This article examines the unfinished business of gender equality for social entrepreneurs, highlighting the empowerment of women in business and entrepreneurial challenges that need to be addressed for equal opportunities.
Most organizational leaders won’t tell you that they fail or make mistakes. It tends to put off potential donors or supporters. Rupert Scofield, a cofounder of FINCA and President/CEO from 1994 to his death at 73 in November 2022, was not like that.
“Let me list the FINCA programs that have had growth spurts in the number of clients and size of portfolio, followed by major collapses and contractions,” he wrote. “Mexico, Honduras, El Salvador, Guatemala, Nicaragua, Haiti, Tanzania, Malawi, Congo, Kosovo, Armenia, and Afghanistan. That is more than 50 percent of our programs. We had to learn the same lesson twelve times.”
What lesson was that? “Your people and systems that have brought you this far are almost never the same ones that can take your organization to the next level.”
Rupert detailed a “triple meltdown in Latin America during my annus horribilis in 1994”, 10 years after the start of FINCA, and says “the only reason I survived was that Chairman Bob (Hatch) saw something in me that told him I had the ability to put things right, if given the time.”
All this comes from (The Social Entrepreneur’s Handbook: How to Start, Build, and Run a Business That Improves the World, 2011, McGraw Hill, available on Kindle). In 260 pages it tells you all about how to educate yourself to see what has to change — a rare quality in organization executives.
One chapter is titled: “If at First You Don’t Succeed, Fail, Fail Again”, and he calls himself “the Monkey in the Middle” working between the Visionary (who doesn’t want to manage or can’t) and Fixers (who want to fix things that aren’t necessarily broken). And he goes into full detail on how things were in FINCA (the Foundation for International Community Assistance), which in line with its origins also means “farm” in Spanish.
Rupert described himself the New York son of “a downwardly mobile blue blood couple” and Vietnam war draft dodger who instead joined the Peace Corps to work with farmers in the highlands of Guatemala. “Scofield has spent the better part of his life dodging revolutions, earthquakes and assassins in the Third World, and once ran for his life from a mob in Mogadishu, Somalia,” he wrote in his handbook bio.
I was lucky enough to be a friend of his for several decades.
In fact, Rupert had two MAs in Agricultural Economics and Public Administration from the University of Wisconsin and a Bachelor of Arts degree from Brown University. He was Country Program Director of the AFL-CIO’s Labor Program in El Salvador, where assassins murdered his boss and came after him, too.
But it was under a tree in Guatemala in 1972 where he first loaned $50 to each of 20 women who gathered there to explain to him how loans too small for most financial institutions and without any collateral to interest banks could nevertheless help them climb out of poverty.
Today, 44% of the start-ups FINCA has invested in have women founders or co-founders, and women make up more than half of FINCA’s global staff.
But much of Rupert’s book details his failures with ideas, expectations, staff selection, management and fund-raising.
What seems successful throughout, though, is that FINCA works to provide people with the tools they need to lift them out of poverty.
Part of FINCA’s success today comes from its methodology. FINCA routinely conducts customer surveys to make sure that its products and services are meeting client needs. One of these surveys — the FINCA Client Assessment Tool — helps to record the daily living conditions of FINCA’s clients.
As explained on FINCA’s website: “Through this survey, we learn about the make-up of the family, including its income-earners and dependents. The data includes basic indicators of the family’s well-being, especially their educational status, daily consumption and the quality of their health. We also collect data on their housing conditions and access to basic services, such as water, electricity and internet service.”
In parallel, FINCA conducts an Enterprise Survey, “which measures their ability to generate income and the direct impact of FINCA’s loans. Our borrowers are all engaged in some form of productive activity which creates employment for themselves and others. The earnings from these activities are usually the main source of income for their families. We look closely at the income and expenses of the business, and how many people they employ. By describing these variables over time, our clients can estimate the impact that FINCA’s loans have had on their businesses.”
FINCA’s originality is this: “Since our founding in 1984, we have challenged the conventional wisdom about the role of a charity and the purpose of a donation. We believe people are capable of building their own pathways out of poverty. Our work is living proof that the solution to global poverty lies in unleashing the wisdom, talent and work ethic of the world’s most disadvantaged people.” (LINK)
It notes: “An increase in income for women has the greatest impact on a family’s financial well-being. Majority women-owned businesses are more innovative, more entrepreneurial and average a 3-5% (CAGR/compounded annual growth rate) greater return on financial investment.”
