How to help poor people?

I am grateful for technology which allows me to attend interesting lectures all over the world without leaving Puebla. As I listened to Esther Duflo´s speech about the role of evidence in the fight against poverty, I reflected on BCDF´s work in San Andrés Azumiatla. As the featured speaker of Center for Global Development's sixth annual Richard H. Sabot Lecture, Esther Duflo shared her latest research on new aspects of the behavior of poor people, their needs, and the way that aid or financial investment can affect their lives.

Esther Duflo is a leading development economist known for her work applying impact evaluation, randomized controlled trials and other field experiments to identify which development interventions actually work. Duflo is the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology and co-founder of the Abdul Latif Jameel Poverty Action Lab (J-PAL).

Esther shared that many development interventions fail because they do not address the real needs of the people. One of the lessons that I learned during BCDF´s business training in Azumiatla is that while small business owners need business training, other needs emerged that I had never considered. Our business training class had mostly women business owners who have to juggle domestic duties and managing their small businesses. One such need is psychological support for women who are often times victims of domestic violence and suffer from depression. This mental state affects how they communicate with their family members and how much energy they put into their businesses. The women in our training session felt completely on their own in overcoming obstacles and lacked a support structure necessary to make their businesses grow. Since all of the small businesses in Azumiatla are family owned, improving family relations is critical in order to help their businesses grow. I would have never discovered the need for support groups for women had I not spent significant amount of time in the community. Social development interventions that are designed from an office will never succeed since they will not address the subtle obstacles that poor people face.

Esther also talked about good politics being a precursor to good policy. I believe this rings true in Mexico. While a conditional cash transfer program is a good policy to incentivize poor people`s investment in education and health, without good politics the program´s impact will be diminished. In spite of some efforts to avoid political manipulation of this program, poor people enrolled in the program have been manipulated during electoral seasons. Good politics are indispensable for real social development. How can it be that Mexico invests more money into education than an average OCDE country and yet has some of the worst results on education indicators?

BCDF attends Caja Depac´s General Assembly

BCDF is very proud to collaborate with Caja Depac Poblana, a credit and savings cooperative offering integral financial services to poor people in the state of Puebla. I had the privilege to attend Caja Depac´s General Assembly which allows members to participate directly and actively in making the important decisions about the services that the savings cooperative offers. I felt inspired by how passionate Caja Depac´s members are about the savings cooperative since they dedicate time and effort to serve on committees, analyze pertinent information and make informed decisions. They are not merely loan borrowers. They are dedicated cooperative members: an institution that represents their interests and strives to ensure their success.

Jesus Ortiz, Caja Depac´s general director, informed in his annual report that 2010 was one of the most difficult for the cooperative due to the economic crisis as well as the crisis of confidence in savings cooperatives due to a few major frauds that occurred that year. In spite of these challenges, Caja Depac presented its case to be certified by the National Commission on Bank and Values, the highest governmental institution that regulates the financial sector. Once Caja Depac becomes approved by this Commission, the members´ savings will be protected by the government. Caja Depac will become the only savings cooperative in the state of Puebla to be certified by this commission.

BCDF is very proud to collaborate with Caja Depac for the following reasons:

• Caja Depac empowers its members to be active users of financial services, providing complete and accurate financial information so that they can make informed decisions
• Caja Depac promotes citizen participation by engaging members in democratc governance processes, which is very unique and necessary in a country where civic participation is usually limited to participating in a local church or donating once year to the needy
• Caja Depac offers integral financial services to poor people that are aimed at empowering them so that they do not become passive consumers of debt

Our business training strategy in Azumiatla would not be possible without the commitment of Caja Depac´s staff, in the corporate headquarters as well as the Azumiatla branch.

BCDF promotes community involvement in Human Rights Workshop for youth in Azumiatla

This month BCDF hosted a Human Rights Workshop for youth in Azumiatla in order to instill basic values of human rights as stated in the Universal Declaration of Human Rights. In the context of our current economic system where worker`s human rights are constantly violated, whether through meager wages, overtime hours without pay or unbearable working conditions, it is critical to raise a generation of entrepreneurs with a solid foundation in human rights.

