Innovative approaches to providing greater numbers of microentrepreneurs in the U.S. with high-quality financial and business development services are the focus of "Findings from the Scale Academy: Innovating to Scale," a recent report from the Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination (FIELD) through the Aspen Institute in Washington, D.C.
The emergence in the mid-1980s of microenterprise in the U.S. sparked new thinking in workforce and anti-poverty strategies: help people start their own businesses, work toward economic stability and, in some cases, create job opportunities for others.
With the field having since demonstrated its potential for supporting those goals, many of the country’s microenterprise development organizations continue on a path of innovation. Some, such as those participating in the Mott-funded Scale Academy, are modeling strategies to “scale-up” the sector’s capacity to help more microentrepreneurs enter and succeed in the nation’s marketplace.
Mott, a longtime funder in the area of microenterprise, has made grants totaling $14.5 million to Aspen for micro-related work since 1990. That support includes $1.7 million since 2006 for the Academy, a project of FIELD, and reflects the Foundation’s interest in issues of workforce development.
Some of the innovations profiled in the report reflect incremental changes in existing processes. These include making it easier for loan applicants to navigate lending procedures or modifying the job duties of loan officers so they can focus more on building client connections.
For example, ACCION USA – a microfinance lender based in New York and a Mott grantee – has streamlined and strengthened its overall lending process by helping potential borrowers to better understand their credit scores and the loan amounts for which they are likely to qualify.
The lender is also: improving its online application tools; providing borrowers with more credit education resources; and building continuous improvement by tracking customer complaints and issue resolutions.
The result: higher-quality services available to greater numbers of microentrepreneuurs.
Innovation at the system level is also found at ACCION New Mexico-Arizona-Colorado, where loan officers are paid, in part, according to their ability to meet monthly lending targets and work with borrowers to keep their loans in good standing.
This incentive-based program, coupled with training, “has created a culture within the lending staff that focuses on sales and on maintaining client relationships,” notes the report author and FIELD Director, Elaine Edgcomb.
Other innovations highlighted in the report reflect the launch of new products or services, such as loans that help clients build a credit history or distance learning opportunities provided over the Internet.
That approach is evidenced by the microlending organization Justine PETERSEN, based in St. Louis.
Without a favorable credit history, the chances of a potential microentrepreneur qualifying for a loan are slim, notes Sheri Flanigan-Vasquez, the organization’s chief operating officer.
The staff at Justine PETERSEN responded to that “catch 22” by developing strategies to reach more clients through credit-building products and services, such as loans, secured credit cards and financial coaching.
The results, says Flanigan-Vasquez, have been impressive.
“For someone who has no credit score, we’ve seen them significantly increase their credit score over a very short period of time,” she notes.
These and other examples of innovative thinking outlined in the report reflect the diligence with which the microenterprise field is “increasing the number of clients the programs serve, which is the ultimate goal,” notes Edgcomb.
“The strategies represent a toolkit of ideas and recommendations that we hope people will think about and select the ones that are most appropriate to their kind of program, their market and what they’re trying to achieve,” she said.