Tuesday, July 27, 2010

Summer Reading: Banker to the Poor

Muhammad Yunus’ book traces the start of the now international Grameen (village) micro-lending program in Bangladesh. It has three vital lessons for nonprofit leaders.

1. Never underestimate the value of a small amount of resources in the right place at the right time. The people Yunus started serving with mirco-loans made the equivalent of two cents a day.

2. Never forget your mission. As micro-lending became perceived as successful, Yunus received many opportunities to lend money to people who were poor, but not necessarily the poorest of the poor. Yunus remained focused on his goal to serve the lowest 25 percent of the population.

3. Never forget to shape your requests to donor and others in packages that help them “see” your needs in ways they can appreciate. At one point working with the Central Bank, Yunus sought to develop a housing loan product. The Central Bank declined these since a house constructed from a $125 loan would not add to the country’s housing stock. Next, Yunus requested a “shelter loan.” This too was rejected. Finally, Yunus asked for a “factory loan” since the borrowers worked as entrepreneurs from their homes. With the assistance of the Governor of the Central Bank, Yunus received permission to begin his loan program.

For other reading suggestions see Recommended Reading.

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