Microfinance Brigades FAQ
What is the objective of Microfinance Brigades?
The objective of microfinance brigades is the establishment and growth of community owned savings and loan institutions that will stimulate the local economy and foster micro-enterprise growth. This would then raise the overall living conditions for the community and provide Global Brigades communities with a long term development solution.
What are the major needs the program is addressing?
The goal of Microfinance Brigades is to promote economic growth in a community to impact all other facets of development. Why can’t these people afford preventative care or nutrition, which would lead these kids away from medical brigades? Why can’t they afford to buy pure water instead of drinking from the same river people wash their dirty laundry in? Why can’t they afford to construct for themselves some basic sanitation? Wherever people are clearly not capped by their work ethic or ability, but solely by their location of their birth, this is when microfinance is needed.
Who gets involved in Microfinance Brigades?
Although many finance, economics, and business students have participated in MFB’s, students and volunteers of all kinds are able to participate on the brigade. Like all great ideas, microfinance is beautiful in its simplicity. Passion and dedication are the most important requirements for our brigaders.
How much Microfinance experience do volunteers need?
None at all. In fact, this is exactly what the program was designed for- to provide the tangible representation of the development theories learned in the classroom. It’s an experience that is designed as a lesson in itself.
What does the Program Lead do to prepare for a Microfinance Brigade?
Microfinance is all about community participation, and the brigade represents this. The community bank and its board work with the Program Lead to coordinate in-house visits with potential borrowers, and to create agricultural activities demonstrating community members’ way of life. Program leads work with brigade coordinators in brigade prep to make workshops and come up with a potential focus for the brigade, whether that is savings, membership or simply community awareness.
How are projects/communities chosen?
We concentrate on communities with an established Global Brigades presence, in order to take advantage of our already established reputation. Community leaders have even contacted the MFB program to establish the program in their community. From there, we use the excellent data collected by our research and evaluation team to choose a new community based on economic need.
What does a volunteer do to prepare for a Microfinance Brigade?
The pre-departure packet contains a number of additional resources covering a number of subjects relevant to microfinance in Honduras or Panama. Reading these to attain a basic understanding of the concepts in microfinance is highly recommended. Also since microfinance is all about community interaction, some rudimentary Spanish vocabulary is useful on the brigade as well, although not required. Each brigade will be assigned a topic to focus on along with an education manual to prepare workshops and activities with the community. With the topics a group is assigned, it is recommended that brigaders prepare workshops/activities, posters and signs for our week ending community event, surveys for data collection in the community, and questions on our model/for our presenters.
What does a community do to prepare for a Microfinance Brigade?
The community bank and its board work with the Program Lead to coordinate in-house visits to potential borrowers, and to create agricultural activities demonstrating community members’ way of life. They also fit their brigade in around their daily work schedules, and commitments to other global brigade disciplines present in the community.
What does a student do on a Microfinance Brigade?
The basic itinerary for a student on a microfinance brigade is designed to a) establish an intellectual and emotional bond to the community and b) demonstrate firsthand the effects and possibilities of microfinance. To accomplish this, students will be visiting homes and farms to learn about the agriculture and finances of potential borrowers, meeting with the Caja Rural (community bank) on a daily basis, learning about various microfinance models from presenters, and a number of interactive activities designed to educate the students on community life.
What does the community do on a Microfinance Brigade?
Microfinance prides itself on involving the community in the process. Whether it is opening up their homes to foreigners or freely discussing their personal finances, community members must develop a special level of trust with Microfinance Brigaders. The community may also cook food for brigaders and provide the brigaders with educational agricultural experiences. Finally, the community bank members are crucial in mobilizing the rest of the community’s involvement in our week-ending event.
How is the Caja Rural (community bank) formed and who oversees it?
In our model, community members themselves are the ones running and owning the community bank. Global Brigades staff train them and provide technical assistance. A dedicated committee within the community banks board is in charge of collecting loan payments.
How are payments on loans made?
