIs) accepting dollar or euro-based loans as two major dissuasions.

Elsewhere in the world, Dual Vision makes loans in euros or dollars. The local MFIs then bear currency risk. The lack of activity in Africa is a stark reminder that earning returns is this fund’s second, integral vision. Mr Seiler draws out a garish pink plastic wallet from his pocket. It is made by a women’s collective in the Philippines. “Our first venture,” he beams proudly. “I distribute these wherever I go. They are made from old drinks containers.”

When Vision Microfinance first visited the collective, the women did not trust them.

“They were used to paying rates of 20 per cent. Per day not per year,” he says. “That means if there is five dollars in the till at the start of the day and not six dollars by the end of the day, the loan sharks can beat you up or damage the property.”

By contrast, the MFI takes approximately 20 per cent a year; Dual Vision takes roughly 8 per cent. Of that gross income, 2.2 per cent goes in fees, leaving currently over 5 per cent for end clients. The MFI rate of interest here is not a global standard, however. Of the 2.2 per cent management fee, 1.5 per cent goes to agencies assessing and monitoring the MFIs such as Symbiotics of Geneva and the likes of Standard & Poor’s.

Mr Seiler says it has been a conscious decision not to spend on post-spend monitoring. In other words, if there are defaults, the fund will take a hit. The counter-argument is that the loans are so small and diverse, a fatal loss could only be suffered if an entire country combusts.

Mr Seiler is inspired by Muhammed Yunus, founder of Grameen Bank, the Bangladeshi lender. Now microfinance is turning full circle: in 2008, Grameen established posts in New York and Berlin, for those who fail conditions imposed by high street banks in those countries. Amadeo Giannini would understand.

Copyright The Financial Times Limited 2009

For the second year in a row, a Nobel Peace Prize Laureate supported Full Circle Fund by addressing our community at our annual Forum. In honor of the new Global Economic Opportunity Circle Launch, 2006 Nobel Peace Prize Winner, Dr. Muhammad Yunus spoke at a special reception of Full Circle Fund Forum guests. Dr. Yunus is widely regarded as the father of microfinance and continues to challenge conventional thinking and identify new ways to unleash the entrepreneurialism of the world’s poor.

Dr. Yunus spoke passionately to the guests about the importance of investing both time and money into social enterprises in developing regions. His talk can be seen by clicking here.

Dr. Yunus spoke passionately to the guests about the importance of investing in both time and money into social enterprises in developing regions.

“Philanthropy – the giving [money] away part is good; I’m not denying that. But if you can somehow manage to bring it to the social business level, what happens? Its power becomes multiplied several times. Because in philanthropy, you give the money, it goes, achieves its objective, but money never comes back. But if you can take that objective, build a social business around it, money recycles. It continues, it grows, and you learn and create an institution out of it, and it is replicable.”

After congratulating Full Circle Fund on its new Global Economic Opportunity Circle, he highlighted the positive impact individuals can have when using their time, talent and resources to solve the world’s most pressing problems.

“Funding is important, but at the same time when you personally can get involved with the business itself, in using your talent, your creativity, your connectivity to that business…and then you feel good that you have helped something which changes people’s lives in the world.”

A Project like Tweetsgiving is an example of how a charity can use social media platforms, in this case, twitter, for fund raising. Imagine being able to raise US$ 10,000 in a 48 hour period from hundreds of people who contributed $5 and $10 dollars whose only connection with a charity was when they discovered the fund raising efforts because of one of their friends on twitter?

Imagine what can be done with more established charities. I believe micro giving promoted on social media networks can have a positive impact on fund raising in the weeks, months and years ahead. Not-for-Profits should take note of this and the work of : Beth Kanter, Rebecca Bollwitt, Stacey Monk and others who are pioneering this field as they can benefit directly as they discover and learn how to properly leverage social media and the passion people have for their respective charities.

In Dreams from My Father he tells of his late mother, Ann, a freethinking and fearless white woman from Kansas who married a black man from Kenya. Barely two years into the marriage, she was left to raise Mr Obama alone, yet she returned to college, studied for an anthropology degree and remarried, to an Indonesian student whom she followed to Jakarta with her son. She worked in Asia running microfinance projects that allowed women to become self-sufficient. “She was very clear that the best indicator of how a country is going to develop is how it treats its women and whether it educates its girls,” Mr Obama recalls.

The reason I am posting this request now is that Stacey has entered their first video in YouTube competition for funds to equip the school further. They need lots of people to vote for them. Their jury are YOU, so please VOTE at YouTube if you agree with me that this is a worthwhile example of a social business that not only bridges continents but provides unique opportunities for all involved (whether people going to help in Tanzania or mama Lucy or her school kids) to meet, enjoy working together, learn about each other and have fun.

We need more such examples. Let us know if you come across any others.

We welcome suggestions on how to spread the word further, especially how to encourage real change in the university courses and in the corporate practices.

