John Hatch has devoted his life to waging a war on poverty. His most potent weapon? Village banks that are managed by and for local communities. FINCA (Foundation for International Community Assistance) oversees a network of 24 country programs and 16,000 village banks that have worked with more than 600,000 families. Last year, FINCA granted loans worth $100 million.
Founder and director of research, FINCA International Inc.
FROM JOHN'S ORIGINAL ENTRY:
Tell us what you do (or what your team or organization does) and the specific challenge you faced.
A quarter of the world's population or some 3 billion human beings currently subsist on a per-capita income of less than $1/day, which is the World Bank's benchmark for severe poverty. As a result, each year worldwide an estimated ten million children die from chronic malnutrition and hunger-related disease, while most of those children who survive to adulthood will live lives blighted by continuing food insecurity, illness, illiteracy, and hopelessness. How can we end this silent atrocity, this colossal social injustice? If the mothers of these children—through self-employment—were able to increase family income by an extra $1 or $2/day, with a tenth of these earnings set aside for savings, they could not only keep all of their children alive, healthy, and in school but in so doing create the momentum for escaping poverty altogether. In 1983 I was inspired to make it my life's purpose to address this challenge. In so doing I have helped grow a world movement that has already benefited tens of millions of the world's poorest families.
What was your moment of truth?
It was early evening on a flight to Bolivia in February 1983 and I was slowly getting drunk on the airline's complimentary liquor. I had been contracted as a consultant to the Agency for International Development (AID) to design a relief program for dealing with a 3-year drought emergency. Already 14 hours had passed since leaving New York, I was still searching for a project strategy that would allow Bolivian villagers to determine their own family or community solutions to the crisis. God waited until I had finished two double-bourbons before he dropped the epiphany on me. A flow of energy suddenly coursed through my body. It carried a boldly simple concept—not just emergency loans to families, but each village having its own bank, managed by and for the villagers themselves. Suddenly cold sober, I grabbed my notepad and calculator to harvest as much of this flow as I could. By the time my plane landed in La Paz less than an hour later, I had created several pages of notes, numerical estimates, a draft visual aid, and a total commitment to what would soon be known as "village banking." The next day I passionately sold the concept to AID as if my very life depended on its acceptance. AID not only accepted my verbal proposal but immediately agreed to invest one million dollars worth of Bolivian pesos on its execution. Within the next five months later my consulting firm—destined to evolve into a nonprofit agency known as FINCA—had created 433 village banks benefiting over 32,000 Bolivian families. (The exact date? 2/15/1999)
What were the results?
By giving village banking workshops to dozens of other nonprofit organizations, and by widely circulating my village banking manual, this sharing of technology is what gave village banking the legs it needed to expand quickly. So while FINCA today manages an impressive network of 24 country programs, 16,000 village banks, and has benefited over 600,000 families, there are also another 300 village banking programs that have been created by other nonprofit agencies to benefit several million clients in 60 countries. Beyond that, the local self-management principles on which village banking is based have found their way into the self-help group (SHG) movements of Nepal and India, benefiting about ten million low-income families. In turn, the village banking and self-help movements have merged with those of other methodologies—notably that of the Grameen Bank of Bangladesh—to create an overall world microfinance industry that now includes some 10,000 practitioner agencies and is reaching an estimated 59 million families worldwide. Capitalism-from-the-bottom up is alive and well.
What's your parting tip?
I now believe all inspiration comes from God, it is meant to be shared, and it demands total commitment to succeed. When that happens, Providence acts too.