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: Shakti Foundation's experience to make it sustainable
I'd like to jointly create this type of social venture in my home town:
You can create a Social Venture in your home town based on the business model in this page. The Social Entrepreneur Institute will assist you to make a business plan, funding the project and provide a More information on the Social Entrepreneurship Institute

ActivityID:

City:

Chapter:

Full Name:

PartnerLong:

Country :

About Your Project: Reference Project:

Company/Organization: Shakti Foundation's experience to make it sustainable

Project Code:

CategoryID:
Bangladesh

County:

City:

Please write about your business concept in five paragraphs with sub-title for each

Answer: Briefly describe the usefulness and uniqueness of your social venture Since its inception in 1992 the organization has been providing small loans to [poor urban] women for income generating activities and has encouraged women to save.... The organization has followed the Grameen Bank model and so far has a membership of more than 15,000 women and has disbursed loans of more than 87 million Taka [US$2 million], with an average loan size of about 4,000 Taka or US$100. The rate of recovery is almost 100 percent. The organization has experienced tremendous growth in terms of volume of operation and membership coverage. In 1992-93, we had membership of only 1,200 women, which increased to more than 15,000 in 1996. Our present loan outstanding is more than 28 million Taka [US$600,000]. But if we are to fly to a poverty-free world, we must have institutional sustainability as well. A number of factors contribute to organizational sustainability, but here I shall talk about the three main ones.

1: Loan repayment

1: Issues to be addressed by this social venture (or case) The first is loan repayment. We have been able to maintain a stable recovery rate since 1992. The recovery, however, fell in 1993 due to the eviction of a major slum.... Since last year the rate of repayment has risen back to about 100 percent. The following factors have helped us in ensuring repayment: regular attendance in the weekly center meeting; group pressure-if someone is defaulting, then we also have a center fund to take care of defaults; and continuous interaction with borrowers through different kinds of workshops. In some cases when people default, letters were sent to their families and influential relatives. Sometimes also absconding borrowers are tracked down by the group, who then creates pressure on the woman to pay back her debts.

2: Appropriate interest rates

2: What is the unique idea to solve the issues? The second point which is important for institutional sustainability is to have appropriate interest rates.... So far, Shakti Foundation has charged 16 percent interest rates on a reduced [declining] balance, and it was initially estimated that it would take seven years for the organization to attain self-reliance. However, it soon became apparent that the staff were low-paid compared to market rates, and unless they were given better salary and benefits, it would become difficult to retain them. Also, as the organization began to expand, its operational expenditure increased, and therefore to meet the costs the interest rate has now been increased to 20 percent. By so doing we hope not only to retain staff, but also projections show that the organization will be able to obtain self-reliance by 1998, assuming that expansion will continue at present rates. While in 1992-3 we were able to recover only 10 percent of our costs, in the four years [since], we have been able to recover more than 70 percent of operational expenses.

3: Keeping costs down

3: Revenue Model & Organization The third factor here is keeping costs down. What has helped us most in this regard is the participation of the branches in formulating their own annual work plan and cost-estimations in relation to their income. The branches are free to spend, as long as it is commensurate with their earnings. They are told that if they earn more, they can take more salary. And they can also spend more. This makes the branches very competitive. Each branch tries to perform better than the others, while keeping their expenditures low. In fact, we have raised the salary of branch staff twice in the last four years, because of the high performance rate and increased income earnings. However, I'd like to mention here that the cost of funds so far has been zero because we get grants, but we are now planning to borrow at concessional rates. And if we continue to disburse loans at the present rate, prevent drop-out of clients and staff, and improve staff performance, then Shakti Foundation will be able to attain financial self-reliance, even if takes a little longer than the projected period [of] 1998.

4:

4: Targeted Benefit & Outcome

5:

5: Strengths and Risks of the business model

The Project Owner: Explain your experience and skills within 150 words.

