Unitus Move is Divisive for Microfinance Movement

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.
Muhammad Yunus meets Seattle fans

by Tom Paulson

Muhammad Yunus meets Seattle fans, at Town Hall May 2010

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.

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About Author

Editor Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom-at-humanosphere.org, follow him on Twitter @tompaulson and/or send a comment below.

  • Terry

    appropo, but from a different direction. stephen Schneider, godfather of climate change advocacy, died July 19; herre arre a couple lines of one of his last essays. Can democracy–and the profit motive–and the gift economy–survive complexity?

    In the last chapter of Contact Sport, I ask a scary question: “Can democracy survive complexity?” My National Geographic Society editors thought that too much of a downer as my final chapter title and substituted “What Keeps Me Awake at Night.” Either way, for a representative democracy to function well, both the public and its representatives have to understand what is at stake: Risk equals what can happen multiplied by the odds it will happen.

    Next is the public policy choice part—risk management. This is the public values aspect over what to do about it, given all the calls in society for governmental use of limited resources. That type of complexity is becoming commonplace now as debate over climate policy, health care, education, national defense, etc., are all topics of enormous confusion and spin from special interests and ideologists. The public and its representatives need to put all this hype and spin in context—ergo my sleepless nights.

    There are many places where you can get into the set of details that are credible in the case of the climate debate, but Contact Sport is, if you forgive the shameless self-service, a place to start, with its balanced sweep of how we got to where we are in this debate of more than four decades. Good luck if you wish to join us in the bloody, muddy trenches of the climate wars—we need the assistance of all who want to help. But before you go to battle, go to boot camp—read and be informed. It is much easier to fight when you know how to use your weapons.

    Restoring a civil public dialogue would, to me, be the most important first step we could take to heal the climate and the public rift over protecting our common heritage. We are already well into this dangerous experiment we are performing on “Laboratory Earth”—with us and all other living things along for the ride.