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Social Capitalists: EcoLogic Finance

43 entrepreneurs who are changing the world
2007 Social Capitalist Winner

EcoLogic Finance

Cambridge, MA
Year Founded: 1999
Executive director: William F. Foote
www.ecologicfinance.org
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EcoLogic Finance provides fairly priced credit and financial education to community-based businesses that promote grassroots economic development and environmental stewardship in Latin America, sub-Saharan Africa and Southeast Asia.

As a social investment fund, EcoLogic Finance serves Small and Medium Enterprises (SMEs) rooted in rural, low-income communities of the developing world. Through our activities, we help our clients develop the skills, the track records, and the relationships required to commercialize high-value products and, over time, become "bankable" customers of mainstream financial institutions.

EcoLogic Finance manages a portfolio of $25,000 to $750,000 loans made to SMEs that do not meet traditional requirements for accessing credit from local financial institutions. Preference is given to businesses that demonstrate the ability to provide meaningful employment and significant increases in household income to disadvantaged groups, especially small-scale farmers, women, and indigenous people; are located in and around protected terrestrial, coastal, and marine habitats; show potential for local self-determination through worker-owned and managed enterprises such as rural cooperatives and producer associations; and are unable to secure financing from conventional commercial sources due to their small size, lack of collateral or operating history, and the financial risks associated with the locale.

In doing so, EcoLogic Finance uses lending as a tool to harness the existing entrepreneurial energy in isolated rural communities, enabling conservation and encouraging socially responsible business practices.

EcoLogic Finance was born from the premise that the greatest threat to fragile ecosystems worldwide is massive human poverty--and it strives to relieve both problems through innovative lending. Throughout the developing world, rural villagers living in critical ecosystems often pursue moneymaking strategies that can irreparably damage both the natural environment and their future economic prospects. Clear-cutting of rainforests, which depletes the soil, is a familiar example of this.

Fortunately, thanks to the rapidly growing world market in "green" food products such as shade grown and organic coffee and cocoa, more and more disadvantaged farming communities are rediscovering the wisdom of "sustainable" crops. Yet just as they prepare to make this crucial transition, another barrier often thwarts them: their lack of access to affordable credit.

Too large for microfinance agencies and too small to be considered "bankable" by commercial banks, producer organizations cannot borrow the money they need to grow their businesses, invest in new equipment or merely survive the cash-less gap between planting and harvest time. Their dilemma: to follow more immediately certain but painfully unsustainable approaches, like clear cutting, or to suffer usurious loan rates from local middlemen.

EcoLogic Finance has established an important presence in the rural credit market through its highly successful lending model and strong supply chain relationships. Since 2000, EcoLogic Finance has provided over 250 loans with a gross value of nearly $45 million in support of more than 125 rural enterprises across 12 Latin American countries, six sub-Saharan African nations and two Southeast Asian states. Ninety-nine percent of our loans have been repaid.

EcoLogic Finance further develops local workforces through EcoLogic Finance for Education, a program that strengthens producers' financial management capacity and basic business skills.

With strong results and innovative alliances with government agencies like USAID and the InterAmerican Development Bank and private industry partners such as Green Mountain Coffee Company and Starbucks, EcoLogic Finance has received the following awards: Fast Company/Monitor Group Social Capitalist Award 2007; Boston Business Journal's "40 Under 40" Award, 2006; World Business Award in support of the Millennium Development Goals, 2006; Yale S.O.M.-Goldman Sachs Foundation National Business Plan Competition, June 2005; Skoll Award for Social Entrepreneurship, March 2005.

To learn more, visit our web site or call 617-625-7080.