You may not know that Freedom from Hunger is an organization with two origins. We arose in 1978 from a merger of the Meals for Millions Foundation and the American Freedom from Hunger Foundation. Meals for Millions was started in 1946 in Los Angeles as a distributor of a scientifically formulated, soy-based food that provided low-cost, high-quality nutrition to malnourished refugees in war-ravaged Europe and Asia and to the hungry in Africa. The American Freedom from Hunger Foundation was started in 1961 with the urging of the Food & Agriculture Organization (FAO) of the United Nations and President John F. Kennedy to educate the American public about hunger and poverty in the Third World and to raise money for anti-hunger programs, including Meals for Millions programs. The boards of directors of the two organizations had a member in common in the late 1970s-Hollywood’s first activist actress, Marsha Hunt. Marsha played a key role in bringing the two organizations together as one.
Marsha was a prolific movie star of the 1930s and ’40s, even making it onto the cover of Life magazine at one point. Then she landed in the early 1950s on Hollywood’s infamous blacklist of suspected Communist sympathizers. Unable to work in the mainstream movie industry, Marsha made lemons into lemonade. She leveraged her star power to promote American awareness of the larger world, especially the world of hunger and poverty. She became an ardent but unofficial advocate for the U.N., especially the world-uniting work of its specialized agencies, such as the FAO. It was no surprise that she was asked to join the board of The American Freedom from Hunger Foundation. The organization pioneered the concept and practice of “walk-a-thons” to raise money, in which volunteer walkers get friends to pledge the cause so much for each mile they walk. The very first Freedom from Hunger Walk, stretching 33 miles, took place in Fargo, North Dakota. No doubt this pioneering of new ways to raise money to combat hunger inspired Marsha’s idea of Thankful Giving.
Marsha took her idea to Capitol Hill. She was no stranger there, having been an activist advocate in 1947 for the rights of screenwriters who were suspected to have Communist sympathies (no doubt this contributed to her own eventual blacklisting). Back in Washington, D.C. in the 1970s, she applied her talents to persuading Senator Hubert Humphrey (MN) and Representative Paul Simon (IL) to introduce a concurrent resolution in the Senate and House proposing the practice of Thankful Giving. As part of his Thanksgiving Proclamation in 1978, President Carter included Thankful Giving as follows:
- I call upon the Governors, Mayors, and all other State and local officials to broaden the observance of Thanksgiving to include the practice of Thankful Giving in their celebration, inviting Americans to share with those abroad who suffer from hunger.
- I call upon the American people to make personal donations to religious or secular charities to combat chronic hunger and malnutrition, and to support the concept of Thankful Giving in order that we may one day assure that no individual anywhere will suffer from hunger, and that we may move to a day of universal celebration in a more perfect community within our nation and around the world.
Marsha Hunt’s vision was bigger than a Presidential Proclamation-nothing less than a new custom around the Thanksgiving Day tables of America. Marsha still holds to that vision and describes it in the same clear voice and cadence of a seasoned actress, despite her 93 years. Thanksgiving should be a day not just for giving thanks for what we Americans have but also for “thankful giving” to those afar who struggle with chronic hunger. It is a balanced internationalist’s perspective: “We Americans give 364 days a year to help the less fortunate in our own country. The 365th day-Thanksgiving Day-should be one day when we give to organizations that relieve and prevent hunger in other countries.” Marsha is even more specific. “We should pass a basket around the table-making sure to give advance warning!-to collect money from everyone, including the children. And the family should together choose which international charity to send their check to.” Marsha sees this custom as good for the family around the table as well as for the hungry poor. “Perhaps this custom will bring families closer together, making them more aware of their good fortune and putting family differences in perspective.”
This year Marsha Hunt celebrates her 75th year in the movie industry (she continued to act in independent films after her blacklisting, her latest film in 2008). And it’s her 60th year as an activist for the poor. She continues to inspire as she stands with confidence and speaks with clarity about her vision of Thankful Giving as a new American custom. She is disappointed that it has not caught on and spread.
