Katalysis Partners Convene in Silicon Valley: An Exploration of the Future of 'Bootstrap Banking'

(from left) Michael Chertok, Eloisa Acosta and Marcos Hernandez

Will Morgan talks with Abelardo Perez about the Katalysis strategy

In February 2004 microfinance leaders from Central America convened in Silicon Valley for a roundtable discussion about grassroots organizations that offer small loans to poor entrepreneurs. Hosted by the Skoll Foundation, this event included dialogue with staff from several organizations, including eBay Foundation, Community Foundation Silicon Valley, Hewlett Foundation, Philanthropy Workshop West and Social Change Consulting. This special event focused on analyzing the opportunities, challenges and trends in the field of microfinance in Central America.

The Katalysis leaders are part of a worldwide microfinance movement that aims to help impoverished, start-up entrepreneurs become economically self-sufficient. This "bootstrap banking" approach, originated by Muhammad Yunus in Bangladesh, has been replicated in 58 countries, lifting 67 million people out of poverty.

The 11 microfinance institutions which work together through the Katalysis Partnership make loans ranging from $49 to $400 to micro-entrepreneurs in Nicaragua, Honduras, El Salvador and Guatemala. They have been in operation from nine to 15 years and all are self-sustaining. Loans made during 2003 went to 87,000 borrowers and totaled $28 million.

Among the microfinance trends discussed at February's roundtable were:

Jerry Hildebrand

Jerry Hildebrand, president and CEO of Katalysis in Stockton, Calif., said, "The tool we are using to change people's lives is microfinance. These are not gifts; they are loans which are repaid with interest. The repayment rate on loans made through Katalysis partners is a healthy 97 percent."

Collectively, the 11 organizations in Katalysis give 68 percent of their loans to women, and five of them give 75 percent or more of their loans to females. Hildebrand explained that more than 50 percent of women in the areas Kalaysis serves are single heads of household, and they don't have the same access to credit that men do. The have all the responsibility for the family and little access to opportunity.

"With $200 or $300, a woman with a small store can make the inventory grow and increase her opportunities of selling," he said.

The rich dialogue that was sparked at this roundtable event will be continued online at Social Edge (www.socialedge.org), the online community for social entrepreneurs. Please join the Social Edge community today as participants discuss:

Christy Cory (left) chats with Jutta Von Gontard

• Are these trends outlined by the Katalysis Partners consistent with global trends in microfinance?
• Are any of these experiences different within specific Central American markets?
• What are the challenges to sustainability for organizations in this industry?
• What other market-led products and services are out there?

The luncheon meeting was hosted by the Skoll Foundation (www.skollfoundation.org), which has made financial contributions to support Katalysis programs. Skoll's mission is to advance systemic change to benefit communities around the world by investing in, connecting and celebrating social entrepreneurs.

For more information about Katalysis, see www.katalysis.org, send an email to information@katalysis.org or phone (209) 943-6165.

Contact:
Terry Nagel - Skoll Foundation
media@skollfoundation.org