> Posted by Michelle Romeu
In her most recent Huffington Post blog, Elisabeth Rhyne explores the efforts of Martín Burt, founder of Fundación Paraguaya, to bring each of his clients out of poverty by leveraging the same social collateral we use in microfinance group lending. By allowing clients to assess each other’s progress out of poverty he empowers clients to change their lives in a new and innovative manner.
While academics from prestigious East Coast universities are developing randomized trials to test the impact of microfinance on poverty – and coming up only with modest-sounding results, Martín Burt, the founder of Fundación Paraguaya , is making a bold leap. Not content to measure poverty impact, or even to alleviate poverty, Burt thinks he can get every Fundación Paraguaya client out of poverty. His secret? Tapping the energy of the clients themselves.
Martín Burt is a microfinance pioneer. He started Fundación Paraguaya in 1985 as a micro-lending affiliate of Accion, and he built it to acclaim as a top-performing microfinance organization (including the InterAmerican Development Bank best microfinance institution award in 2004). After a brief foray into politics–a term as mayor of Asunción–Burt came back to Fundación Paraguaya with a broad social focus at a time when much of microfinance was exclusively narrowing in on financial services.
Burt contends that the most important contribution of microfinance to development is not so much what it provides but how it operates. Microfinance showed that institutions assisting the poor must become financially self-sustaining if they are to have scale and permanence, two qualities necessary for significant impact on global poverty. Just as important is the way microfinance treats clients – the poor of the world. It treats them as capable people who can be agents of their own development. It supports them in their own efforts toward a better life – the proverbial hand up, not handout. Burt applied this philosophy in developing a model agricultural high school serving students from disadvantaged families in rural Paraguay. The school operates without external subsidy, financed through sales of student-grown and processed products.
Recently, Burt turned his fertile social entrepreneurship imagination to the foundation’s group loan clients. They seemed to benefit from their access to Fundación Paraguaya loans, but rarely crossed the line out of poverty, and this bothered him. Read more >