I was pleased to tell her that Americans are even more generous to hungry people these days than they were in 1978. While the percentage of the U.S. federal budget going to international assistance is low (far less than 1%) compared to much of Europe and other countries, private giving of Americans to international assistance far exceeds any other nation-on a per capita basis and in total amount. I see so many gifts from donors to Freedom from Hunger that exceed $100 each, and I am astounded every time we receive a check or credit card donation for $1,000 and sometimes many thousands of dollars. For most people, that’s a great deal of money! People may not be calling it Thankful Giving and it may not be happening just at Thanksgiving, but it is happening!
Marsha Hunt is a social pioneer. It is difficult to see smooth progression from an original idea to what we see happening today. People like Marsha have the optimism of a desert plant that produces seeds that may not receive enough rain to germinate for many years. But the rains do come eventually, and then we see the fruits.
Marsha Hunt’s Thankful Giving is a seed waiting for the rain!
Christopher Dunford, Ph.D., President, Freedom from Hunger, has over 30 years of rural development experience in Africa, Asia, Latin America and the United States. Chris speaks and writes for international audiences on the impacts of microfinance, on measurement and management toward social objectives, and on the integration of microfinance with education in small business management and health protection. Freedom from Hunger is an international development organization that brings innovative and sustainable self-help solutions to combat chronic hunger and poverty. www.FreedomfromHunger.org
We are concerned about what’s happening in India. No doubt you’ve seen articles in The Wall Street Journal and elsewhere referring to a microfinance crisis centered in the Indian State of Andhra Pradesh. For counterpoint and perspective from well-informed experts rather than poorly informed journalists, I suggest you check out these commentaries by Niranjan Rajadhyaksha and Beth Rhyne, and for a more in-depth analysis, see the Intellecap white paper.
There is a fundamental paradox in this story-competition for the business of the poor! In summary, microfinance institutions (MFIs) have become “thick on the ground” in Andhra Pradesh and aggressively competitive with the well-established, government-sponsored Self-Help Group (SHG) movement. But jealousy of the upstart MFIs taking clients away from the SHGs is only one driver of government interference with Indian microfinance.
In aggregate, the MFIs themselves have overplayed their hand. Compared to neighboring Bangladesh, microfinance as a social business is quite new in India and less deeply rooted in traditional anti-poverty work than it is in the promotion of microfinance to profit-seeking investors (culminating in the IPO by SKS, the mega-MFI). The new MFIs have created the appearance of being far more concerned about doing well financially than in doing good for clients, community and nation.
Consider this formula for provoking political backlash:
- The “magic of the marketplace” rhetoric of the more prominent commercial microfinance institutions in India is insensitive to the socialist perspective of the Andhra Pradesh state government.
- Indian MFIs charge considerably higher interest rates than the government-supported banks charge on loans to SHGs (entirely justified for institutions aiming to be viable commercial entities without the government subsidies enjoyed by banks-and keep in mind that Indian MFIs are among the most efficient and charge among the lowest interest rates by global standards).
- Add the insult of SHG members going over to the MFIs despite the higher interest rates.
- Sprinkle in a few bad apples, in the form of predatory loan sharks parading as MFIs.
- Allow poor enforcement of standards by the Indian associations of MFIs.
- Provide investor incentives for MFIs to push easy loans to over-indebted borrowers.
- Pressure MFI credit officers to collect loans past due to the point that some officers threaten violence to poor clients who can’t repay.
- Highlight a few sensational stories of suicides by MFI clients (which may or may not have been caused by pressures to repay loans).
The Indian press has had a field day and fostered demagogic political exploitation of the unfortunate situation. It is indeed a crisis. The Andhra Pradesh government has just passed a regulatory law that would effectively shut down MFIs in that state, if it is enforced. For the moment, the MFIs have obtained a “stay” in the Indian courts. But it’s bad! Those who would suffer the most from the collapse of the microfinance industry in Andhra Pradesh are the poorest citizens with the fewest options.
