Microfinance

This has been a very popular method of helping people move out of poverty for many years, especially in third world countries, and this article from the Chronicle of Philanthropy examines one effort which has surprised everyone by apparently shutting down.

An excerpt.

“A decade ago, Unitus set out to accelerate the commercial investment in microfinance—to prove that banks and other investors could earn a return on their loans while helping impoverished people move on to a better life.

“And by most accounts, the Seattle charity has succeeded, not only in the work it does with its 23 partner organizations in developing countries but also in adding some spark to the entire microfinance world, which now provides billions of dollars to poor people eager to start their own businesses.

“On July 2, the charity declared victory—and promptly announced it was laying off its entire 40-person staff.

“The charity’s decision to wind down its sole program shocked not just employees—who were expecting the charity to continue on in microfinance, although perhaps with a different focus—but also donors to the charity. One supporter of Unitus had been negotiating a large gift to the charity in recent weeks but was ultimately told the money was not needed, according to a source familiar with the negotiations.

“The unusual announcement has reverberated beyond microfinance and piqued the interest of many nonprofit experts. The questions they are asking: Is this one of the best examples to date of a charity preserving philanthropic capital by calling it quits when the job is done? Or is a more sinister reason lurking behind the positive spin in the charity’s press release?

'Why Aren’t They Sharing?’

“The announcement of Unitus’s closure came just before the long July 4 weekend—which to some observers calls to mind a “bury the news” ploy used frequently by for-profit corporations.

“The vast majority of Unitus’s employees will be gone within a few weeks. Most of the charity’s employees work in Seattle, but Unitus also is closing offices in Bangalore, India, and Nairobi, Kenya. Brigit Helms, the charity’s chief executive, who was hired just nine months ago, will serve as an adviser to Unitus as the charity figures out what to do next.

“The charity isn’t holding a meeting to celebrate its accomplishments in microfinance—it isn’t even letting Steve Schwartz, the charity’s former public-affairs manager, talk about them. A small public-relations firm in Utah is now handling journalists’ calls for Unitus.

“If this is a success story, then why aren’t they sharing information on the success story to help us learn?” says Holden Karnofsky, of GiveWell, a site that evaluates charities. GiveWell declined to recommend Unitus to donors even before the recent announcement because Mr. Karnofsky believed the charity had not adequately answered his questions about program effectiveness.”