The Time is Right for Creative Capitalism
Published: August 20, 2008
Author: Nancy Koehn

Executive Summary:

Bill Gates has it right. Business is the most powerful force for change in the world right now and gives the idea of creative capitalism real power, writes Harvard Business School professor Nancy F. Koehn. Key concepts include:

* No other set of institutions has the resources or the breadth and on-the-ground depth of business to deal with the world’s toughest problems.

* Five powerful forces are converging in this moment to support creative capitalism.

* All sizes and types of business—from start-up to multinational—have something to contribute.

Bill Gates has it right. Business is the most powerful force for change in the world right now and gives the idea of creative capitalism real power, writes Harvard Business School professor Nancy F. Koehn.

Editor’s Note: In a much admired and debated speech given at the World Economic Forum in Davos last January, Bill Gates said that many of the world’s biggest problems cannot be fixed by philanthropy, but instead require free-market capitalism—”creative capitalism”—to solve.

According to Gates, creative capitalism is “an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.”

Harvard Business School professor Nancy Koehn recently contributed an essay on creative capitalism to the blog Creative Capitalism: A Conversation, run by Michael Kinsley and Conor Clarke. We reprint her comments here with permission from the site. Readers should feel free to write their own comments on the Creative Capitalism site.

Readers are welcomed to respond to Koehn’s essay on the Creative Capitalism site/blog.

About Faculty in this Article:

HBS Faculty Member Nancy F. Koehn

Nancy F. Koehn is the James E. Robison Professor of Business Administration at Harvard Business School.

MIT Launches Next Billion Network for Innovative Mobile Technologies

Submitted by Manuel Bueno on July 18, 2008 – 15:08.
Published in: Telecommunications and IT

Our regular NextBillion readers will already know that the MIT is one of the most important universities in the base of the pyramid arena. Some of their most important initiatives are the Legatum Center for Development and Entrepreneurship, stimulating bottom-up entrepreneurship fueled by innovations, and the Lemelson-MIT Awards, recognizing the impact that inventors can have on economic and social well-being.

In these and other cases, MIT’s strategy has been to apply its engineering prowess to try to solve BoP problems in the shape of technologically-adapted inventions.

Now, MIT has launched a Next Billion Network to deploy innovative mobile technologies that can help people reduce friction in their local markets from the bottom up. This approach is based upon the belief (which I share) that mobile phones, by enabling increased connectivity, can offer new opportunities for low-cost, sustainable solutions in the BoP.

With mobile phone penetration rates in some countries still very low and with developed countries already being mature markets, it has been widely predicted that, within the next few years, the next billion people to get a mobile phone will come from developing countries. Moreover, it will be their primary (and perhaps only) connection to the global communications network.

The Next Billion Network could develop into something especially interesting, because it takes into account the fact that countries with low levels of phone penetration also lack widely-accessible computers and internet connections. As such, the mobile phone has the potential to quickly fast-forward into both a PC and an internet device. Similarly, the NBN takes into account the role of mobile phone banking. The initiative, in sum, looks at mobile phones as tools that could become much more than a mere talking and texting device. I find this approach very exciting and refreshing.

The Next Billion Network is based at the MIT Media Lab and will comprise 6 core activities:

1. Year-Round Academic Coursework at MIT
2. Next Billion Challenge Awards
3. On-the-Ground Deployments with Local Partners
4. Working Relationships with Industry
5. Local Mobile Programming Incubators
6. Opportunities for High-Tech Entrepreneurship

This is an opportunity for students and developers to design and deploy the projects and technologies aimed at the BoP, for NGOs to join the network and benefit from MIT’s expertise while sharing their needs and concerns, and for corporations to develop tailor-made projects and collaborations that enable them to find opportunities in BoP markets.

Social entrepreneurship and micro venture capital

Microfinance has been the rage in international development for awhile now. I would say it peaked when Muhammad Yunus, founder of Grameen Bank won the Nobel Peace Prize in 2006.

The rage today in international development is social entrepreneurship and venture capital investing in small and medium enterprises (SMEs). Social entrepreneurship targets base of pyramid development but a step above microfinance. Where as microfinance typically invests in small individual loans, social entrepreneurs invest debt or equity as business partners.

The places to start seeking information:
Ashoka.org
Technoserve

Social entrepreneurship funds:
Acumen Funds
Agora Partnerships (Ross is an intern there)
Endeavor (President is James Wolfenshon)

Blogs on social entrepreneurship:
The Green Skeptic
NextBillion.net

Where you can do it online:
MicroPlace
Betterplace

I recommend checking the links out. They each bring something new and enlightening.

Posted: 28 Apr 2008 08:46 AM CDT

from the Livingston Daily Press and Argus

By Alison Bergsieker

With a median household income of $70,000, almost 40 percent above the state average, Livingston County residents appear to be pretty well off.

But below the surface are the more striking statistics: Poverty is an increasing issue around the county.

In an effort to get the word out, the Livingston County United Way is hosting a Bridges Out of Poverty two-day conference next week, welcoming social service providers, business leaders and the public to better understand and meet the needs of area people living in poverty.

“There is a perception that people in this community are well off and don’t have problems,” United Way Executive Director Nancy Rosso said. “Well that couldn’t be further from the truth.”