On one hand, the Indian crisis could encourage other governments with socialist leanings (like Bolivia and Ecuador) to lean harder on MFIs (CRECER, our offspring partner in Bolivia, has been under this threat for a couple of years now). The sensationalism or partial ignorance of the global and local press could paint all microfinance with the same negative brush and call into question the whole value of microfinance, maybe even make microfinance out to be a “bad guy” for the poor.
Some commentators even fear there is a global microfinance investment “bubble” about to burst and literally discredit microfinance for the poor worldwide. Such doom-and-gloom ignores the fact that MFIs survived the worldwide recession in remarkably good shape; like the poor they serve, MFIs are remarkably resourceful and resilient in the face of adversity. The “bubble” theorists also overlook the decentralization of microfinance; each country’s microfinance market is quite unique. The troubles in India are unlikely to adversely affect the MFIs in neighboring Bangladesh, much less those in Latin America. The more likely outcome is that microfinance practitioners and their investors and regulators will engage in some overdue reflection on what microfinance can and should do and what it cannot and should not do. But slowing down the spread of microfinance appreciably is improbable, even in India. It makes too much sense, there is too much demand, and it has too much momentum to be stopped in its tracks now.
Introspection in the microfinance “industry” has already created a consumer protection movement to self-regulate the way MFIs treat their clients. The Smart Campaign promotes six principles for client protection, and hundreds of MFIs have signed on to these principles. Implementation of these client protections are the next challenge, but the news from India only strengthens the resolve of MFI leaders to take client protection very seriously in their day-to-day operations.
There is a parallel movement to provide microfinance clients with financial education. Freedom from Hunger and Microfinance Opportunities have teamed up with support from the Citi Foundation to develop and disseminate a “trainer’s guide” for training MFI clients (and the staff who guide them): Consumer Protection: Balancing Rights and Responsibilities. Here are some of the “learning sessions” that MFI trainers can offer current and prospective clients:
- Your Rights and Responsibilities
- Right to Respect, Privacy and to be Heard
- How Much Debt Can I Afford?
- Choose the Best Financial Product for You
- Compare Two Loans
- Two Ways to Calculate Interest Rates
- What to Ask Before Signing a Contract
- Debt-Collection Practices
- A Justified Complaint Benefits Everyone
We all could benefit from such education, don’t you think? While this consumer protection education module is designed specifically to serve the needs of those with very little education, the content is useful to all clients of microfinance.
These efforts to promote better client treatment and also smarter consumer behavior are encouraging signs that the microfinance movement is responsive to criticism where it is due. There’s lots of room for improvement. And those improvements are already in the works. Microfinance will adapt, improve, survive and thrive. The poor deserve that and so much more.
Christopher Dunford, Ph.D., President, Freedom from Hunger, has over 30 years of rural development experience in Africa, Asia, Latin America and the United States. Chris speaks and writes for international audiences on the impacts of microfinance, on measurement and management toward social objectives, and on the integration of microfinance with education in small business management and health protection.
Founded in 1946, Freedom from Hunger is an international development organization that brings innovative and sustainable self-help solutions to combat chronic hunger and poverty. Freedom from Hunger trains and collaborates with 112 local partner organizations to provide value-added microfinance to groups of women. This leverage through collaboration allows a staff of fewer than 50 professionals to offer its programs to more than 2.4 million women in 17 developing countries of Africa, Asia and Latin America. www.FreedomfromHunger.org
My first job in international development was to assist the writing of the Plan of Action to Combat Desertification - for presentation to the first U.N. Conference on Desertification (deterioration of drylands for human use) in 1977. Like all these conferences intended to mobilize global action, we had a global advisory group of distinguished experts to guide the development of positions and documents for the conference. It was a memorable moment when one of them, after reviewing a near-final draft of the Plan of Action, looked me in the eye and said, “Great analysis, but these are the same recommendations we’ve been making for the last fifty years.”
What’s different about the Millennium Development Goals? Why does anyone expect the MDGs to mobilize global action that will make a real difference?
