FAQs
What is Unitus?
Unitus, an international nonprofit organization, fights global poverty by accelerating the growth of microfinance—small loans and other financial tools for self-empowerment—where it is needed most.
Oh, like Kiva?
Sort of, in that both organizations see microfinance as a pathway to empower the world’s poor to work their way out of poverty. However, whereas Kiva is a 1-to-1 relationship between borrower and lender, Unitus works on a 1-to-many basis by helping microfinance institutions reach the greatest number of people in the greatest need.
In other words, the transformational power microfinance has on families is the same, the difference is our way focuses on making that transformation accessible for as many families as possible.
Where does Unitus work?
Unitus works with high-potential microfinance leaders in developing countries around the world to rapidly expand access to microfinance services for the working poor in those areas.
We target our efforts in high-need regions of the developing world where microfinance has promise but is struggling to grow. Once MFIs and/or regions reach critical milestones and demonstrate sustainability, we shift our resources to where they can be used most effectively.
In four sentences or less, how does Unitus actually work with MFI partners?
- Unitus provides consulting and capital to high potential MFI partners to eliminate issues constraining their growth.
- In many cases these issues are things like access to growth capital, managing human resources, improving operations, and integrating management information systems.
- Where needed, Unitus also provides grant and debt funding to MFIs tailored to their specific needs, and often helps arrange additional funding from outside sources.
- Finally, Unitus hosts events, develops tools and provides forums for our partner MFIs to facilitate peer-to-peer learning and exchange best practices
How do you define “high-potential” MFIs and how does the selection process work?
What makes an MFI “high-potential” varies, but it usually involves a blend of working in a high demand area where reasonable financial services are out of reach of the poor, and managerial competency limited by a lack of technical, operational, financial, or human resources.
To be considered for partnership, MFIs must meet the following criteria:
- Growth: Demonstrated growth and 5x projected client growth (organic) in the next 3 years.
- Mindset: Commercial microfinance approach and innovative mindset.
- Size: Scale of operations from 5,000 to 100,000 clients with some basic systems and processes in place.
- Poverty focus: Demonstrated commitment to serving the poor.
- Structure: For-profit legal structure, or NGOs with strong commercial orientation that will transform within 2 years.
- Startups: We also support commercial MFI startups with strong visionary management.
While more than 300 microfinance institutions have applied to be Unitus partners (as of the end of 2007), only 23 have met our criteria.
How does anyone know if microfinance actually works?
This is an area of great debate among microfinance academics and practitioners as there are few holistic metrics to assess improvements in the wide array of areas microfinance can have an impact (food stability, housing quality, educational opportunities opened, improved financial stability, and women’s empowerment to name a few).
Unitus has always looked to its partners to ascertain the effectiveness of their programs Up until recently, this has been largely anecdotal, with partners sharing stories of borrowers’ success paired with statistics on MFI growth. However, with efforts like Unitus’ 2009 launch of its Social Performance Management Implementation Project providing those holistic metrics, we expect to see data that supports assumptions about the positive social impact of certain microfinance activities.
Why donate to Unitus when I can have the same impact AND make a return by making direct investments in MFIs?
Because you won’t have the same impact. While they are important for bringing vital private capital into microfinance, most microfinance investments as a whole fall short in their scope – because they require a certain level of scale and efficiency before they make their investments, the total number of MFIs that could be considered for an investment is minute relative to the global MFI total.
That’s where Unitus comes in. We see our partners as having the potential to graduate into that network of investment-grade MFIs, and that the consulting and financial resources we provide are what helps them to realize that potential.
What is the relationship between Unitus, Elevar Equity and Unitus Capital?
Unitus incubated and launched these legally separate social enterprises to mobilize capital from private investors to support the rapid growth of MFIs and other poverty-focused enterprises.
Unitus Equity Fund (now Elevar Equity) was the first 100 percent privately funded equity fund focused on microfinance. Unitus conceived and launched UEF to demonstrate that the microfinance industry was a viable market for social investors looking for reasonable returns. UEF helped catalyze the market, particularly in India, and as a result, there are now over a dozen equity funds and more than $100 million in private equity investment in the Indian microfinance sector.
Unitus Capital was originally part of Unitus’s Capital Markets team. As this team grew more sophisticated and gained momentum, it realized that it could serve many more MFIs with investment banking services outside of the Unitus non-profit structure. Thus, we launched a stand-alone social enterprise with a somewhat larger team, ambitious goals, and a dedicated balance sheet.
While Unitus has retained stakes in both Elevar Equity and Unitus Capital since their respective inceptions, we are not receiving any direct payouts and any future returns will go directly into our global programs budget.
Why doesn’t Unitus work in the United States?
A core component of our change philosophy is that we wish to accomplish the most good for the greatest number of people. When we examined how to create the most significant change for the poorest populations, it was evident that we should focus our efforts on the countries in the world where access to credit and basic financial services are least available and poverty is the most widespread.
