As Bob Dylan once said, something is happening here but we don’t know what it is.
Honestly, I can’t for the life of me figure out the meaning of the closure/restructuring of the Seattle non-profit microfinance organization Unitus. But it could be a watershed moment for the anti-poverty movement so it’s worth paying attention. Seattle is big on microfinance and social entrepreneurs.
Here’s the gist so far as I can tell:
- Just before the 4th of July, the high-profile, non-profit Seattle-based microfinance organization Unitus shut down and booted its employees. The organization refused to comment much, but did declare it had succeeded in putting an end to poverty (just kidding). Eventually Unitus’ board chairman issued this peculiar, unenlightening statement.
- Meanwhile, a giant Indian microfinance company, SKS, announced this week that it was seeking to raise an additional $354 million by offering itself up for sale to shareholders (in an IPO).
- Unitus had invested something like $6 million in SKS and now stands to make $70 million due to the IPO. Clay Holtzman of the Puget Sound Business Journal wrote this story, and many others pertaining to the Unitus shut-down and its SKS links.
If Muhammad Yunus was dead, he’d be rolling in his grave! As it turns out, the 2006 Nobel Peace Prize winner who founded the microfinance movement is still alive and kicking — especially at those who use microfinance mostly to make money with service to the poor as, at best, a by-product.
”This is pushing microfinance in the loansharking direction,” Yunus said of the SKS decision.
Others contend that it’s just fine to make money off the poor, even charging them interest rates as high as 70 percent – so long as the profit-making leads to more loans.
Yunus, who is a frequent visitor to Seattle because of the many organizations here working on microfinance, has grown increasingly concerned that microfinance is becoming just another get-rich scheme (gilded in do-gooder lace) for some in the “sick” financial industry.
Whether this criticism will soon be leveled at Unitus or not remains to be seen.
Here’s another site, Philanthropy Action, closely following this story.