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kiva

Investing in the Leaders of Tomorrow

By | Social Enterprise, The Thagomizer | One Comment

A bad credit history was the only thing keeping the 19-year old James Ward from attending Howard. Ward had been homeless for most of high school but had worked hard and managed to get into a large university. However his mother’s bad credit made him unable to get student loans that would financially enable him to go. So, showing a spark on ingenuity, he found a different way to fund his college education. Ward started a campaign called “Homeless to Howard.” Using only a Tumblr blog and Paypal account he was able to launch an online campaign that helped him raise $12,000, enough for his first year of college.

Access to credit is one of the many “poverty traps” that exist today, mechanisms that create the cycle of poverty and limit inter-generational mobility. Having no credit is just as bad as having bad credit and it is hard to start credit if no-one in your family has good credit. Today, credit can affect your access to everything from an apartment, utilities, cell phones, and as in the example above student loans. Not having credit excludes you from accessing affordable services and loans that allow you to work your way out of poverty.

Luckily new ways of financing are starting to evolve. In the developing world where a student loan system doesn’t exist, microloan systems are coming in to fill the void. Vittana allows people to make $25 loans to students across the world to pay for their education. Graduates make on average 2.8 times more than before and thus there is a 99.8% repayment rate. Two years ago, Kiva, a well known global microlender announced it would start providing small, no-interest loans for student’s education in countries across the globe. Kiva got in the business because they recognize that financing student loans are not appealing to most lending institutions interested only in return. Students have no collateral, require long terms and grace periods, and often have no prior credit history. Making student loans is more appealing to a organization like Kiva where investors are more focused on making social change than getting a financial return.

Lumni, which now operates in the United States asks investors to think of students like start up companies. Through Lumni, investors fund student’s education and those students must promise to give investors back a percentage of the income they make for their first ten years out of college. A deal like Lumni means investors care not only about whether or not the student can pay back the student loans, but how successful they become. They become stakeholders in the student’s future and will do more to make sure they succeed.

student-debt

Cartoon by Jeff Parker

American students today leave college with massive amounts of student debts. My generation has seen first hand what happens when you come out of college with loan repayments to make and no good job in site. When faced with a choice of taking a low paying entry-level job at a company that will be an in to your career and a slightly higher paying job at Starbucks, many graduates must chose the latter so that they can start making repayments. Furthermore during their first years, they often shovel so much back into paying off their student loans that they don’t save anything which can cause further financial instability and could result in more debt if any other emergency or need arises.

In contrast a new system, in which loan makers are invested not only in getting a return, but also in student success could not only increase access to funding for education for students like James Ward, but create a system that ensures better success and financial stability for our college graduates. Instead of investing in immediate returns, these social enterprises invest in the future. This allows students to have a grace period to make decisions that will set them up for further success in the long run. It’s a triple bottom line approach that could ultimately lead to larger profits both monetarily and socially for all involved.

99 Problems But This Ain’t One

By | Design, Social Media | No Comments

Crowdsourcing. Throw that one into a convo among graphic designers and you’re sure to see the fur fly. You’d have to be living in a bomb shelter to not know how transformational providing this type of contest-based service has been to the design industry. Controversial, yes. But is crowdsourcing going  to die a sudden death as a result? … meh, probably not. There are scores of sites out there promoting this type of service business model, and probably just as many reasons as to why it works and why it shouldn’t.

But this post isn’t about that.

99designs.com is the number-one online marketplace for crowdsourced graphic design, with a new design uploaded every five seconds and more than $35,000,000 paid out to our design community since 2008 (from their website). They have launched a recent initiative that will provide free graphic design services (logos, t-shirt design, print and web design) to 99 nonprofit organizations, selected over the next few months. There is no deadline to apply and nonprofits can submit this short form to get started in the running.

According to their blog, they have already said yes to these contenders:

  • Cancer Council Australia advises the Australian government and other bodies on practices and policies to help prevent, detect and treat cancer, and advocates for the rights of cancer patients for best treatment and supportive care.
  • Greenbelt Alliance aims to make the San Francisco Bay Area a better place to live by protecting the region’s greenbelt and improving the livability of its cities and towns through public policy development, advocacy and education. (California)
  • Black Dog Institute is an educational, research, clinical and community-oriented facility offering specialist expertise in depression and bipolar disorder. (New South Wales)
  • Voice of Warriors helps veterans and their families connect with a wide spectrum of mental health and other resources at a local and national level. (Michigan)
  • CASE for Refugees provides free legal advice, representation and advocacy to refugees, humanitarian visa holders and people from culturally and linguistically diverse backgrounds. (Western Australia)
  • National Breast Cancer Foundation has allocated more than $55 million to more than 230 breast cancer research projects since 1994 to further its mission to promote and support breast cancer research. (Australia)
  • Menlowe Ballet performs imaginative and illuminating new works and provides  professional performing opportunities to students from the nationally recognized Menlo Park Academy of Dance. (California)

Does this side venture into the do-good world help redeem 99designs from its low ranks or is it a PR stunt to help soften the blow of what’s really going on here? It’s ironic they mention their other community outreach efforts in the nonprofit contest FAQs. It also states that the winning designs (for the nonprofits) will be compensated by 99designs.com, which doesn’t change the biggest problem with this particular crowdsourcing model – the fact that the designers who do the work but don’t make the cut are not paid. But because this is work for a nonprofit, does that make it okay in the name of pro bono?

This contest-like approach for getting creative work for free is not new. Sometimes the winner gets recognition or some other form of compensation for his or her efforts, but somehow that seems more feel-goody and less cut throat than when the “prize” is payment for services and is only rewarded to one lucky person. A creative freelance site like Elance employs a more agreeable model, where designers bid on proposed projects and work one-on-one with the client for an agreed-upon price. Sure, maybe the fee is still unreasonably low and devalues the design profession, but at least designers are getting reimbursed for their time and work.

There are other low-cost options out there for nonprofits who have little to no funding for design and marketing services (why these services are usually not deemed essential to the overall operation budget is another topic for another day). Taproot Foundation connects professionals with social change organizations to give them access to resources such as design, technology and marketing. Grassroots.org is another example. Many designers take on pro bono projects in addition to their daily work to flex their creative muscles. And students are usually in need of real-world experience in and outside of the classroom.

It’s easy to forget that crowdsourcing isn’t always a negative thing. It has just become synonymous with crowdsourced design. Kiva and Kickstarter are harnessing the power of the masses to benefit organizations around the globe. Used in other ways, crowdsourcing can be very beneficial for nonprofits without endorsing the type of spec work that 99designs blatantly encourages.