Results

50/50 was begun for a simple reason--to find a better, fairer, more effective way of using microfinance to help people increase their earnings and improve their own lives.

Because of that mission, we're not bound to any particular methodology.  We're empiricists, plain and simple--if there's something that's proven to work better, we're flexible enough to change course and incorporate it into our methods to improve the way we do things (we've even got an internal branch, the 50/50 DO Tank, dedicated to trying out new ideas).  But we think we've got a pretty good model, and here's why:

Unlike many other organizations, we work with our entrepreneurs every step of the way to make sure their business succeeds.  Most of our entrepreneurs weren't fortunate enough to study business in school, and many live in places where reaching profitable markets can be challenging or natural disasters, political instability, or other tough circumstances can throw the best-planned businesses into disarray.  But because our overarching goal to help our entrepreneurs succeed--rather than growing as fast as we can--we believe the results will speak for themselves.

As we've just started, it's still very early to draw conclusions about how our entrepreneurs are doing.  But some preliminary results are in, and we think it shows a good--though not perfect--track record.

Of the five entrepreneurs in Tanzania that began butterfly farming over a year ago, we can see some clear results--a majority are in better and more stable financial circumstances than they were before, which is among our most important indications of success.  Thanks to butterfly farming, one is earning significantly more money than she was before she began with 50/50.  Two are doing better, though not staggeringly so.  One is in roughly the same position as before she began, though she unexpectedly underwent some difficult personal circumstances--a divorce, which is quite rare in local culture--which hindered her ability to devote time to her business.  And after a strong start, we have (for the time being) lost contact with one entrepreneur.  

With the exception of the last entrepreneur mentioned (who made the first 5 of 12 repayments), all of the entrepreneurs successfully repaid the loan portion of their funding.  That means that our current repayment rate is 88.3%.  Conversely, our default rate is 11.7%.  Just to compare the U.S. Small Business Administration, which also oversees loans to help start small businesses--albeit in a society with much better education, services to support entrepreneurs, and bankruptcy laws--typically reports default rates of anywhere from 7 to 12% each year.  Unlike many other organizations, which report rates of default that are difficult to believe considering the high interest rates they charge and the lack of support they give their entrepreneurs, we don't mind telling you when things are working and when they're not--in fact, we believe that this transparency is the key to figuring out how to improve our model so that our entrepreneurs gain the greatest benefit.

But at 50/50, we think a little differently in terms of the figures that measure our success.  Most microfinance organizations will boast about the size of their portfolio or the profits they're making from the high interest rates their customers pay.  Here's the number we're most proud of:

0.

Yep, zero.  Zilch, nada, squat.  Zero.

Zero is the interest rate that we charge entrepreneurs on the portion of their funding set up as a loan (the other half of the funding is a grant--no repayment required).

Zero is the number of dollars that we divert from our core mission toward things like salaries, rent, and direct mail--all things that represent huge and, in our view, all too often wasteful costs incurred by many other organizations.

Zero is the number of loans that we "pre-disburse," meaning that none of our entrepreneurs whose funding meters show less than 100% have received their funding yet.  We value your choices and when you decide to lend to one of our entrepreneurs, you can be assured that money is going directly to them, not to us our an intermediary bank that has already made the loan.

Zero is the number of homes, livestock, and television sets that we've seized as collateral when our entrepreneurs have been unable to pay back the full amounts of their loans.

Zero is the numer of families we've uprooted and communities we've damaged through irresponsible lending practices, public shaming of borrowers who have defaulted, and coercive or threatening collection measures.

We'll post additional information here as the results of our early loans come in.  But if you agree with our philosophy and want to get involved more, why not browse through our entrepreneurs and make a loan?