Small communities usually lack access to electricity and are therefore unable to process credit transactions. All bank transactions are done using cash.
If there is a failure to pay, how are these defaulters being actively pursued and by whom?
The aforementioned committee is in charge of collecting on payments. Default is rare, and defaulters are pursued by house visits, fines, collection of collateral (livestock, etc.) and public declaration.
Who are the guarantors of the loans? Who is conducting all of the underwriting?
Loans will either have cosigners or collateral backing them. There is no formal underwriting process in these small communities.
Do we act as a caja ourselves or are we acting through one already set up?
Global Brigades supports the community bank. Any additional funding provided to the community will go through this structure.
Approximately how many caja rurales exist in Honduras?
Approximately 650 exist as of June 2010.
Who are the major players (MFIs) present in Honduras?
WorldVision, Procredit, FINCA and FUNDER.
How many households will a group of brigaders get to visit in a one-week brigade?
On a one week brigade, a typical brigader will visit six households.
Will the home visits entail a tour of the farms or just time to ask the family members questions about their farm/business?
Typically both. It all depends on the relationship and comfort the volunteers build with the household member. It cannot be approached as an awkward inspection; it should instead be a proud display of generational work for the community member.
How will volunteers participate in funding a caja rural?
Volunteers will be funding the caja rural as a whole. $100 from each volunteer’s Program Contribution is allocated to the Program Fund. At the end of the week, the volunteers work with their Coordinator to determine if the Program Fund should be allocated towards general capital in the Caja Rural or to a more specific cause. This allows for a) a respect for the autonomy of the Caja Rural, which is community owned and operated and b) volunteers to fund overall caja projects (such as caja businesses) or make recommendations which cover our entire investment.
What type of consulting opportunity is available for volunteers?
Upon first house visits, volunteers have a couple of hours to quickly assess the family’s household income and expansion opportunities. As the Caja matures and community members repay loans, more advanced week-long consulting becomes an option for those farther along in their financial development.
How many community members will a volunteer meet during a typical brigade?
Including household visits, meetings with the Caja Board, and the community meeting, brigaders can typically expect to meet about 75-100 community members.
What are the greatest barriers for getting community members to save, to qualify for a loan and to take a loan?
1) Credibility – getting community members to buy in to the fact that their neighbors they grew up with are now qualified to hold, manage and grow their funds.
2) Knowledge – community members are used to instant transactions, the concept of interest, payments are foreign. Also, there are plenty of preconceptions about who exactly is benefitting.
3) Collateral – given that house records are rare and tangible goods such as livestock are also uncommon, savings and or a cosigner are often needed.
4) Initial Loan Size/Term – agricultural loans are larger scale and longer term than the caja can initially provide with its startup capital.
What does a student do to prepare for a Microfinance Brigade?
For all brigade planning tools, volunteers should visit the Volunteer Resource Site. For Microfinance Brigades specifics, please see "What to Expect on Your Microfinance Brigade." Be sure to reference the Microfinance Pre-Brigade Curriculum.
Is there a minimum or maximum number of volunteers for groups?
For University Chapters, there is a minimum 15 volunteers. To fairly serve a community’s needs, this number is non-negotiable. There is no maximum volunteer number. Non-University Chapters- please contact email@example.com.
Where do the funds I raise go?
Your in-country costs are split between several areas such as food, lodging, transportation, and staffing. The complete breakdown can be seen here.
Is this safe?
The safety of the student volunteers is Global Brigades’ number one priority and is the single most important consideration when entering a community or choosing a project. Each country that Global Brigades serves in has implemented safety protocols and policies to decrease any risk of danger and to ensure that any emergency can be properly handled in a prompt and professional manner. For more information on safety precautions, emergency procedures and insurance information, please visit Safety and Insurance on the Volunteer Resource Site.
This sounds great. How do I get involved?
First, find out if your school has a Microfinance Brigades Chapter by searching for you school here. If your school does not have a Chapter, click here to fill out an interest form. You will be connected with a Chapter Advisor.