First of all, they are more than a laundry list of unrealistic recommendations to governments, like the typical U.N. conference outputs. They are SMART objectives: specific, measurable, attainable, relevant and time-bound. Take a look at this simplified list of the MDGs:
- Reduce the proportion of people living in extreme poverty by half between 1990 and 2015
- Enroll all children in primary school by 2015
- Make progress toward gender equality and empowering women by eliminating gender disparities in primary and secondary education by 2005
- Reduce infant and child mortality rates by two-thirds between 1990 and 2015
- Reduce maternal mortality ratios by three-quarters between 1990 and 2015
- Provide access for all who need reproductive health services by 2015
- Implement national strategies for sustainable development by 2005 so as to reverse the loss of environmental resources by 2015.
These are derived from the agreements and resolutions of the world conferences organized by the United Nations in the first half of the 1990s (an eighth objective was later added to encourage cooperation between countries both providing and receiving aid). When you think of all the problems in the world that we hear about in the media, this is a surprisingly short list. That is the genius and the courage of the MDGs. They focus on the few changes most likely to make a world of difference.
Second of all, there has been surprisingly widespread and sustained public attention to the MDGs. More than the U.N. or governments, social activists and media have embraced and promoted the MDGs because they set reasonable priorities and insist on getting the job done, and soon. The MDGs are about pressing needs and solutions that we can both feel and think are urgent and doable. We can get our minds around them.
This public attention has pressed aid organizations of all sizes and shapes to show how their work contributes to the MDGs. While Freedom from Hunger’s strategic direction was more or less set a good decade before the MDGs were announced, we quickly embraced the MDGs because our work with microfinance, education and health is focused on the poorest women and families and thereby contributes directly to achievement of the first six MDGs, but especially to the first MDG-those living in extreme poverty are the chronically hungry poor. However, other organizations pursuing other but still important work in international development understandably have objected to being forced into line with a relatively narrow set of objectives. This is the downside of setting priorities for development-important issues don’t make the short list.
In New York, the world just celebrated the tenth anniversary of the announcement of the MDGs in 2000 (hence the label “millennium”). That by itself is remarkable. I’ve never before seen international development goals remembered, much less celebrated ten years later. Columnists in The New York Times, ranging from Nicholas Kristof to Bono (who has proven himself so much more than a rock star), reflected on the value of the MDGs, evidence of progress, and what still needs to be done (yielding to the temptation to offer their personal recommendations).
World observers who take the long view (like 50 years) won’t become lazy cynics just because the goals haven’t been reached and almost certainly won’t be reached on deadline-because there has been real progress. In the world now, compared to the world in the immediate post-WWII decades, far fewer young children die each year from preventable causes, medical care is much more available, per capita food supply has increased despite rapid population growth, and average family size has tumbled worldwide.
Even in the past year, the Food and Agriculture Organization of the U.N. estimates that “the number of people who will suffer chronic hunger this year is 925 million-a drop of 98 million from 1.023 billion in 2009.” Would this improvement have happened without the MDGs? Probably. Will the MDGs be achieved on time? Probably not. Is the world community, including people like you and me, doing more constructive work for the betterment of humanity because of the MDGs? Very likely. Is the world still deeply troubled and flawed? Absolutely. Are people better off than in previous generations? Yes, in many respects. Will people be better off in 50 years? There is a good chance, if we don’t just throw up our hands and indulge in global self-pity.
Remember that optimism is a much more productive state-of-mind than pessimism. And it is easier to be optimistic when we have a short “to do” list that we can believe is SMART. That is the great strength of the MDGs. The prospect that these “goals” won’t be met on time exposes us to the ever-present risk of world-weary cynicism. That is the great weakness of the MDGs. To counter that risk, think of the MDGs like the dashboard of your car. It highlights a few (not all, which would be too confusing) key indicators of the car’s performance-road speed, gas level, engine temperature. Our dashboard is right in front of us (like the media attention to the MDGs), so we are reminded of what is important to pay attention to. And by paying attention to these crucial indicators, and taking the action they demand of us drivers, we are much more likely to get to our destination.
Christopher Dunford, Ph.D., President, Freedom from Hunger, has over 30 years of rural development experience in Africa, Asia, Latin America and the United States. Chris speaks and writes for international audiences on the impacts of microfinance, on measurement and management toward social objectives, and on the integration of microfinance with education in small business management and health protection. Please visit www.freedomfromhunger.org for more information.