Business_Partners: Describe what types of business partners are you seeking

Position1 (Investors):

Position2 (Management & Staff):

Position3 (Management & Staff):

Position4 (Professional Staff):

Position4 (Professional Staff):

Position6 (Outside Experts):

Business Partners can jointly develop a business plan

Mode:

I'd like to jointly create this type of social venture in my home town:
You can create a Social Venture in your home town based on the business model in this page. The Social Entrepreneur Institute will assist you to make a business plan, funding the project and provide a More information on the Social Entrepreneurship Institute

ActivityID:
City:
Chapter:
Full Name:
PartnerLong:
Country :

About Your Project:		Reference Project:
Company/Organization:		Shakti Foundation's experience to make it sustainable
Project Code:
CategoryID:		Bangladesh
County:
City:
Please write about your business concept in five paragraphs with sub-title for each
Answer: Briefly describe the usefulness and uniqueness of your social venture		Since its inception in 1992 the organization has been providing small loans to [poor urban] women for income generating activities and has encouraged women to save.... The organization has followed the Grameen Bank model and so far has a membership of more than 15,000 women and has disbursed loans of more than 87 million Taka [US$2 million], with an average loan size of about 4,000 Taka or US$100. The rate of recovery is almost 100 percent. The organization has experienced tremendous growth in terms of volume of operation and membership coverage. In 1992-93, we had membership of only 1,200 women, which increased to more than 15,000 in 1996. Our present loan outstanding is more than 28 million Taka [US$600,000]. But if we are to fly to a poverty-free world, we must have institutional sustainability as well. A number of factors contribute to organizational sustainability, but here I shall talk about the three main ones.
1:		Loan repayment
1: Issues to be addressed by this social venture (or case)		The first is loan repayment. We have been able to maintain a stable recovery rate since 1992. The recovery, however, fell in 1993 due to the eviction of a major slum.... Since last year the rate of repayment has risen back to about 100 percent. The following factors have helped us in ensuring repayment: regular attendance in the weekly center meeting; group pressure-if someone is defaulting, then we also have a center fund to take care of defaults; and continuous interaction with borrowers through different kinds of workshops. In some cases when people default, letters were sent to their families and influential relatives. Sometimes also absconding borrowers are tracked down by the group, who then creates pressure on the woman to pay back her debts.
2:		Appropriate interest rates
2: What is the unique idea to solve the issues?		The second point which is important for institutional sustainability is to have appropriate interest rates.... So far, Shakti Foundation has charged 16 percent interest rates on a reduced [declining] balance, and it was initially estimated that it would take seven years for the organization to attain self-reliance. However, it soon became apparent that the staff were low-paid compared to market rates, and unless they were given better salary and benefits, it would become difficult to retain them. Also, as the organization began to expand, its operational expenditure increased, and therefore to meet the costs the interest rate has now been increased to 20 percent. By so doing we hope not only to retain staff, but also projections show that the organization will be able to obtain self-reliance by 1998, assuming that expansion will continue at present rates. While in 1992-3 we were able to recover only 10 percent of our costs, in the four years [since], we have been able to recover more than 70 percent of operational expenses.
3:		Keeping costs down
3: Revenue Model & Organization		The third factor here is keeping costs down. What has helped us most in this regard is the participation of the branches in formulating their own annual work plan and cost-estimations in relation to their income. The branches are free to spend, as long as it is commensurate with their earnings. They are told that if they earn more, they can take more salary. And they can also spend more. This makes the branches very competitive. Each branch tries to perform better than the others, while keeping their expenditures low. In fact, we have raised the salary of branch staff twice in the last four years, because of the high performance rate and increased income earnings. However, I'd like to mention here that the cost of funds so far has been zero because we get grants, but we are now planning to borrow at concessional rates. And if we continue to disburse loans at the present rate, prevent drop-out of clients and staff, and improve staff performance, then Shakti Foundation will be able to attain financial self-reliance, even if takes a little longer than the projected period [of] 1998.
4:
4: Targeted Benefit & Outcome
5:
5: Strengths and Risks of the business model
The Project Owner: Explain your experience and skills within 150 words.
Business_Partners: Describe what types of business partners are you seeking
Position1 (Investors):
Position2 (Management & Staff):
Position3 (Management & Staff):
Position4 (Professional Staff):
Position4 (Professional Staff):
Position6 (Outside Experts):