I’ve been concentrating on the development aspects; a Constitution and structure that will ensure sustainability once the original group graduates.  I’ve found the NGO Cafe, http://www.gdrc.org/ngo/, to be an amazing resource which can answer so many questions and is ideal for any non-profit.  I hope to finish an outline for the Constitution within the next couple weeks so the board can make the necessary decisions about the day-to-day running and we can start on the 501c3 paperwork!

I also want to take the time to address Christine’s last post Dodge City move .  I know we’ll be talking about this tomorrow, but this is a path that’s so easy to go down when reading academic papers.  Dr. Humphrey and I, while sitting in a Starbucks one afternoon, went from a strict zero-tolerance policy to thinking about how you say no to an entire group when one person doesn’t pay off their loan, and what if that person is going through terrible times?  A legitimate business failure (they do happen!) and perhaps a death of a child, or sickness in the family?  How do you say no?!  Through this path we came up with an entirely new system involving forgiveness and mediation and multiple chances, something that stuck with me until I got the minutes from a meeting with an expert.  Yes, it’s harsh, but everyone we’ve talked to with on-the-ground experience has emphasized nothing else nearly as much as zero tolerance.  The idea is to truly help people, and if we go out of business after a round or two of loans we can’t help anyone.  I still struggle with this idea some because I know that I hope to be on the ground over the Summer and Fall of 09, but I know that in order for La Ceiba to be sustainable we have to have zero tolerance.  It’s not about having a pretty statistic to show high repayment rates, it’s about having enough money to loan out more money, to pay loan officers who can work with the clients and find out what further services are needed, to have the resources to facilitate more holistic initiatives.

I struggle because I don’t want to have to be the one to cut off a woman’s access to loans because someone else in their group defaulted, but I keep going back to why I’m here.  I want to help as many people as much as possible, and to do that La Ceiba must be sustainable.  Making it so some women cannot participate will be extremely difficult, but we are not taking opportunities away from anyone, we are providing opportunities that were not previously there to anyone who can participate.

Client Must Come First– it is the title of the article that shook my “rational” thought.  In particular, i am talking about zero tolerance default policy.  The simplistic economics makes sense- zero tolerance creates the incentve for the individual and the group to not default (i.e. comittment and enforcement).   But how about the resulting free rider problem?  Or, how about the cases that some people will punish group members so severly for defaulting that loan groups no longer serve as a support system but instead serve as a threat (sometimes even a threat of death)?

And, at the end of the day, what is more important–high loan repayment rates or helping the people we are set out to help?  These questions may seem interliked because they are.  But, as to which side of the fence to lean on, I am starting to lean on the help the people we are setting out to help.  Perhaps, if La Ceiba expands into a larger MFI we may need to re-evaulate our policies.  But until then, the question is, what are the best policies for the people of Siete de Abril?

• Echelon Conspiracy video