Questions for Eric Weaver collected during 11/9/2011 chat

Replies to This Discussion

Permalink Reply by Gordon Chan on November 14, 2011 at 8:25pm

Additional questions from November 9th:

 

Q: Is it legally more difficult to do mf in the United States?

Q: Have you seen Opportunity Fund's business model replicated in other communities?

Q: If you were starting out today, what would you do differently to be even more effective?  Are you able to lend to new immigrants?

Q: What are your top recommendations for community investments (public policy)?

Q: You mentioned that some organizations have use similar services to help low income households fund energy audits and retrofits.  Can you provide a few examples of who is already doing this?

Q: It sounds like Opportunity Fund is more impact investing than microfinance. Impact investing has been a "buzz" word recently. Is there really a difference between the two?  Which one is opportunity fund?

Q: What do you think of the micro-lending market in the U.S.? Also, do you think that crowd funding will take-off in the near future?

Q: Why isn’t microfinance bigger in the US given the number of people under the poverty line?

Permalink Reply by Eric Weaver on November 28, 2011 at 1:58pm

Q: How long does a typical borrower stay with the MFI? 

Terms of a microloan from Opportunity Fund range from 9 months to 7-8 years, depending on the size of the loan. Most loans are ~2 years. And many borrowers go on to take out additional loans as they pay them back, before "graduating" to a bank loan.

 

Q: In your opinion, what are the advantages and disadvantages of student-led practitioner groups operating domestically?

What do you mean by "student-led practitioner groups"? Student-run MFIs? Like Gumball Capital and Happy Day Microfunds? Both have the same challenges: sustainability in terms of leadership and financial sustainability. Gumball Capital recently succumbed to these challenges and closed their doors. Happy Day MicroFunds is struggling with the same challenges.

Q: How does Opportunity fund measure its social impact, and what is that social impact, in its experience?

Measuring social impact is critical to our work. We are a non-profit lender, and we exist to fulfill our social mission. If we weren't to measure our social impact, we'd have no idea whether we were meeting our goals.

 

There's an entire section of our website dedicated to sharing our social impact measurements, and to sharing HOW we collected those numbers. (Opportunity Fund is really aware of the need to produce measureable, reliable, verifiable results. This can be expensive, but to us, it's worth it.)

 

See social impact results here: http://www.opportunityfund.org/social-impact

 

 

Q: Eric, do you think that the existence of the welfare system in the United States has negatively affected the success of MFI?

By MFI (which stands for "Microfinance Institution"), I think you mean "microfinance" (as in the entire industry)....

 

No. I do not.

Q: How does Opportunity Fund ensure credit worthiness?

We pull a credit report on each loan applicant. :)

 

Q: With regards to Opportunity Fund, how much added economic activity does every $1 lent result in??

Did someone "plant" this question? Each dollar lent spurs nearly $2 in additional economic activity in the local economy, such as: new wages for workers that these small businesses hire; new taxes they pay as their revenues grow; and new spending as they grow and invest in the business.

 

See our report - Ripple Effect: The Macroeconomic Impact of Microlending in the Bay Area.
http://www.opportunityfund.org/sites/default/files/pdf/Ripple%20Eff...

 

 

Q: If 90% of international MF loans are used for expenses, why don't american MFIs provide this same opportunity?

What do you mean by "expenses"? Do you mean consumption loans? Like microloans that are used for consumption smoothing?

 

I can't speak for other American microlenders on this one; but Opportunity Fund does not provide consumption loans because we want to focus our lending on income-generating activity that has the potential to reduce poverty over the long-term.

 

Q: What are your thoughts on the Starbucks Create Jobs for USA? Will large-scope fundraisers like this change the landscape of US MF?

 

Great question. See my blog post about it here:

http://www.opportunityfund.org/blog/Creating_jobs_is_a_hot_topic_an...

 

 

Q: Does Opportunity Fund consider higher education a business investment that is worthy of a loan?

Nope. But we certainly DO support education investment. We just do it without charging any interest. In fact, if a low-income person wants to save and invest in their higher education, we'll match $2 for every $1 they put toward their education. These are through our microsavings accounts. See more information here:

http://www.opportunityfund.org/about/our-programs/ida

 

 

Q: Does Opportunity Fund's proximity to Silicon Valley, better promote its "Small Business" segment of loans? In other words, is geography an equally important criteria for US MFIs?

Geography is always a factor in the growth of an industry. Yes, we have benefited from our founding in the valley.