A Mostly Comprehensive Guide to the Unitus Closure Announcement: Updated 8/2/10
July 28, 2010 2 CommentsIt’s been a couple of weeks since Unitus unexpectedly announced its decision to shut down operations, suspend its involvement in microfinance, and eventually reopen with a new approach to poverty alleviation. In the wake of the announcement and because of our close ties to a number of Unitus staff, we have received numerous requests for the story behind the story. Truth be told, we were as surprised as everyone and have been seeking more information about the motivation behind the closure, its timing, and why the board chose to make the announcement as abruptly as it did.
Among our board and volunteers, one consensus has emerged: the Unitus closure is consequential for the microfinance industry. As such, we are making efforts to learn as much as we can and share that information with the larger microfinance community. Below, we have linked to published articles, blog posts and listserv discussions relating to the announcement. We have also heard that the New York Times is planning to publish an article on the topic, which most certainly will set off additional chatter. We will update our list periodically and also ask that readers use the comment thread to contribute their own thoughts and links to other information about the Unitus closure:
- Seattle Times article announcing the Unitus closure
- SiliconIndia.com post about closure and corollary funds
- Discussion on Ohio State Develpment Finance Listserv
- Chronicle of Philanthropy, “Microfinance Group Unitus Shuts Down, Eyes ‘Reinvention’”
- MICROCAPITAL BRIEF: Unitus to Discontinue Microfinance-Related Activities to Focus on Other Poverty Alleviation Strategies, Will Release 40 Staff Members in India, Kenya, United States
- Chronicle of Philanthropy, “When It Comes to Donations, Is It Possible to Have Too Much?”
- “Closure of Popular Poverty-Fighting Charity Raises Big Questions”
- “Microfinance mission accomplished? Hardly, expert says” — Seattle Times
- Discussion of “Microfinance Mission Accomplished? Hardly” on Microfinance Practice Listserv (login required)
- Unitus Fund to Cash Out on Indian IPO — Puget Sound Business Journal
- Matt Flannery’s tweet immediately after the announcement: “Is this what happens when your non-profit succeeds?“
Update 8/2/10
Tim Ogden at Philanthropy Action has put together a fully (not just mostly) comprehensive guide to the SKS IPO and how it relates to Unitus. Check it out. He has also written his own take on the controversy, called “Why every social entrepreneur should be paying attention to SKS and Unitus”. Read it.
News and Commentary
[...] 6. Chronicle of Philanthropy, “When It Comes to Donations, Is It Possible to Have Too Much?” 7. “Closure of Popular Poverty-Fighting Charity Raises Big Questions” 8. “Microfinance mission accomplished? Hardly, expert says” — Seattle Times 9. Discussion of [...]
I’m just flabbergasted by this development, but in some ways it follows from a string of changes in the industry that resulted when we took the fateful leap into the hubristic belief that we needed to give every poor person a loan to “close the gap” and in order to finance this massive scale-up we needed to access the formal capital markets. That led to a fundamental shift in our key indicators from poverty-allevation to profit, from the health of our borrowers to the health of our assets.
I just posted a blog yesterday called “Profits & Perverse Incentives: the New Face of Microfinance” that catalogues 6 shifts in the practice of microfinance that stemmed from this fundamental change and brought us to where we are today. The SKS IPO is for many a triumph, but for others, like me, a sad look at the end game of microfinance, a final capitulation from being an anti-poverty movement based on a pro-poor innovation to being a market niche in the banking and investment industries based on their rules of the game. Please accept my contribution to your list: http://stayingfortea.org/2010/08/03/profits-perverse-incentives-the-new-face-of-microfinance/