Update from Unitus

Today I received a detailed update from Unitus, and I think you might find it as fascinating as I did, for both its honesty and its comments about the state of microfinance in general. I made a small donation a few years ago, and have been impressed with the organization’s communications ever since.  It begins:

Dear Unitus Donors and Supporters:

This is a follow-up to our July 2 announcement that we would redirect our efforts toward new poverty alleviation strategies and initiate no new microcredit acceleration projects. We want to keep you informed about what we’re doing to fulfill our commitments. This letter serves as a stewardship report from our board to you. We are dedicated to using your generous donations appropriately and in alignment with our core mission to help reduce global poverty.

Why We Are Changing our Focus

Unitus’ mission is to reduce global poverty through economic empowerment and this is not changing. What is changing is our focus going forward.

Almost 10 years ago, Unitus identified the potential to dramatically catalyze expansion of the supply of quality microcredit, and subsequently developed and deployed a methodology we called ‘microcredit acceleration’ to realize this opportunity. We saw ourselves as a catalyst for the microfinance industry, hoping that our methods and practices would be adopted throughout the industry. We are proud of the substantial, concrete, positive impact that we’ve been able to make with your support in the operations and scale of our 22 microfinance partners, in the industry overall – and ultimately, in the lives of nearly 15 million of the world’s desperately poor.

After considerable review, we concluded earlier this year that we had achieved our specific microfinance objective: to demonstrate the scalability and commercial viability of microfinance in such a way as to influence the flow of commercial capital toward this crucial poverty alleviation tool. Our decision to curtail additional microcredit acceleration projects was based on strong recommendations from Unitus staff and other respected microfinance experts that sufficient commercial capital was available in many regions to fuel microfinance growth, with additional providers continually entering the field. Understanding this, we felt that we should be very careful in how we would continue to commit precious donor funds to a strategy that had largely achieved its intent.

This realization then necessitated a very difficult decision. Not wanting to unduly spend donor funds on unneeded administrative overhead, we felt an important obligation to scale back our internal operations while still fulfilling our existing commitments and preparing for the next phase of Unitus. This was a painful decision because it involved laying off employees, winding down projects and closing a 10-year chapter of Unitus leadership in microfinance. Painful as it was, we believed then – and continue to believe now – that it was the right thing to do. All this being said, while we tried to make this change in a completely professional and caring manner, we realize that we made mistakes in the way our change was announced and implemented. We apologize for any ill feelings or misperceptions this may have caused to those within and outside the Unitus organization. We could and should have done better executing this organizational shift.

Read the rest here on the Unitus site.