The workshop was facilitated by law students from the Popular Autonomous University of Puebla (UPAEP) that form part of Active and Voluntary Students Community. The four day workshop that took place on January 21, 22, 28 and 29^th engages youth to think about their inalienable rights and the obligations that come with these rights. One of the main points of the workshop is to reflect on the obligation they have to participate actively in their communities, being a force for good in the society. The workshop covered topics such as human dignity, value of human life, freedom, law and justice, social and economic rights, and community involvement. The workshop was attended by over 20 young people ages ranging from ten to nineteen years of age. These young people actively engaged in activities such as role plays, poster drawing contests and puzzle solving.

The end of the workshop will be culminated by a day of community service, painting a mural in one of the public spaces in the community. Join us on saturday February 5th to renovate Azumiatla!

BCDF hosts its first Business Roundtable Discussion for young people in San Andrés Azumiatla

On January 11, 2011 BCDF and Endeavor Puebla co-sponsored a Business Roundtable Discussion for young people in Azumiatla. Business Roundtable Discussions are held on the second Tuesday of every month in Azumiatla with the goal of inspiring young people to turn their entrepreneurial dreams into reality by learning from experiences of established business people in Puebla. BCDF partnered with Endeavor, a global nonprofit that transforms emerging countries by supporting high-impact entrepreneurs, to identify business people who are not only financially successful but also deeply committed to Mexico`s social development.

BCDF`s first Business Roundtable Discussion hosted Josué Bereshit, the General Director of Soyamigo, a company that sells diverse soy products, who shared his experience in marketing health products in Mexico, a country that has one of the highest obesity rates in the world. Around twenty two young people engaged the speaker with tough questions and personal reflections. Jorge, a fourteen young man, asked Josué about how he overcame the moment when his company was about to disintegrate due to lack of liquidity. Fausta, a seventeen year old young woman, probed Josué about the different marketing strategies his company uses to dispel the myths that people have about soy products. At the end of the session, youth shared their own dreams about starting their own businesses. Whether opening a mechanic shop, publicity agency or a chain of restaurants, youth emphasized how they want to uplift their communities, starting innovative businesses and creating employment for community members.

The next Business Roundtable discussion will take place on Tuesday February 8, 2011, hosting Roberto Quintero, the General Director of Cinemagic, a low-cost movie theater company dedicated to generating economic development in rural communities.

Women`s Health Center

BCDF and the Center for Regional Development at the Autonomous Popular University of the state of Puebla (UPAEP) are collaborating in order to build a Women`s Health Center in La Preciosita, a community located in the municipality of Santa Rita Tlahuapan. The goal of the Women`s Health Center is to catalyze the community to work together to ensure access to timely basic medical attention and education on disease prevention. The medical attention will consist of primary physician as well as specialists such as dentists, gynecologists, ophthalmologist, among others. Some of the topics for education services include nutrition, food preparation, organic farming, disease prevention, domestic violence and hygiene habits.

Monitoring: BCDF will monitor to ensure the community`s involvement in the construction process as well as administration of the center. We will get constant feedback from community members to ensure that they feel engaged in the entire process and are involved in critical decision making processes such as the types of medical services and educational courses offered.

Evaluation: BCDF will design an evaluation system that measures certain characteristics prior to the construction of Women`s Health Center and then after the center has been operating between one and two years.

In the short term we will measure the following results indicators:

ü Number of people attended by the Center

ü Timely access to medical attention

ü Knowledge of specific topics such as nutrition, disease prevention, etc

In the long term, we will measure the following outcome indicators:

ü Number of deaths prevented

ü Number of disabilities prevented

ü Frequency of illnesses in the community

Business training strategy

Strategy 1: Integral business training strategy

BCDF is launching an integral business training strategy in San Andrés Azumiatla, a marginalized area of the city of Puebla. BCDF is collaborating with a saving cooperative, Caja Depac Pobalna, in order to target the cooperative members who take out small loans through the cooperative. Caja Depac Poblana provides access to an array of financial services in rural marginalized communities. In this partnership, Caja Depac Poblana provides BCDF access to its members in order to detect their business skill needs, offers critical input to ensure relevance of the training, and lends BCDF its space to carry out the training sessions and coaching. BCDF and Caja Depac Poblana aim to replicate this training strategy in other marginalized communities where the savings cooperative has branches.