John Hatch, a co-founder of FINCA, established the organization after conceiving the idea of “Village Banking”, giving poor Bolivian farmers with no collateral access to loans through a collective guarantee by the farmers.
As a graduate student conducting research with subsistence farmers in Peru, he found that most credit programs were administered by outside experts and the management style resulted in poor repayment rates and low morale among borrowers.
When Hatch began lending to women, he saw the potential of Village Banking as an anti-poverty tool: “Our focus on women was the result of a growing conviction that the fastest way to affect the welfare of children was through aid to their mothers” (LINK). Richard Williamson, also a co-founder and still on the board, is a certified insolvency advisor who served as CEO from 1990 to 1993.
Writing 25 years after the founding of FINCA, what Rupert calls the Visionary (John Hatch), the Carpenter (Robert “Bob” Hatch, John’s older brother, a highly successful organizer/manager — “John’s polar opposite” — and early funder), Mr. Bean (Richard Williamson), and the Monkey in the Middle (Rupert) were still together, at that same foundation which originally operated out of a two-bedroom apartment on Broadway and West 66th Street in Manhattan.
Rupert’s overarching message: “By thinking creatively and behaving like a business, your nonprofit can accomplish far more than if you simply think of yourself as a charity, dependent forever on donations. Hatch’s big breakthrough occurred when he stopped thinking about the poor as helpless victims and, instead, as entrepreneurs and ‘survival artists’ who ‘just needed a chance’ to bootstrap themselves out of poverty.”
Charity Navigator, a watchdog organization, gave FINCA its highest, four-star rating in three of the previous four years.
Fifteen years on, looking towards FINCA’s future, Global CEO Andrée Simon observed that “we have not yet realized the full potential for microfinance because the systems and tools of the past few decades were not designed to sustainably scale our business model.”
“But things are different now,” she adds. “In just the past few years, global technology and infrastructure have caught up to the abiding promise we have made to the world’s most disadvantaged people.”
In addition to brick-and-mortar branches and banking agents (such as a local hardware store, grocery stand or corner shop contracted by a bank to process clients’ financial transactions), FINCA is building mobile banking applications and accepts donations in crypto.
In Uganda, FINCA is working with BrightLife, a social enterprise, which distributes and finances solar energy and improved cookstove products for low-income, off-grid customers, especially women. “Initial findings indicate BrightLife products create safer and healthier homes.” (LINK)
FINCA says its clients fall into 3 broad, sometimes overlapping, categories: microbusiness owners (women and men engaged small trading or service enterprises), smallholder farmers, and “families on the margin — the women disproportionately affected by poverty and yet bearing the burden of raising their children”(LINK).
The organization has found through surveys and focus groups that FINCA clients have three needs: the ability to earn a living, resilience against future shocks, and access to education. As a result, FINCA offers a range of interventions: small loans and financial education, savings accounts and insurance programmes, and connections to healthcare institutions and other partners, plus education loans for the children.
FINCA also argues we need new approaches in development to achieve gender equality. Simon writes: “In many countries, women still need their husbands or a male family member to sign off on a loan and lack the collateral to prove creditworthiness under traditional funding structures. [Melinda] French Gates advocates for ‘grant-making at the beginning to get women organized, and then mentorship and sponsorship to [teach them] how to start their business,’ followed by the removal of structural barriers to increase access to credit.” Global CEO Simon promises that “Institutions like FINCA can support these efforts by collaborating with regulators, funders, and partners to address the challenges women face — whether through advocacy or product design.”
What about Rupert’s annus horribilis, since he was as ready to look at failures as well as success?
“For three years, the FINCA program in El Salvador prospered, becoming the largest microfinance program in Central America,” he records. “In 1993, however, the project is infiltrated by criminal elements, who, having perceived in John’s trusting nature a golden opportunity for industrial-size fraud, siphon off more than a million dollars through the manufacture of thousands of ‘ghost loans’.”
So what do you do? Rupert was always reluctant to engage in the wholesale butchery of corporate life, and said there are good ways round the problems that use your partner’s best qualities:
“Create a space in the organization where the Visionary can still add value without disrupting the daily operations. Don’t keep putting him into positions that play to his weaknesses. Forget about trying to control the Visionary, because you can’t” [and shouldn’t].
