After spending 12+ years abroad, microfinance for me will always evoke dusty bazaars and foreign places.  I’ve been home a year now and have gotten used to the idea of the many microfinance programs operating in California’s Bay Area, with its urban areas and wildly varying incomes.  Still, I found myself a bit surprised when I learned about a microsavings program operating in my home town of San Mateo, California.  After all, San Mateo County has one of the highest average incomes in the nation.  But an average is just that, and there are always people who fall well below the mean.

HIP Housing, as its name implies, focuses on finding housing solutions for the economically disadvantaged.  How does microsavings play a role?  Self-sufficiency Director, Carolyn Moore, explains.

Q: Tell me about your savings program with Opportunity Fund.

Carolyn:  At HIP Housing, I work with low income parents who are in school.  The self-sufficiency program pays a portion of their rent so they can focus on school, finish it, and eventually earn an income that will pay for their own rent.  The key is that I’m working with a low-income population which has an education plan, and this makes them a good fit for the Individual Development Account (IDA) savings fund through Opportunity Fund because the money you save and the matching funds must be used for education, small business, or a home purchase.  With the high housing prices in the Bay Area, most clients spend it on a small business or education.

We’ve been working with Opportunity Fund for the last three years.  The IDA works as a savings account with matching funds.  The client saves a minimum of $25/month and has two years to save up to a maximum of $2,000.  Everything is matched 2:1.  So if they save $2,000, Opportunity Fund throws in $4,000.

Q: Who are your typical clients?

Carolyn: Most of my clients are single moms because when you say low income parent that’s usually what that means, though we do have a few single dads and couples.  A lot might have been teen parents, who got out into the working world and realized you can’t make it on a high school education or less in this area so they decided to get some kind of training to increase their earning power.  Our program is 1-2 years of rental assistance, so we require the education plan be completed in 1-2 years.  So I’m working with people doing relatively short term educational programs, e.g. administrative assistant training, medical assistant, dental assistant – i.e. entry level vocational training at the community colleges.

Q:  Can you give me an example of a success story?

Carolyn:  I have a single dad with two kids who has been in the program for about two years.  He was cutting hair on the side but you can’t do that without a license, so he needed to go to school.  There’s a barber school in San Francisco that cost $6,000 but he didn’t have the money.  When he came to our program we cobbled together various sources, including the IDA.  He didn’t have $6k immediately so we had to get him some other funding through the Workforce Investment Act, which is retraining through the welfare system to get started.  By the time he got through the first part of the program he had saved enough in the IDA to pay off his education.  Now he has a job with Philgood Cuts in San Francisco.

It’s hard to go to school, take care of your kids, and work.  The majority of my clients have part time jobs.  It would have been difficult for this particular client to be able to assemble the various resources on his own.

Q: How are you funded?

Carolyn: We have various funding sources.  This program gets a lot of money from the County of San Mateo.  We also get money from private foundations and individual donors.

Q: What haven’t I asked that would you like to tell me about?

Carolyn: Save Together.  Opportunity Fund is one of the partners, and it’s an IDA in the Kiva model where individual philanthropists can go on-line and make a donation to an individual in their community.  So a low income person goes on line and says they need $6,000 for cooking training.  An individual donor can then go on-line, think it’s a good idea, and donate $25, and the IDA can build that way.

About Kirsten Weiss

Integrating marketing and strategy to develop profitable, demand-driven institutions.