Ideas For Serving Deeply Vulnerable Populations
Yaay Equitable Financial Services!
There are a lot of wonderful things about the use of financial services as a tool to tackle poverty: it respects the dignity of the poor; generates a revenue stream for the lender; builds the borrower’s credit; and allows borrowers to make investments, such as in a security deposit or computer purchase, that they would otherwise be unable to make. One challenge, however, is that there is an inherent tension between making loans to the poor and maintaining high repayment rates: the lower the income of the borrower, the riskier the loan. This is not due to any character flaws on the part of the poor, but rather the instability–financial and otherwise–that often defines their lives.
Given that our poverty-fighting mission, it is imperative that we figure out how to make loans to deeply vulnerable populations without taking on an unacceptable level of risk. Many of our referrals come from caseworkers and agencies that work with the temporarily homeless, the mentally ill, ex-offenders and survivors of domestic violence, and there it is very frustrating to deny a loan application that can transform the life of the applicant–a loan to cover the cost of a security deposit for a homeless family, for instance.