Savings Groups Help Low-Income Families ‘Put Their Money to Work’
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When a financial advisor says, "Put your money to work for you," stocks, index funds, high-yield CDs and other investments probably come to mind.
But what if you had no access to E-Trade, Charles Schwab, or even a neighborhood bank? What if the closest financial institution wouldn't even accept your deposit? Or what if the fees for setting up an account and making deposits outweighed the benefits of using such services?
How, then, would you "put your money to work"?
The answer for many women and men in rural, under-served communities across the developing world is "by participating in savings groups."
Last week, Julie Zollmann, an associate at Bankable Frontier Associates, gave a talk at CGAP headquarters in Washington D.C. about a financial diaries research project that she headed up in Kenya. Julie and her colleagues recorded detailed financial transactions and tracked the habits of 300 low-income families in both urban and rural communities in Kenya.
Their meticulous research showed that these individuals – many of whom are micro-entrepreneurs – are quite active money managers. They are always looking for ways to put their money to work, and savings groups are among their favorite tools.
"Most...saving was quite intentionally pushed into financial assets—like savings groups—where it could not be immediately withdrawn," Zollmann writes in a blog post for CGAP's website.
"These kinds of devices are playing an important role in the portfolio, helping money build up into useful, investible sums. And, most of the time, they are also playing an auxiliary function. This money, our respondents told us, is not just sitting there – it is working. While the respondents have a future claim on those funds, they serve another purpose in the immediate, such as enabling a loan or enabling a friend or neighbor to invest today. Money that just sits around idle under the mattress—even in a bank account—is seen as wasted."
Video Q&A: For Every Micro-Entrepreneur Served by Five Talents, 7 People Benefit, on Average
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Editor's Note: This is the third in a series of blog posts featuring Q&A videos with Five Talents President and CEO Sonia Patterson. Click here to watch the first and second videos in the series, which addresses questions pertaining to Five Talents, our partners, our approach to financial inclusion and microfinance, and our impact in some of the world's most under-served communities. The videos were generously produced for Five Talents by the Giving Library.
Five Talents tracks the impact of its programs by looking at a range of data that we gather from the women and men in our savings and loan groups. This information includes the number of jobs that have been created, the number of loans distributed and repaid, and the amount of money that has been saved.
But there are other metrics that show how our programs are strengthening the fabric of the household and the greater community over the long-term. For example, we survey program participants about the number of people for whom they provide, about their relationship with their spouse and about changes in their community at large.
That's why Five Talents' holistic approach of combining microcredit with savings group formation, business skills training and mentoring is incredibly effective and transformational.
Click here to read our most recent annual report. (The 2013-2014 edition is coming this fall!)
Generosity's Many Faces: How You Can Get Involved with Five Talents
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5 Ways to Get Involved with Five Talents from Five Talents on Vimeo.
As the busy fall season approaches, a million things will grapple for our attention. It is our hope that, amid the noise, you will remember the women and men struggling down poverty's road.
After all, there is no better time to come alongside them, and equip them, than today.
"Real generosity toward the future lies in giving all to the present," Albert Camus once said.
But generosity need not only be writing a check, or making an online donation. When we give out of our wealth of time and energy and intellect, we are also being generous.
We'd love it if you would choose at least one of five ways to get involved with Five Talents. No matter where you are in life -- or in the world -- there is something you can do to help women and men in under-served communities gain access to savings groups, micro-business loans, business skills training and mentoring.
2014 Fall Gala to Highlight Five Talents' Micro-Savings Programs
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On October 17, friends and supporters of Five Talents will have an opportunity to learn -- first-hand -- about the organization's programs in Asia, Africa and Latin America.
The 2014 Fall Gala, titled "Portraits of Empowerment", will feature a special guest and speaker from Five Talents' program in Kenya.
Guests will also enjoy a delicious meal and a silent auction featuring beautiful hand-crafted products from Myanmar, Indonesia, Kenya, Bolivia and other countries where Five Talents works.
Attendees will also get an inside look at how their participation in the event and support of Five Talents directly benefits the lives of women and men struggling along the road out of poverty, through access to micro-business loans, savings group formation, business skills training, and mentoring.
Click here to find out more about the special event and purchase tickets.
Our annual Fall Gala provides a great opportunity to introduce friends and family to the work of Five Talents. Click here to invite people in your network via the Fall Gala Facebook Event page.
'Your Donations and Prayers Are the Bricks That Build the House of Transformation'
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If you were to ask 56-year-old Celestina about her life during a visit to the marketplace in Tarija, Bolivia, you would not have to wait long to hear about her children.
She'd probably tell you about her daughter Romina's continuing education.
