This week is our annual conference. When I use the word Microfinance as part of explaining what Fredericks does I am often met with a puzzled expression. Actually if I really want to confuse somebody I throw a set of initials at them: ‘We’re a CDFI,’ I say and turn swiftly on my heel. To save you looking it up I will translate: ‘We’re a Community Development Finance Institution.’ Happy now?
What we do is we lend small amounts of money to people who want to start their own business. We do that in the United Kingdom, though many eminent organisations do it in the developing world. The question then arises: ‘Why would you need to do that in a modern western economy, when there are money lenders at every turn?’
Indeed. Why would we?
That question has even more resonance now that government has recognised the gap and has stepped in to facilitate getting business loans to young people up to the age of 30. Politically it is almost acceptable now for banks to draw a line above the sole trader start-up business and say: ‘Those are not economic for us, the risk is too great, and look what happened last time we took on too much risk.’ So, using government capital, a large number of new companies have stepped in to distribute loans to young entrepreneurs.
Now the question has shifted. How should we?
On Thursday in South Gloucestershire a couple of hundred people will get together to share their experiences and passion for enabling others to support themselves through their own enterprise. For a variety of motivations it matters to each of those delegates that there is enterprise in their neighbourhood. It matters that people who show the desire to support themselves are enabled to. It matters that skills and experience they have gained can be put to practical use to support and mentor others. It matters that debt is not thrust on people without first taking the trouble to understand their circumstances. It matters that people don’t end up worse off than they were before they took that first courageous step.
Ours is not an economic model: to invest so many hours in support and assessment, but that is the only way we are prepared to do it. Frequently political and economic imperative is at odds with a careful and considered approach. Too often that is all about big numbers. But if I think about the many hundreds of business cases I have reviewed over the years, it is the ones who really care about the quality of what they do that have generally succeeded. And those that show genuine care for their customers.
This remains the lesson for Fredericks Foundation. If we stop caring about our customers we should stop doing it.