Blog Post 4: The BPC

One of the things that I expected to see, but didn’t was how transparent the use of the grants would be after they are awarded.  Perhaps you the BPC team did mention it and I just missed it, but I think this is an important issue.  Individuals can easily say one thing, but do something completely different with the money.  While there is no enforcement mechanism in place that would provide consequences to those that do not use the money in accordance with the business plan they created, some level of transparency can help to measure the impact and success of the program.  Obviously, immediate impact can be judged based on whether or not the business succeeded, but greater transparency is key in order to note whether the business failed because of poor financial training, and thus needing to adjust the curriculum (although the curriculum looks fantastic Meredith!), or because they simply did not allocate the money as the original plan indicated.

If there is to be any measure of transparency in the program I am curious to know who will carry it out.  Since men have been added as competitors in the BPC and our loan officer has expressed her discomfort in dealing directly with men, I am curious about who will be watching the winner.  I don’t mean to sound like big brother, but one of the main problems we have with the loan program is that there is no form of guarantee or collateral to ensure that we get our money back.  In this case, even though we are not seeking any money in return, giving a grant to someone who will misuse the funds is as good as throwing the money away.  If there was some way to monitor the BPC winner’s expenditure perhaps we can use the potential access to the business loan program as an incentive to use the grant properly.  Again though, we fall into the problem of who will monitor the winner.

Just as a suggestion, perhaps we could request all of the receipts from the winner that would account for the entirety of the grant.  Failure to turn in any and all receipts could result in immediate disqualification from the business loan program as well as participation in any future grant program.

Other than that, the program looks good.  Obviously it is not complete, but I think you guys are doing a fantastic job and definitely heading in a great direction.

2 Responses to “Blog Post 4: The BPC

  • I agree completely about the issue of the (mis)use of grant funds: one of La Ceiba’s biggest obstacles in understanding our impact is that we don’t know what funds are being used for. While there are definitely theoretical reasons for this lack of information, it creates practical problems. However, I foresee practical problems in your proposed requirement for receipts. Who is going to tally and track the use of funds? How can we be sure that the money being spent is from the grant rather than from a loan that the client has taken out? Tracking receipts is a painstaking business for anyone, and I don’t know that we can impose that kind of burden on the winner. Also, the sanctions seem remarkably harsh, although I don’t know that there’s really any other way to ensure that this is followed through. So though I agree about the need for transparency, I’m not sure how it’s going to work.

  • tfaramarzi
    7 years ago

    I originally had started to post this in response to Becca’s blog, but as it addresses the main question of your blog and is recurring, I’m going to redirect/ adapt the response here.
    I first should preface any answers by stating what is hopefully evident; there is a certain level of flexibility needed with regards to implementing and continuing the Business Plan Competition. That’s not intended to mean that the decisions we make are entirely transitory, but I can safely say that much of our future activity is hinged on the preceding processes and advances. That being said, I had the same initial question about the grant money- given accurate documentation and transparency it would make an excellent measure of impact (particularly regarding the amount of start-up capital and it’s potential within these communities) and transparency would therein be necessary. However, we aren’t going to award the prizes with any sort of mechanisms designating them as seed capital, and therefore we will have limited opportunities to document the allocation of those funds. Prize-winners will be free to use the money as they choose. In that sense, ‘mis-use’ of the funds would exist only insofar as our own perspective. We can hope that because it is awarded through basic education in business development, and accompanied by the creation of a functional business plan- which in and of itself is a highly valuable new tool with arguably intrinsic impact-, it would follow that prize winners in the established track seize the opportunity to use the lump sum to invest in their business, but we cannot require or ensure this. The principal reason for this is our inability to follow up effectively on the development of their business. After the course ends, we are constrained by both time and means of obtaining specific information about their transactions. Similarly, the complications that Laura has enumerated will likely be tied to any sort of monitoring method that we can create. The savings account provision has been made optional in an effort to avoid being overly-paternalistic, specifically given our limited capacity to be actively involved in the development of their businesses. I think if there is a change in our ability to implement some sort of transparency mechanism, using access to the business loan program would be key in asking for participation with that mechanism, but even that could be a relatively invasive process.
    That being said, I am offering here my opinion based on what I understand about the BPC ethos, our current abilities and the need to maintain consistency in our actions in this first year. I agree that we will be forgoing the opportunity to collect some essential data that could help us determine our impact and gather information valuable to LC as a microfinance entity, and I don’t believe that the option is off of the table. Still, we don’t seem to have the means to perform an effective and thorough documentation of how prize-winners allocate the grant funds at this stage. That’s not to say that we will not have an impact, but that our impact will be gauged more abstractly. I think it must be kept in mind that participants’ attendance and completion of the curriculum and a business plan/assessment alone will have tremendous implications regarding the impact of the BPC this year and in the future. For our purposes, I see it as being more necessary to articulate the impact of the BPC in terms of the content/delivery of the curriculum and the development of the participants’ business plan- did the information/materials developed cause participants to invest the available funds in the development of their business? Why or why not? We tend to assume that this information would be difficult to obtain without some sort of transparency method, but perhaps we need to consider in conjunction with the development of the business plan some way in which we can gather qualitative information measuring these impacts. A transparency method would more evidently be necessary for viewing the exact allocation of funds as you had mentioned, Caitlin, and it will at some point be necessary to collect evidence that clients will use LC business loans and seed capital sustainably and with consideration to the best use of those funds. However, I think that measuring the effectiveness of the business development/ financial literacy may not require that we impose mechanisms requiring prize-winners to use prize money for specific purchase and investments geared towards business growth. I think we can reasonably hope that after completing the curriculum, the prize-winner will likely invest in business development, but that is contingent on other uncertain factors that we cannot really survey at this time. Ok, I hope that has served as some sort of articulation of my reasoning.

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