The main goal of the business training strategy is to strengthen the capacities of micro business owners to run and manage profitable and sustainable businesses. We believe that profitable businesses will generate economic development not only for the business owners but for the larger community through job creation. The training consists of two stages: first stage is a 50 hour class that provides basic business skills such as marketing, sales, management and accounting and the second stage is personalized business coaching to different business clusters in order to apply the skills learned in the class. We will work closely with the savings cooperative to facilitate access to credit for these businesses to grow as well as facilitate access to additional government resources available for low income business owners.

Our theory of change is that by focusing on the capacities of the business owners, we will catalyze more profitable businesses which in turn will have positive impact on the community.

Monitoring: We will monitor the participants` satisfaction with the training through constant feedback on its relevance and applicability in their businesses in order to make necessary changes in real time.

Evaluation: How will we know if we have made any impact? We are currently exploring different diagnostic formats to apply to all of the businesses that participate in our training sessions. We will apply this diagnostic prior to enrollment in the training sessions and six months to one year after the training is over. The business diagnostic will rate the business on the following aspects: management, accounting, suppliers, product quality, customer satisfaction, corporate governance, and human resources. In order to measure the impact of business strategy on the larger community, we will also document the business ‘annual revenue and number of people employed before and after the training. As businesses are more profitable, the owners will spend more money within the community and therefore generate impact on a community level. Job creation allows community members to improve their standard of living.

What does 2011 hold in store for BCDF?

We are excited to welcome 2011. It promises to be an exciting year full of challenging opportunities and meaningful service work. After six months of planning, BCDF is armed with a clear direction and an action plan to fulfill our mission and work towards realizing our vision. We aim to contribute to the breaking of cycle of poverty through integral community development: catalyzing economic development, improving community infrastructure and investing in people`s individual and collective capacities.

Our first challenge this year is to design a monitoring and evaluation system for our two main projects: construction of women`s health center in La Preciosita and integral business training strategy in Azumiatla.

What are monitoring and evaluation and why are they important?

Source: http://www.toolkitsportdevelopment.org

Monitoring is the collection, analysis and use of information from projects in order to learn from the experiences acquired, to account for resources used and results obtained and to make decisions regarding the future of the project.

Evaluation is the assessment of an ongoing or completed project in order to decide their relevance, effectiveness, efficiency, impact and sustainability.

Monitoring and evaluation must be done systematically and objectively in order to provide relevant information necessary for decision making.

BCDF is committed to measuring its effectiveness not by the amount of resources invested into a project but by the impact of the results obtained.

Meet some of the innovative entrepreneurs from San Andres Azumiatla!

I visited these entrepreneurs and interviewed them about their businesses. They shared their visions for the future and the challenges they currently face. Each entrepreneur has his own dream about expanding his business in order to be able to provide his family with a brighter future full of opportunities. The challenges they face are lack of basic accounting, administration and business management skills.

Doña Marisela: Grocery store

Doña Lupita: Grocery store

Doña Maria: Seamstress

Don Telesforo: Sound and lights for parties

DoñaCelsa: Butcher shop

Doña Juanita y Don Antonio: Clothing and shoe store

Women's Health Center

On friday November 26, 2010 Beck Community Development Foundation and the Center for Regional Development at the Autonomous Popular University of the state of Puebla (UPAEP) co-led a participatory workshop with community leaders in La Preciosita, Tlahuapan in order to

begin the planning process of the Women's Health Center. The workshop's main goal was to define the key objectives of the Center, define the services to be offered and outline governance structure. The workshop turned out to be a great success with enthusiastic participation of the community leaders.

The Women's Health Center has been a dream for many years since La Preciosita lacks access to health services in the community. Doña Natalia said "We have waited so long to make our dream come true. It is a real blessing to be able to participate in this meeting where we can design our dream center. Our families need health services in order to prosper and get ahead in life." Many of the women in the workshop described how they lost loved ones due to preventable illnesses and ailments left unattended due to lack of resources.

