Accion International started in 1961 after an amateur tennis player from the United States, Joseph Blatchford, visited Caracas, Venezuela, and was horrified by shantytowns there
Lending money to the poor wasn't always seen as a way to fight global poverty.
Accion International, based in Somerville, Mass., and one of the world's largest micro-lenders, had its roots in charity. The group started in 1961 after an amateur tennis player from the United States, Joseph Blatchford, visited Caracas, Venezuela, and was horrified by shantytowns there.
Blatchford returned to law school in the United States and mobilized classmates, friends and family to donate cash and time to do Peace Corps-type community work in South America installing latrines, building schools and training families in healthy nutrition.
But by the 1970s, the group realized its efforts did not address the deeper problem: lack of economic opportunity for the poor in a region with too few jobs and virtually no welfare system.
So, Acciˆn began to offer low-cost loans to struggling entrepreneurs, folks who repaired cars or sold fruit on the streets to eke out a living. The borrowers generally lacked collateral, tax records or other assets sought by commercial banks, but they agreed to organize with family and friends and fellow borrowers to jointly commit to repay.
Over the past decade, Acciˆn has loaned more than $3.2 billion, mainly in Latin America, with loans averaging $500 each and due within months. Many micro-lenders have repayment rates that top 96 percent better than most commercial banks that target less risky clients.
"The group methodology works, because members cheer each other on. That makes as much difference as the money," said Tracey Talentino, a former Chase Manhattan banker who worked with Acciˆn and now helps run Micro-Business USA in Miami.
Acciˆn is so committed to the future of micro-credit that it's working with mainstream banks to develop micro-loan programs big enough and efficient enough to break even and maybe turn a profit.
"Micro-finance should be integrated into the financial system, not marginalized, so it can be sustained and expanded," said Robin Ratcliffe, Acciˆn's vice president of communications.
Today, few of the estimated 7,000-plus micro-lenders worldwide cover all their costs, depending on donations from governments, foundations and individuals for new funding.
