Question 1

How do you calculate impact?

Brian.Brown · Accepted Answer

Dashboard Statement

The WPF Dashboard is a report that measures the foundation’s overall impact since inception. The dashboard is updated quarterly. The figures presented include Whole Planet Foundation’s contributions as well as reporting data from WPF’s MFI partners through the end of the reporting period.

People

Approx. Number of Loans Made to Entrepreneur Families Due to WPF Support of Microfinance Partners: First, to find how many loans WPF programs have funded we get the Average First Loan Size reported by our partners and divide it over the funds that have been disbursed to the MFI. Next, we find how many times those funds have been distributed and repaid back to the MFI since their disbursement. Finally we incorporate the repayment rate reported by the MFI to account for any funds that have been defaulted. Total Loans Made to Entrepreneur Families Due to WPF Support = SUM{(([AmountDisbursed] / [AvgFirstLoanSize]) X [Turn]) X [RepaymentRate]} Turn = (Reporting Period –Disbursement Date) / AverageLoanTerm This is applied to every disbursement WPF has made to its partners since inception. Approx. Number of Opportunities for Entrepreneurs and Their Families (Loans Disbursed X Average Family Size, Including Multiple Loan Recipients & Their Families) Every loan provides a unique opportunity for the supported client and their family members. To estimate total opportunities first we gather the fertility rate to determine the average family size in each country. We add 1.75 to the average fertility rate to include parents or other relatives that live in the household. As of September 2022, the average family size across WPF’s portfolio is about 5.06 people. Next we factor in the number of loans supported. Opportunities for WPF- Supported Clients = Total Loans Made to Borrower-Families Due to WPF Support X AverageFamilySize Current Active Entrepreneurs Active clients reported by MFI partners in each quarter to WPF. Current Active Entrepreneurs & Their Families Active clients reported in WPF communities including their family members. % Women Clients This is a weighted average of the figures reported by the MFIs across WPF’s portfolio.

Places

Eligible Countries Total of Authorized Countries and Program Countries in Development where both a Whole Foods Market product connection and viable microfinance industry has been identified. Total Projects Total count of projects approved to receive funding. Authorized Program Countries Countries which funding has been approved by WPF’s Board of Directors. Active Countries Countries which funding has been approved by WPF’s Board of Directors and funds have been disbursed. Authorized U.S. Cities Total U.S. cities in which funding has been approved by WPF’s Board of Directors. Active U.S. Cities Total U.S. cities in which funding has been approved by WPF’s Board of Directors and funds have been disbursed. WFM Products Unique number of products sold in WFM stores that are sourced from WPF countries around the world. Microfinance Partners Total number of unique partners funded by WPF.

Funding & Loans

First Loan Disbursed Date in which WPF began funding loans. Authorized Disbursements Total amount of funding approved for WPF projects by the foundation’s Board of Directors Disbursed to Microfinance Partners Total amount of funds disbursed by Whole Planet Foundation to its MFI partners for on-lending capital. Avg. First Loan Size Weighted average across the portfolio reported by MFI partners Repayment Rate Weighted average across the portfolio reported by MFI partners [Update:11/13/2020] Starting with the reporting through September 30, 2020 we have revised this formula to more accurately quantify this metric. After review by the Field Team after two quarters after the start of COVID-19 the team concluded that the previous formula was not accurately reflecting PAR. Previous Formula =SUMPRODUCT(CGAP PAR % > 30 days for Institution, Approx. Loans Made to Entrepreneur Families Due to WPF Support/SUM(Approx. Loans Made to Entrepreneur Families Due to WPF Support)) Revised Formula =SUMPRODUCT(CGAP PAR % > 30 days for Institution, Total loan Balance Outstanding on Institutional Loans (USD)/SUM(Total loan Balance Outstanding on Institutional Loans (USD))) * In addition to this revision the Field Team agreed that it is important to remove all CLOSED projects and any projects where MFI data is being duplicated (ex: CASHPOR G2, G3, G5, G6) to most accurately reflect this value Approx. Value of Loans Supported by WPF Funds to MFI partners continue to grow over time. To find the total leveraged amount takes each disbursement and calculates the turn to find out how many times those funds have been distributed and repaid to the MFI. Then we factor in the MFI’s Repayment Rate to account for any defaulted % of their portfolio Sum{ ([AmountDisbursed]+( [AmountDisbursed] X [Turn] X [RepaymentRate]))} Total Loans Supported by WPF Funding (Purchasing Power Parity basis) Approx. Value of Loans Supported by WPF adjusted for the exchange rate in each countries’ local currency. The Economist: The Big Mac index

Question 2

Do microcredit clients sell products in Whole Foods Market?