We started off the workshop identifying the main health problems facing the community. During a brainsstorming session, the participants came up with the following problems:

• Lack of adequate health infrastructure
• Lack of nutrition training
• People getting ill with preventable illnesses
• There is a lot of violence within families in the community
• The community is not organized and doesn't collaborate
• There is a higiene problem in the home and in the community
• There is a problem of food contamination from lack of higiene and from chemicals used in farming

After identifying numerous health problems, the workshop participants narrowed down two problems that are the most important to address: lack of adequate health infrastructure and lack of nutrition training. Then we put together a problem tree to identify root causes and consequences of these problems.

Then the participants defined the services that will be offered in the Women's Health Clinic. The Women's Health Clinic will have two main components: medical attention and education.

The medical attention will consist of primary physician as well as specialists such as dentists, gynecologists, opthamologist, among others. UPAEP,

Beck Foundation and the community will work together to ensure that medical services are consistent and of the highest quality. UPAEP is currently negotiating with the University's medical school to solicit their commitment to send interns on a regular basis.

The second component is education and training. The workshop participants defined the following topics as the most important to address in educational workshops:

• Nutrition
• Food preparation
• Organic farming
• Disease prevention
• Domestic violence
• Hygiene habits

We ended the workshop with a lot of enthusiasm from all of the participants who are eager to work hard to make the Women's Health Center. Don Raul, the president of the construction committee, said "I feel very inspired by the discussions today. I know that all of our hard work will pay off when we see our families get the proper attention and care they need."

What do small business owners need?

I am spending one week interviewing small business owners in an impoverished community, San Andres Azumiatla, in the city of Puebla. These business owners are members of Caja Depac Poblana, a savings cooperative, and must save a small amount on a monthly basis in order to qualify for loans. They take out out loans mainly to improve their businesses but also for unexpected expenses such as

an illness.

After interviewing many business owners, I felt inspired by their stories of survival, perseverance and business acumen. I was surprised by the commonalities in the obstacles that small business owners in poor communities face in order to grow their businesses.

Sra. Maria is a mother of four young children whose husband dedicates himself more to politics than to his family. He eventually left for the United States and didn't send any money to his family. Sra. Maria was forced to find a way to make a living in order to support her family. She opened a butcher shop that is one of the most popular in the community. She currently buys about 6 cows that she slaughters based on demand. Her customers are her neighbors who like the quality of the meat she sells them and maintain their loyalty to her in spite of competition. She currently operates her business from a small room in her house with full time hired help where she has a meat cutting machine and a refridgerator. Sra. Maria's dream is to open a first class meat shop with a glass display, a clean space that is comfortable and appealing to the customers and a diverse selection of meat products. She strives towards registering her butcher shop with the city slaughter house. She is confident that she can realize her dream if she perseveres, making small but constant strides towards her goals. The biggest obstacle she faces is access to credit with a sufficient repayment term that allows her to generate the profit necessary to repay her loan.

Sra. Anselma makes gorditas, a traditional snack from Puebla that consists of fried tortilla with cheese and salsa. As many women in the community, she was a housewife for many years until her husband lost his job and she faced serious health problems, generating an unprecedented level of expenses. In desperation she turned to community loan sharks who would lend her 200 dollars which in a matter of few months became 1,000 dollars. She eventually accrued almost 10,000 dollars worth of debt at an exhorbitant interest rate of 10% monthly. Sra. Anselma opened two gordita stands and has made a serious effort to pay off her loan. She cooks the corn the night before and then wakes up at 5am to take the corn to be ground. Then she prepares the sauces and stores everything in containers that she will need for both of her stands. After dropping off the ingredients to the stand that is operated by hired help, she drives to her stand to set the stove and tables in place. After being up on her feet for more than seven hours, she goes to the market to buy the ingredients she will need for the next day. Sra. Anselma dreams about having an enclosed stand to sell gorditas, where she can be protected from the wind and the rain, offering more quality to her customers. She wants to grow her business and open more gordita stands in the city of Puebla. Sra. Anselma needs help improving the image of her business, learning about ways to ensure higher quality gorditas and diversifying the snacks that she sells.

Sra. Anselma and Sra. Maria are two of the savy business women who want to grow their businesses yet lack the necessary tools to do so. They need support in expanding access to markets, sufficient capital to buy raw materias in bulk, and credit to invest in equipment. Most importantly they need to believe that they can make their professional goals come true.