With a twinkle in her eye, she'd no doubt brag about her grandchildren.
Celestina would also be sure to mention the house she has been building, brick by brick, with the profit from her micro-business. "One day," she says, "I will finish building my house."
Celestina's house is a great picture of what happens when a woman or man joins one of Five Talents' programs. When they learn to save money, invest loan capital in a micro-business, and participate in training workshops, their whole household is transformed.
Children are able to attend school. Extended family and friends benefit, as the group member's new knowledge trickles down into the community. Often, the household's living conditions improve as well – there's more food and better shelter.
Over time, an entire family's life begins to change – little by little, brick by brick.
Your donations, prayers and advocacy are the bricks that build the house of transformation.
When Celestina found Five Talents and our partner organization in Bolivia, Seeds of Blessing
, she had already launched several micro-enterprises.
Celestina had first sold bread before moving on to corn. For a while, she was earning a decent profit from the micro-enterprise and began using some of that profit to build a house. But then unexpected costs began stealing from her profits. She'd not yet learned to save, and so her work on the house stalled. Worse yet, she no longer had money to invest in her business.
"I was worried because I needed to increase my capital in order to have more profit," Celestina said.
In desperate need of a loan, she turned to Five Talents and Seeds of Blessing.
When someone like Celestina joins a savings group, your donations help to provide loan capital, a safe place to save, and training in core business skills. In Celestina's case, an initial loan of $40 helped her to get the business back on track.
"The group gave me a loan, and with it I bought things that I needed," she said. "Now, I am selling more items, including corn, chilies and peanuts, and with what I earn I can finish building my house."
The impact of your support, however, extends far beyond the direct beneficiary, and this is part of what makes Five Talents unique.
Women like Celestina are not just getting a one-time loan, paying it back and going on with life. They are joining a community whose support and training inevitably trickles down into the lives of family and friends.
Book Review: ‘There Is a Country: New Fiction from the New Nation of South Sudan’
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Last year, McSweeney's gave us our first taste of South Sudanese literature — a collection of eight pieces by South Sudanese writers titled There Is a Country: New Fiction from the New Nation of South Sudan.
The publisher notes that the volume, edited by Nyuol Lueth Tong, is "the first of its kind, from the youngest country in the world."
Just over three years ago, the people of South Sudan gained recognition as a sovereign nation. Young and old took to the streets, crying, laughing and waving flags.
The New York Times, in reporting on the historic occasion, noted, "A new nation [is] being born in what used to be a forlorn, war-racked patch of Africa, and to many it [seems] nothing short of miraculous."
Over the last two years, however, the celebrations have given way to far more ominous circumstances: continuing tensions with the North, violence between political factions in the country, displacement of entire communities and the threat of famine.
It's perhaps fitting, then, that the stories in 'There Is a Country' fall somewhere in-between the celebrations and the sporadic violence. There is romance, mischief, family conflict and dreaming — the stuff of community life everywhere, whether in the American suburbs, or in one of South Sudan's refugee camps.
In "Port Sudan Journal," Victor Lugala tells the story of a 25-year-old who has slipped across the northern border into Sudan carrying a black rucksack with a pair of blue jeans, some boxer shorts, a toothbrush and a diary, ostensibly seeking out a long-lost uncle.
"The diary had been a birthday present from my Ugandan friend, given to me before I'd left home," the young man says. "It was as if he knew that one day I would be far away, wandering without a destination in mind."
In "Escape," by Edward Eremugo Luka, the narrator describes his late-night run from a group of men friendly with the North. The action appears to take place before South Sudan's independence, after the main character's family has safely fled their hut outside of Juba. As he turns his back on his now abandoned home, he vows to return one day in the future.
Inside the Life of a Micro-Entrepreneur in Indonesia
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Supiati discusses the impact her husband's medical condition has had on her income-generating activities.
Job Opening: Donor Relations Officer with Raiser's Edge Experience
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Five Talents is hiring! Do you know someone with database management experience who is looking to pick up some part-time hours?
The Donor Relations Officer is primarily responsible for ensuring quality and timely processing of gifts and managing the Raiser's Edge database. This opportunity is a part-time role working out of our office in Fairfax, Virginia.
Click here to view the full job description and requirements. We'd love it if you shared this link with your church network. You may also visit our Facebook Page to share our post about the job opening with your friends.
Five Talents' Sonia Patterson Accepts 2014 Brava! Award
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SmartCEO magazine recently honored Five Talents President and CEO Sonia Patterson with a Brava! award, highlighting Sonia's leadership & passion.
A Video Invitation For You and Your Friends to 'Walk With Us'
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