Brian.Brown · Accepted Answer

In countries where Whole Foods Market sources product, we help people lift themselves out of poverty, but Whole Foods Market does not source product from microloan recipients. Microcredit loans typically support very small, home-based businesses., but Whole Foods Market does not source product from microloan recipients. Microcredit loans typically support very small, home-based businesses.

Question 3

What is microcredit?

Brian.Brown · Accepted Answer

Microfinance encapsulates a wide array of products and services from credit to savings that are designed to meet the needs of the World’s un- and underbanked. Whole Planet Foundation focuses on the credit component of microfinance and seeks partners that have a mission to and a methodology that is able to reach the most marginalized groups of micro-entrepreneurs. Some of the key characteristics of microcredit supported by Whole Planet Foundation:

Focus on the poorest microentrepreneurs possible, especially women
No collateral or guarantees will be required
The banking services will be provided to the people as close to their doorstep as possible
Loan transactions are transparent at all levels
Loan sizes will grow with each loan cycle
The borrowers will be free to choose to participate
Repayments will be designed in a way that meets the needs of the borrower
There will be the fewest barriers to entry as possible for people with little to no assets

Question 4

Does microcredit really work?

Brian.Brown · Accepted Answer

In a word, yes, microcredit is a tool to alleviate poverty but it is not a silver bullet. A poor woman and her family do not escape poverty after receiving a single loan. Without jobs, the poor are left to their own devices to provide for their families and credit is a way for microentrepreneurs to start or grow their businesses. For those that choose to borrow, they are investing in their own potential to change her and her family’s lives. Whole Planet Foundation believes in the power of the poor, and is committed to supporting new, more, and better opportunities to alleviating poverty.

Question 5

What is an MFI?

Brian.Brown · Accepted Answer

An MFI is a microfinance institution that provides microfinance services. We partner with local MFIs that have developed an approach to serve microentrepreneurs in a way that is aligned with their reality. We refer to this as a pro-poor approach to microfinance.

Question 6

Why give credit to the poor?

Brian.Brown · Accepted Answer

In communities void of jobs and based on the informal economy, credit is a a direct means for the poor to improve their family’s lives. Whole Planet Foundation focuses on supporting access to more opportunities in the form of microcredit with world-class organizations that deliver much more than a loan. Our partners provide a multitude of services from literacy workshops, to business training, to critical health services all which are not possible without first investing in the poor's own personal capacity with microcredit.

Question 7

Does Whole Planet Foundation set interest rates?

Brian.Brown · Accepted Answer

Whole Planet Foundation does not set interest rates. Interest Rates charged by Whole Planet Foundation microfinance partners in the field are impacted by a number of factors and vary by country.  We work with MFIs that have agreed to keep the interest as low as possible while covering inflation, cost of capital, MFI overhead and other associated health, savings, insurance and education services, (when these service are offered) and profit.

Question 8

But the interest rates seem high...

Brian.Brown · Accepted Answer

Sometimes interest rates seem very high by Western standards, but the highest rates inevitably come from moneylenders who are traditionally the only ones willing to lend to the poor. Risks can be substantial, but the microentrepreneurs are usually good at repaying loans that are appropriately sized for their capacity. Whole Planet Foundation partners are committed to pricing transparency that clearly informs clients the cost of the loan. The borrowers make informed decisions to invest capital and grow their businesses.

Question 9

What are the main factors in determining interest rates?