Posted by Chris Dunford, Megan Gash and Bobbi Gray Kotara
Freedom from Hunger Research, Evaluation and Monitoring Team, Davis, CA
A discussion has occurred recently in the microfinance blogosphere about the statement Measuring the Impact of Microfinance: Our Perspective, written by leaders of ACCION, FINCA, Grameen Foundation, Opportunity International, Unitus and Women’s World Banking. Bloggers such as David Roodman, Rich Rosenberg, Sushmita Meta and Tim Ogden have skillfully dissected the shortcomings in the statement’s arguments and tone.
As microfinance practitioners with a strong hand in research, we at Freedom from Hunger can sympathize with both sides of this debate. We know the importance of scientifically valid research to make the case for sustained allocation of resources to a development intervention. The philosophy and methods of science have been for centuries the globally accepted convention for knowing what we know with enough confidence to build the modern world.
Freedom from Hunger has led rigorous research-including randomized control trials- and partnered directly and indirectly with research institutions and individuals across the globe to measure the impact of Credit with Education and its variants. The results from these studies have validated some of our claims and failed to validate others. We are challenged to embrace the revealed weaknesses and to reflect with our practitioner partners and take action collectively to make important improvements in our products and services.
However, as fundraisers (apologies to our ‘development’ colleagues who prefer other labels), we know all too well that the phrase “statistically significant difference” does not move the human spirit or open the pocket book, even pocket books controlled by executives of charitable foundations and development assistance agencies. Human beings respond to stories about individual, recognizable human beings; this is part of our DNA. We get excited when the dreary litany of global problems is interrupted by stories of human spirit, determination and progress.
The recent research studies in India and the Philippines seem to conform to best practices of credible impact research, so let’s accept the results for what they are, which are mostly positive and realistic. Alex Kobishyn wrote recently on the India Development Blog (http://www.indiadevelopmentblog.com/) that the organization at the heart of the J-PAL study, Spandana, was pleased with the results of the study, being as positive as they could expect to measure impact over the time frame of the study. Alex says Spandana has incorporated the findings internally and funded a second study to gauge medium-term impacts. If the practitioner at the heart of the study is taking these results in stride, so should the rest of us.
Microfinance loans are a financial instrument to help manage finances, just as are savings accounts and insurance. A person can potentially take one tool and use it to transform her or his life and that of a whole family, even a community. We have stories to “prove” the possibility, but other stories (like the financial diaries presented by Portfolios of the Poor) show that such transformation is not the case for all. Isn’t that to be expected? To reiterate what the researchers from IPA and J-PAL themselves have said in response to the media (on the Nicholas Kristof blog http://kristof.blogs.nytimes.com/2009/12/28/the-role-of-microfinance) “microcredit seems to have delivered exactly what a successful new financial product is supposed deliver-allowing people to make large purchases that they would not have been able to otherwise.”
Scientific truth is the aggregate of claims left standing after repeated attempts to falsify them. That’s what scientific research does, falsify claims-or not. The claim that microfinance very often helps poor entrepreneurs and households to manage cash flow and smooth consumption has not been refuted by research to date. But these impacts seem quite modest compared to the grander claims of microfinance enthusiasts. The point of Our Perspective seems to be that stories about individual people and families tell us that these seemingly modest impacts really make a positive, even a major difference in the lives of the poor, at least some of them. Stories are observations or data points like any other. But what are their limitations? We should ask some questions about them.
Are we hearing the whole story of this individual or that family? What else is happening in her or his life? An advantage of the financial diaries and similar “story” collection methods is that we are more likely to capture the whole complex story by more in-depth and comprehensive observation and questioning than we do through either client interviews for fundraising communications or quantitative surveys with highly structured questions and response choices.
Is this story typical or atypical? We would know the answer if the people featured were randomly selected from the microfinance clients rather than cherry-picked. This is not so hard to do. Think how interesting it would be to have a fairly large number of stories from a representative sample of clients, households or enterprises. If we could report that 70 percent of these cases showed a positive trend (however that may be objectively defined), 25 percent showed no meaningful change in their lives, and 5 percent have fallen backward, that would be a powerfully positive indication of the value of being a microfinance client.
