Organization Profile & Updates
Founder: John Hatch
Year of First Loan: 1984
Total Borrowers 1984-2004: 1.3 million
Number of Borrowers in 2004: 255,795
Percentage of Women Borrowers: 85%
Total Funds Loaned (1984-2005): $975 million
Outstanding Loan Portfolio: $176 million
Repayment Rate: 97%
Annual Expenses (2003): $32,561,629
Number of Employees: approx. 3,000
1101 14th St. NW, Suite 1100
Washington, DC 20005
Tel.: (202) 682-1510
Fax: (202) 682-1535
FINCA offers small credit loans, larger individual loans, savings deposit accounts, health and life insurance products, health care, and business-interruption coverage.
FINCA is the pioneer of the village banking method of microcredit where putting the poor in charge of their own bank is the founding philosophy. The level of autonomy that FINCA gives to its borrowers is a unique feature of FINCA. The results among FINCA's borrowers are increased earnings, better family nutrition, high repayment rates, and increased empowerment-results that have been replicated over and over again in the poorest areas of the developing world. Believing that his village banking invention belonged not to himself, but to the world's poor, John Hatch has eagerly taught his methodology to hundreds of organizations and individuals.
The Democratic Republic of Congo
Percentage of clients who are the "poorest of the poor":
Latin America: 45%
FINCA employs approximately 3,000 (2,000 are credit officers) worldwide. About 99% of the 3,000 employees are host-country nationals (local citizens). Of these host-country nationals, about half are the young-adult-age children of FINCA clients. In some countries, FINCA is the largest career path for daughters of impoverished families.
The FINCA Story
John Hatch had worked on international development projects throughout the world and had grown increasingly frustrated with government programs' failure to involve the people they hoped to benefit. In 1984 John was in an airplane high above the Andes, en route to a consultant assignment in Bolivia, when inspiration struck. He grabbed in-flight cocktail napkins, scraps of paper, and a pen and began writing down ideas, equations, and flow charts as fast as he could. By the time he landed in La Paz, he had the outline of a radically different approach to poverty alleviation: a financial services program that put the poor in charge. Believing that the poor lacked neither ambition nor skill, but simply resources, John developed a philosophy he has yet to abandon: "Give poor communities the opportunity, and then get out of the way!" This spirit created what became known as the village banking method. This approach gave the poor the opportunity to obtain loans without collateral-the poor's main obstacle to accessing credit—at interest rates they could afford. But perhaps most important, it gave them control: the power to collectively disburse, invest and collect loan capital as they saw fit.
John first had to convince a group of USAID officers that his epiphany would pay off—for the rural poor and the government of the United States, whose grant dollars would fund the first projects. Remarkably, the officials liked his innovative idea and provided an initial grant of $1 million. John and his Peruvian business partner, Aquiles Lanoa, launched the program in five separate geographical areas of Bolivia and within four weeks, they had created funds in 280 villages serving 14,000 families with loans worth $630,000. John's clients in Bolivia were puzzled at first by village banking because it represented a significant departure from business as usual. They were intrigued enough to try it, however, and it was an immediate success. When John's client in Bolivia changed its in-country team, the new representatives shut the program down. More cautious than the original client team, the new group acknowledged the program's success but still felt that un-collateralized lending to very poor people was too risky. Undeterred, John spent the next few months training others in the village banking methodology, helping open new programs throughout Latin America, and building the institution that would come to be known as FINCA International. FINCA incorporated in 1985.
While the original village bank credit and savings program remains the core product in the African programs, FINCA has partnered with leading insurance companies to offer health and life insurance products, health care, and business-interruption coverage in response to the AIDS crisis occurring in Africa.
In the Newly Independent States (countries of the former USSR), FINCA's product offerings have expanded to include larger, individual loans, collateralized by office or specialized equipment, vehicles, or property.
Three of FINCA's most successful programs, Ecuador, Uganda, and Kyrgyzstan have transformed into regulated deposit-taking institutions (MDIs). MDIs can accept savings from the public and then lend those savings to fuel much faster program outreach.