Women Helping Women

A LITTLE MORE than two years ago, El Cajon resident Elsa Urzua, an aspiring jeweler, was not exactly what a commercial bank would have labeled a good applicant for a small business loan. Credit? She had none. A detailed business plan? No, Urzua doesn’t even speak English. Collateral? Nope. She and her husband and their three children were barely getting by, doing what they could to pay the rent on their small apartment.

But she was the perfect candidate for a microloan from the San Diego–based Foundation for Women.

“Everything a bank does, we do the opposite,” says Deborah Lindholm, the nonprofit’s founder. Lindholm is among the American pioneers championing a lending model that first appeared in India in the mid-1970s—one that involves bringing a “village” bank to the world’s poorest and lending them small amounts of money (by commercial standards, anyway) and giving them a chance to make something of themselves. The Foundation for Women, like many organizations that have set up microlending banks, expects the loans to be repaid in weekly installments, with interest. Her foundation goes one step further by requiring a contribution to a savings fund. When the women pay off their initial $250 loan, they’ve not only made good on their debt, they’ve also set aside $125 in savings.

The savings aren’t often tangible until the clients see it with their own eyes, says Elena Cruz, microcredit director of the foundation’s San Diego efforts. “We don’t have a savings culture yet, so it doesn’t click,” says Cruz. “At the end of the [loan] cycle, the women will say, ‘Why are you giving me this money?’ ”

The push to help San Diego’s poorest is relatively new for the foundation, which kicked off in 1997 and opened its first microlending program in Tamil Nadu, India. It also has lending programs in South Africa, Zambia, Niger and Liberia. The foundation serves 80,000 clients, 50 of them in the greater San Diego area (El Cajon, Chula Vista and North Park). Cruz is hoping to double the local numbers by year’s end.

When Lindholm, who holds a Ph.D. in clinical psychology, talks about microcredit she sounds as giddy as a beauty-pageant contestant. Except she really is helping solve world poverty. A decade ago, microlenders came together in a world summit and committed to a nine-year goal of reaching 100 million people who live on less than $1 a day. Those nine years ended in 2005, and next month, the microlenders will gather again to find out whether they hit their goal—and to make new ones.

“We will not know the final numbers until November, as we are still gathering data,” says Sam Daley-Harris, director of the global Microcredit Summit Campaign. “We estimate more than 100 million loans were given by 2005, but that the goal of 100 million poorest people receiving loans will be reached one to two years late.” The discrepancy comes from the fact that many of the borrowers come back for more and increasingly larger loans.

THE NUMBERS HAUNT Lindholm: Half the world’s population survives on less than $2 a day, and half of those people live on less than $1 a day. Prompted by a midlife divorce, she had an epiphany upon hearing the statistics and learning how microcredit is one powerful weapon in the war on poverty.

“I love talking about this so much,” she says. “It’s not the end-all to solve all poverty. But it’s one amazing methodology. For women, it’s really outstanding.”

As suggested by its name, the Foundation for Women lends only to women. “Women pay their loans back. Men don’t,” Lindholm says bluntly. It’s not just a feminist talking point. The foundation has lent money to men—well, boys, actually—in South Africa. The effort there is to target the teenage head of household in families where both parents have died, most often from AIDS. The teenage girls have a stellar microcredit repayment rate: 100 percent. The 17 boys who’ve been given loans have a payback rate of 40 percent. Overall, the Foundation for Women experiences a 98 percent payback rate, with 100 percent loan repayment from the 50 San Diego–area clients.

Wall Street has taken notice. With some microlenders charging up to 20 percent interest (the Foundation for Women charges from 15 to 25 percent, depending on the going bank rate in the country in which loans are made), they measure up to a solid investment vehicle, according to the Wall Street Journal. Investment firms are marketing securities that are similar to bonds and are backed by the microloans. Annualized net returns are expected to be as much as 5 percent for debt funds and up to 10 percent for equity funds, which give investors shares in the microfinance institutions.

Keen market watchers may have also noted the term “microcredit” coming from Microsoft’s Bill Gates earlier this summer, after investment tycoon Warren Buffett announced some $37 billion would go to the charitable foundation Gates runs with his wife, Melinda. Most of the flurry of news articles that appeared in the wake of the record-breaking donation mentioned microcredit only in passing, while going into more detail about the Gates’ desire to fund health initiatives, education, research and agriculture projects. But it didn’t escape Lindholm’s eye.

The Foundation for Women hasn’t reached self-sufficiency as a lender yet, and it still depends on donations and grants (it takes $25,000 to start a village bank). In the spirit of her grassroots focus, Lindholm is hoping to get 10,000 people to commit to saving a dollar a day for 100 days and then giving it to the foundation. The campaign, initially launched on Mother’s Day, was slated to re-launch at a September 29 luncheon. And she will relaunch it twice a year until the goal is reached—“until I can show up at Melinda [Gates’] doorstep and say, ‘I raised my million dollars. I’m ready for my match,’ ” she says.

Lindholm is part of a contingent of eight from her foundation who will be on hand next month at the global summit in Halifax, Nova Scotia. “When people who are so enthused and excited about this work get together, the energy is just so electric,” she says.

MEANWHILE, Elsa Urzua’s business continues to grow. Prior to receiving her first $250 loan, jewelry was something of a hobby she did for friends and family. She used lower-quality silver and imitation gemstones. The loans—she’s completed three now and is the midst of paying back another $1,000 loan—enabled her to buy better-quality materials. The 45-year-old now sells her pieces, ranging in price from $18 to $70, at street fairs and art festivals. And she owns her own mobile home, where she keeps a very organized workshop.

Urzua meets weekly with other borrowers, like her former neighbor who first introduced her to microcredit. They make their payments, hear of new opportunities to ply their wares and give general support to each other. The foundation goes beyond the financial, offering weekly yoga classes and even feng shui tips for decluttering. After completing a handful of lending cycles, the organization refers its clients to a regular lender so they may establish the underpinning of the American Dream: real credit.

Urzua plans to follow in the footsteps of the first San Diego Foundation for Women clients to cross over into the commercial mainstream. She dreams of opening a tiendita (little shop) in a strip mall. “In the program, they really help me restore my spirit and make me feel secure,” she says.

Do you like what you read? Subscribe to San Diego Magazine »