But is the microfinance participation what causes the positive change? Here it gets complicated. The dreaded RCT (randomized control trial) enters the scene like an unwelcome auditor who takes too much of our time, costs too much money and even disrupts our operational plans. But that is what is needed (in some form) to really answer this question. Notice, however, that the evidence can still be in the form of a qualitative story analyzed for positive or negative trends. The debate is not between quantitative vs. qualitative research. It is over the value of evidence from studies where research “subjects” have not been randomly assigned to get the “treatment” (micro-loans, for example) or the “control” (no micro-loans). It is this awkward random assignment of the “treatment” that allows us to know if we can “attribute” improvements in lives to microfinance participation (or whatever is the “treatment”). Ugh! What a pain. But it’s got to be done, and done well, at least a few times in different situations before we can say our claims of positive trend are supported (more accurately, not refuted) according to the globally accepted convention.
Let’s be clear about something very important. There are various levels of “knowing” the value of microfinance or any other development intervention. We cannot ignore the personal experience of development practitioners who have decided that microfinance is worth their time and effort. Not all of us were born thinking positive thoughts about microfinance or trained from professional adolescence to do nothing but microfinance, and therefore we do not have a vested interest in microfinance being the “silver bullet” against poverty. Many of us have decades of experience in fieldwork with the poor. Perhaps we’ve seen disheartened agriculture extension agents who could not persuade farmers to adopt new technologies that would assure enough food for the family throughout the year. Perhaps we’ve noted that mothers bring their kids into primary health care clinics only when they are far-gone with preventable illnesses. Perhaps we’ve trained budding entrepreneurs for months only to see their businesses flounder in the face of competition. Perhaps we’ve looked into grateful but discouraged faces and wondered what, if anything, might engage the poor in their own development. And then perhaps we saw a group of women come together in mutual support to borrow or just save for their own purposes, at first very uncertain and then over time getting more and more self-confident and evincing a palpable sense of hope, opening up to possibilities like flowers opening to the sun.
You will have to forgive us for knowing that something different was happening, something definitely worth investing time, money, even careers in. We at Freedom from Hunger know very well how difficult it is to capture with the methods of science this transformational experience we can see with our own eyes-not in special cases picked out for fundraising collaterals, but over and over again as we visit and talk with more and more of these participants in microfinance. This difficulty reflects an inadequacy of method rather than a lack of “evidence” in the broader sense of the word. We researchers have to try harder and more often to capture this more complex and elusive reality.
Any serious practitioner of microfinance gets out to visit microfinance clients and would-be clients, and even people who can’t be bothered with microfinance, and thereby knows microfinance is no magic bullet. Very poor women are not leaping up and out of poverty in droves. We can see this is not happening with frequency. They are just better off in small but significant ways-practically significant, even if not statistically significant. We also know that microfinance practitioners are not equal in their methods and, therefore, the results for their clients. And any journalist or marketer worth the name would get out there and see this, too. It is just an act of naiveté to buy the hype of microfinance enthusiasts carried away by the relief of having found something, anything that makes a real difference for the poor, and then to get upset when awakened to the more modest but still encouraging facts on the ground.
Everyone, let’s get real here! The research to date is not telling us to abandon microfinance but to learn from experience and improve products, systems and practice. The recent studies both validate some claims and reveal weaknesses in others. The results, and the various public responses to these results, remind us to keep on innovating and learning how to do better microfinance, better research, better marketing communications and better journalism.
Celebrate Freedom from Hunger Day with us by helping women win life-saving victories against chronic hunger and build healthy lives for their children. Today, September 28th only, every gift will be matched 3 to 1. For example, today your gift of $25 grows to $100!
To continue our celebration, for the next 30 days two generous donors will continue to double every dollar you give.* Think of how many lives your contribution will improve and potentially save!
*Thanks to two generous donors, total donations up to $58,000 will be matched 3 to 1 for today only.