He also advised: “Satisfied employees will be your ace recruiters”. But even in 2011 he noted: “These days, your website is the second most important way to attract new talent, and it’s the best investment you can make, both in fund-raising and in recruiting.”
“A tireless, twenty-four-hour workhorse [that] lurks in cyberspace like a giant sea anemone, your dot-org casts its tentacles across the globe, pulling in good people and money. Make sure it tells your story as well as any of your best field people can. Furthermore, post videos of your beneficiaries explaining, in their own words, how your organization has directly helped them.”
FINCA’s website tells visitors extensively about what it is doing and what its clients and staff are achieving.
FINCA may remind you of Bangladesh’s Grameen Bank and Mohammed Yunus, winners of the 2006 Nobel Peace Prize. So how do the two projects differ? Dr. Joseph S. Maresca, in a comment featured on the Amazon Kindle site for Rupert’s book, writes: “The objective of the Grameen programme is to overcome poverty, have a sustainable economy and a modest return on the investment; whereas, the objectives outlined by Rupert Scofield are mainly the social benefit within a non-profit organizational setting versus a profit-seeking enterprise.”
Typically, the site also includes a couple of extremely critical views of the book (largely misjudged, so far as I can see) as well as the assessment that it is “genuinely inspiring” and “an essential tool” with 4.5 stars out of 5 on overall ratings.
Rupert passes advice Yunus gave him (see below), and points out that social entrepreneurs like Muhammad Yunus and John Hatch actually encouraged and enabled imitators.
John Hatch travelled around the world holding workshops to teach other large international NGOs the Village Banking methodology. He reasoned that FINCA had neither the financial nor human resources to roll out the model on a large scale.
This strategy worked reasonably well in that a number of large international relief organizations, including Save the Children, CARE, World Relief, Catholic Relief Services, and a myriad of local NGOs, became enamored of the methodology. At this writing, Village Banking has been adopted or adapted by more than eight hundred organizations, or almost 10 percent of the microfinance institutions worldwide.
Yunus advised Rupert to stick to his original strategy when expanding to other regions, since he knew how it worked, and only change it if he came across problems and get other smart people onboard. Rupert’s own recommendation on this score: “Be the Dumbest Person in the Room.”
Rupert suggested NGO managers can reduce “office stress through releasing your inner ham”: “One way to do this is to encourage people to behave like lunatics, beginning with yourself. In my case, I have taken a barely discernable talent for music and reinvented myself as a rock star once a month, performing some hopelessly outdated ’60s ballad to kick off each staff meeting.”
He also notes: “I make an annual practice of meeting one-on-one with most or all of my headquarters employees, regardless of position. I tell them I am interested in hearing three things: 1. Any obstacles they are facing in their work that is preventing them from being as productive as they could be 2. Any problems they see in FINCA, either in their department or somewhere else, that for some reason no one is addressing 3. Any bright ideas they have for solving the issues”.
Rupert was not convinced his social entrepreneurship ideals would work in developed countries: “The United States is a developed economy where only 10 percent of the population is self-employed, a fact that automatically limits the potential client base. Second, for most low-income people, who tend to be less educated and skilled, being an entrepreneur is not a viable strategy for escaping poverty. In a developed economy, the barriers to starting a business are much higher than in the developing world, where pretty much anyone with fifty dollars in capital can go to the market and buy and sell vegetables and make a buck or two. In the United States and Europe, to succeed as an entrepreneur you need much more than capital. You need a novel idea, a good business plan, marketing skills, financial acumen, and if your business goes to scale, management skills.”
Here’s a 20-minute AI audio version from Google’s NotebookLM using my Medium text. I’m just amazed at the quality (though Rupert stepped down in 2022 not 2006, and it’s FINCA not FINSA).
Nonprofit Explorer Financials for FINCA (LINK). Rupert reported in 2007: “For the record, in 2007 my total comp (salary and benefits, all in) was 0.52 per cent of FINCA’s total expenses” (p226). In 2022 it reached $375,300. Rupert had always been ready to discuss this. “Considering who FINCA works with, the poorest people on earth, I must admit I am not entirely comfortable earning at this level,” he wrote. “That is why, over the years, I have plowed back a good chunk of my income into FINCA and other causes. A charity CEO compensation of $200,000 for an organization spending $20 million per year (1%) probably seems much more reasonable than the same salary for a $1 million organization (20% of expenses for one person).”