Getting to the root of the problem

Reading all of the statistics in the last post, it is easy to get discouraged. Where do we start? How can we identify the root causes of the poverty we detected?

BCDF board members and staff decided to use a useful tool called the problem tree to help us differentiate the effects of poverty from its causes. We asked ourselves what are the root causes of poverty, what is the core problem BCDF needs to address and what are the symptoms of the problem.

After analyzing the root causes of problems in its different dimensions such as education, economy, community organization, infrastructure and the environment, we came to the conclusion that the core problem is weak community economies. The consequences of weak communities include lack of tools, skills, and educational knowledge to incorporate favorably into the workforce, insufficient household income, unemployment and underemployment, deficient basic infrastructure and environmental degradation.

So if we know what the main problem is, what should BCDF establish as its objective? Our objective should be to strengthen and energize community economies in order to contribute to breaking the cycle of poverty in marginalized community. There are various strategies we can pursue such as providing technical training for youth, promote direct access to markets, catalyzing community based development plan, and promoting favorable conditions for agriculture. Since the root causes are complex and multidimensional, there are many ways to attack them.



Based on this problem analysis, what should be BCDF´s strategic lines of work be given its mission and operational capacity? In lively discussion in our strategic planning meeting, we defined our three strategic lines:
1. Investment in human capacity,
2. Advancing community economies
3. Strengthening community infrastructure

These are the three components necessary to accomplish integral community development, breaking the vicious cycle of poverty and empowering community members to become self-reliant. We believe that through education, income generating opportunities and community spaces we can catalyze sustainable community improvement.

BCDF in Mexico

Many people ask me why the Beck Group decided to open a foundation that works in Mexico. In 2009 Mexico passed a threshold to become a high income country. It is one of the 5 high income countries in Latin America , among Chile, Uruguay, Argentina and Panama. Mexico has the 11th largest economy in the world as measured by gross domestic product and purchasing power parity. In spite of these seemingly positive economic indicators, if we zoom in on Mexico we can see an incredibly high level of poverty and one of the world´s worst social inequalities.

Nationally 44.2% of Mexican population live in moderate poverty and 70% live in multidimensional poverty. In terms of social rights such as health and education, 40% of Mexicans lacks access to basic health care and 21.7% of all students drop out from school. In 2010 the highest daily minimum wage was US$4.45 and therefore 20% of Mexicans lack access to sufficient food.

Mexico is a young country: 31% of the population is young. But the children and youth live in deplorable conditions. 17 out of 100 Mexican youth migrate to the US. 25% of all children and youth live in extreme poverty while 60% live in some level of poverty. 13% of youth of working age are not employed.

Even though there are many states with social needs, BCDF decided to focus on doing work in the state of Puebla. Puebla is the 4th poorest state in Mexico based on income and 7th most marginalized based on access to social rights. Out of 217 municipalities, 69% are highly or very highly marginalized. In Puebla 29% of the population didn´t finish middle school, 49% live in overcrowded housing and 61% earn less than 250 dollars per month.

These statistics are depressing. How can a small grassroots non-profit organization make a difference in Puebla?

Please follow our blog and we will inform you on our work and offer opportunities to get involved.

Microfinance in Mexico

As I sat in the front row and soaked in Muhummad Yunus´every word about how 27 dollar loans transformed women's lives in Bangladesh, I felt inspired by the power of microcredit to lift women out of poverty. Even though microcredit has really taken off in developing countries as a way to combat poverty, it has also become a source of contoversy and heated debate revolving around the high profits reaped by many microfinance institutions.

The need for financial services:

Ever since I moved to Puebla, Mexico, I have been shocked by the number of pawnshops all over the city (sometimes 2 or 3 on one block) and the flooding of advertisements of institutions offering easy and fast access to loans to solve all your needs. In Mexico, only around 32% of the economically active population has access to formal financial services in comparison to approximately 80% in developed countries. In rural areas access to these services is limited to around 5% of the population. (Source: Press release, World Council of Credit Unions) Mexico has more than 60% of its population working in the informal economy and 60% of all of the households in the informal economy are excluded from credit, savings and insurance services.

