Introducing
Social Innovation Initiative Research Teams

The Capital Good Fund
Mollie West, Andy Posner, Raisa Aziz, Nabeel Gillani

Project Overview:

We are a group of Brown students who will develop a microfinance program in Providence and partner with community organizations that provide outreach and business skills to low income people. Brown students will staff the program as volunteers and make small loans of less than $2,000 to clients looking to start or expand small businesses. There is demand in Providence for loans to borrowers who lack collateral and do not have access to a banking system due to their legal status. We will also provide loans of less than $2500 for immigrants to apply for citizenship or for legal permanent resident status. Once immigrants become legal permanent residents, they become qualified for the Earned Income Tax Credit. Borrowers could then use the EITC to pay back the loan and accrue additional income.

 What the Project Addresses:

Our program will address urban poverty in Providence, a city with a high poverty rate of 29%, and will specifically target minority and immigrant communities.  We will address the lack of access to capital facing many low-income borrowers who are trying to start their own businesses. A secondary outcome is that we will also reduce predatory lending practices, which plague poor and immigrant populations. We will be working with community partners with existing trusting relationships with borrowers. We will build upon these trusting relationships and work with clients to address their loan and business planning needs.

Timeline of our objectives:

Fall 2008: Write business plan; select partner organizations; work with partner organizations to select clients (partners will add credibility and knowledge)

January 2009: Connect low-income clients with business training skills so they can learn how to start and maintain successful businesses. Select clients who are eligible for the EITC with an adjustment of status loan.

January 2009- June 2009: Raise borrower income by providing access to capital. With a small loan, borrowers can make investments for their businesses, thus growing their businesses and getting larger returns on their investments.

Join the project!

1) We would like to find other models to base our EITC and citizenship loan program on. We know of a few other organizations that are doing EITC loans and we would like to research their models: Shore Bank Cascadia Branch, Illinois Refugee and Immigrant Rights Coalition, Austin-Accion Program.

2) We would like to find out when and how we can become a Community Development Financial Institution (a government sponsored institution to help low-income people), because this would give us additional funding and support.

3) We would like to research demographic information in Providence to find out more about Olneyville, and eventually other neighborhoods that we can expand into. This information will be helpful when we present our plan to donors and want to quantify the need for loans.

4) We would like to create a presentation with the research that we have done in our focus groups and surveys. This would involve compiling the information in a meaningful and helpful way so that we could present it in a powerpoint or report.

5) We want to research the legal aspects of lending out money. We need to know if we are bound by any legal constraints, such as anti-usury laws that might put a cap on the interest rate we can charge.

6) We would like to look deeper into the group lending model for microfinance. Several MFIs in the US use the group lending model (Grameen America, Project Enterprise), but several have switched over to the individual model (Elmseed and Accion). What are the benefits of the group lending, and should we eventually switch to group lending?

7) We should research methods of getting Brown students to volunteer as business consultants for our clients. How can we find and motivate Brown students with business backgrounds (who hopefully speak Spanish) to help with our program? Who should we target, and in what manner (listservs, applications, flyers)? What Brown resources can we tap into?

8) We want to find methods of evaluating the effectiveness of our program. We know that the Aspen institute offers an evaluationtool, for a fee, but we want to know more about it, alternatives, how
to implement it, etc.

9) We want to know about the potential for this to grow. Where else in Rhode Island and in neighboringstates would we find the kind of demographics/socioeconomic statusthat would benefit from our program? How many people could we reachin RI? In Mass, etc..

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Please contact Alan Harlam, Director of Social Entrepreneurship, for more information Alan_Harlam@brown.edu