St. John’s The Peter J. Tobin College of Business recently
introduced a novel, student-run Global Microloan Program that
actively engages students in international finance while fulfilling
St. John’s Catholic and Vincentian mission of helping the poor and
the marginalized. In the Vincentian tradition, the program,
named GLOBE (Global Loan Opportunities for Budding Entrepreneurs)
aims to help the poor help themselves by boosting the earning
capacity of local entrepreneurs
while also serving the needs of their local communities. It
reflects the University’s long-standing commitment to globalization
and student engagement.
Lending small amounts of money to
entrepreneurs who do not have the necessary collateral required by
traditional financial institutions to qualify for a loan has been
increasingly embraced by the microfinance industry. Borrowers
in the most under-resourced regions of the globe, most of whom are
women, are carefully vetted and repayment terms typically vary from
nine months to two years. Default rates on these loans tend
to be low, averaging approximately three to four percent and a
recent focus on measuring outcomes suggests that communities
receiving microloans enjoy lower rates of extreme poverty and
higher levels of education for the borrowers’
children.
The organization of GLOBE begins with a class
of selected
students who demonstrate a strong record of academic
achievement, an understanding of the global business environment
and an expressed interest in microfinance and social
entrepreneurship. Relying heavily on the Web to source
donations, the program combines St. John’s award-winning
Information Technology capabilities with student talents in
marketing, management and financial assessment. The Daughters of
Charity serve as program field
partners, coordinating the necessary distribution and
collection of funds worldwide.
The program is based upon a division of labor
between participating students and the Daughters of Charity and is
designed to achieve effectiveness and minimize administrative and
start-up fees.
With an established presence in 72 developing
countries and familiarity with their local
communities, the Daughters of Charity receive initial
applications. They then communicate with and distribute funds
to approved candidates and subsequently collect loan repayments.
They monitor loan repayment and fees, and assist in assessing
lending risk and evaluating business plans.
Students in the class, which runs every semester, work in task
teams to manage the microloan fund, vet loan applications, maintain
the website, market the program, communicate with stakeholders, and
raise funds. Every loan presents a new learning opportunity
for students about the microfinance industry and social
entrepreneurship, the issues of poverty and social justice in the
developing world, cultural differences that impact the way in which
business operates globally, and the power that each individual has
to make transformational changes in the world.
Connect With GLOBE!