Brian.Brown · Accepted Answer

Interest rates are determined locally by five main factors. Here they are:

Rate of inflation in the country
- Double digit inflation is not uncommon in developing countries. Interest rates have to cover inflation.
Cost of capital
- This refers to cash in the capital market (banks etc) that they use to relend to poor borrowers. Hundreds of billions of dollars will be needed to fund the billions of potential poor borrowers.
- Cost of capital (COC) is often well into double digits 15-20% in developing countries. Interest rates now must cover inflation + cost of capital (COC usually does cover some of the inflation, but often not all.)
Cost of providing the loan (MFI’s Overhead) is very high
- This is due to the fact that the most successful operations usually visit borrowers 25-50 times a year at locations near the borrower’s homes and this takes an army of field loan officers, motorcycles and other support.
- Traditional banks can’t do this. Interest rates now must cover inflation + cost of capital + MFI overhead
Other associated services, such as health, savings, insurance and education services.
- Some MFIs believe it is imperative that they extend other crucial services to the poor along with the loan. These can include:
- Health exams and other medical services such as family planning and reproductive and parenting education
- Business advice and education/training
- Marketing advice and assistance for their crops or products
- Mandatory savings (often cited as necessary to escape poverty)
- Health and/or life insurance

Profits or excess capital at year end
- Profit, or for the non-profit “excess capital” is important to keep the MFI operating so that it can continue working to help the poor. Either way, the MFI must end up the year in the black or face going out of business.

Question 10

How does Whole Planet Foundation select MFI partners?

Brian.Brown · Accepted Answer

Whole Planet Foundation has developed our own quality standards for our microfinance partners which are based on industry best practices. We proactively search for like-minded MFIs that are able to grow and serve more microentrepreneurs. Our Field Team first conducts desk due diligence to identify potential partners. After reviewing relevant information, a short list of potential partners is visited in person by our Regional Directors. The field visit is done to see first-hand the approach and practices of an MFI. The field team reviews the nuances of how the program works to assure a potential partner aligns with our view on pro-poor microfinance. We are looking for organizations that have as few barriers to entry as possible while operating on a financially self-sufficient basis.

Question 11

What happens when a microcredit client cannot pay back a loan?

Brian.Brown · Accepted Answer

The strength of microcredit is avoiding repayment problems in the first place. The system is designed in such a way that risks are mitigated throughout the process. Key elements from some of the most effective organizations include:

Selecting clients that are investing in a business, not used for personal consumption
Assessing the clients capacity to take on a loan
Assuring clients are committed to the program and understand the expectations of them
Repaying loans frequently, even weekly over a longer period of time making payments small
Lending in peer groups that can act as a safety net in times of struggle
Refinancing loans when microentrepreneurs continue to struggle

During our due diligence phase of selection a new MFI partner, WPF will review these as well as all policies of a potential WPF grant recipient to make sure their policies are acceptable. However, we are not in the MFI incubator or improvement business; i.e. our mission is to get business development funds into the hands of the very poor. We look for MFIs who have a proven track record for doing just that. We have staff to monitor and evaluate how well our grants funds are spent, but no staff for MFI training development.

Question 12

What happens when governments ban microloans to the poor or heavily regulate interest rates?

Brian.Brown · Accepted Answer

When governments ban microloans to the poor or heavily regulate interest rates this only deprives the poor of access to capital that could help them live better lives and drives them into the hands of the local moneylenders whose interest rates can run into the thousands.
Loan sharks use brutal techniques to collect on delinquent loans and confiscate meager property.
These local moneylenders are often the same government bureaucrat who is outlawing the competition.
Slum landlords in many cities are actually bureaucrats who build shanties and rent them out to the poor. Property rights and microlending give the poor weapons to use against these corrupt bureaucrats who are often trying to kill any legislature that would impinge on their side businesses.

Question 13

Why doesn't Whole Planet Foundation work with government-run microfinance institutions?

Brian.Brown · Accepted Answer

Whole Planet Foundation does not work with government-run MFIs (microfinance institutions), as we’ve found these can be poorly run and corrupt. We've found great success by working with MFIs with no government affiliation.

Question 14

What has your team learned while doing this work?

Brian.Brown · Accepted Answer

One microcredit loan is not a silver bullet that ends poverty immediately. It will, however, along with subsequent business expansion loans, help her to provide better nutrition, healthcare, housing, education and schooling to her kids, who will then be better prepared to escape poverty. Ending poverty is a generational endeavor. Sometimes, although not very often, there is an economic middle-class level attained by a first generation microloan recipient.