The lack of access to formal financial services has severe consequences on families, forcing them to utilize loan sharks and pawn shops. Financial inclusion is defined as universal and continual access to integral, formal and adequate financial services that adapt to the needs of the users and therefore contributing to their development and well-being. Financial inclusion allows families to stabilize their consumption, accumulate resources, have investment opportunities and have protection against basic risks in life. (Javier Chavez Minjares, Secretary of Agriculture, PATMIR presentation, 2010)

What are integral financial services?

· Savings account

· Investment

· Credit (loans)

· Remittances

· Insurance

· Payments

· Government transfers, among others.

Microfinance institutions:

(Source: Javier Chavez Minjares, PATMIR presentation, 2010)

There is a plethora of microfinance institutions in Mexico offering diverse services to their clients. Even with all this competition, the average annual interest rate is around 70 percent, compared with a global average of about 37 percent. The main microfinance institution is Compartamos Bank, a Mexican firm that initiated as a small nonprofit organization, and has been at the center of debate since it generated $458 million in a public stock sale in 2007.(New York Times, April 2010) Some of the non-profit organizations that offer microfinance services in Mexico include Fundacion Realidad and Foundation Pro Mujer. Foundation Realidad offers financial and nonfinancial services to families that do not have access to formal banking services to improve their quality of life. (www.kiva.org) Fundacion Pro Mujer offers integral financial services focusing on women and their economic development. Private banks offering microfinance become profitable charging very high interest rates to poor people. Civil society organizations depend on donations to subsidize the cost of microfinance.

Can there be a just and sustainable way to provide microfinance and promote financial inclusion?

What do you think?

Some useful links:

Banks Making Big Profits from Tiny Loans, New York Times, April 13, 2010 http://www.nytimes.com/2010/04/14/world/14microfinance.html

Compartamos Bank: www.compartamos.com

Fundación Realidad: www.fundacionrealidad.org.mx

Fundación ProMujer: https://promujer.org

Kiva, Loans that Change Lives: www.kiva.org

Welcome to the Beck Community Development Foundation

“How wonderful it is that nobody need wait a single moment before starting to improve the world. “ Anne Frank

The Beck Community Development Foundation’s service work in the United States, Mexico and Central America over the past years embodies these words. After numerous aid trips to Central America to assist impoverished communities to build lasting social change capitalizing on Beck’s most valuable assets-the development, design, planning and building skills of its employees-the Beck Foundation made a multi-year commitment to catalyze the improvement of educational infrastructure in San Antonio Juarez, a community one hour outside of the city of Puebla, Mexico. The Beck Community Development Foundation’s approach is to work with the community to identify their needs, collaborate to develop sustainable and lasting infrastructure and assist them in making the most of the assets they possess. The Beck Foundation decided to establish its activities in Mexico because it is a country full of contrasts and social needs.

Mexico´s slow yet solid democratic transition coupled with unprecedented economic growth did not ameliorate the high level of poverty and social inequality as revealed in the statistics cited below.

Poverty: (CONEVAL 2007)

In a country of 107 million people:

· 13.2% of the population lives in extreme poverty, which means that they do not have sufficient resources to obtain a basic food basket.

· 20.7% of the population lives in poverty of capacities which means that they can afford to buy a basic food basket but do not have sufficient resources to invest in health or education.

· 42.6% of the population lives in general poverty, which means that they have access to a basic food basket, education and health but do not have a minimally aceptable standard of living such as adequate clothing and transport for all members of the household.

Social inequality: (CONEVAL 2007)

· Mexico has the highest income inequality out of all countries in Organization for Economic Cooperation and Development (OECD).

· The medium monthly income of the poorest 10% of the population is 1,000 dollars which is lowest than in any other developed country.

· 10% of the richest population holds 39.3% of nation´s wealth

In the face of these stark social indicators, the Beck Community Development Foundation aims to play a critical role in contributing to Mexico’s social development. The Foundation will use a rigorous methodology to identify key social problems, design innovative initiatives that build on community assets and engage other civil society actors in order to maximize resources and impact. The Beck Community Development Foundation is committed to building better futures with communities in need.

We will use this blog as a space to exchange ideas about innovative approaches to social development and to share our experiences in implementing projects to address community needs. We invite you to engage with us, to respond to our blog posts and to share your ideas and opinions in order to enrich this conversation.