Unitus – What next ?

Unitus which abruptly ceased it’s non-profit microfinance operations in July 2010 and laid off it’s employees just before the IPO of SKS Microfinance, has posted a new update on it’s website indicating towards it’s future course of action. The official announcement follows below :-

Update from Unitus

December 22, 2010

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.unitus global poverty

Our Progress Since July

We are pleased to report that Unitus has made significant progress in professionally and carefully winding down our microcredit operations in the past five months. We also have begun researching new opportunities for Unitus to make a further new and significant impact in reducing global poverty.

Fulfilling Partner and Program Commitments

Plans are in place to fulfill existing Unitus partner commitments. In some cases, Unitus has completed the work already. In other cases, we will complete the work or transition the remaining work to be completed by other capable organizations.

MFI Acceleration Partners.

Our strategy has been to focus our efforts on supporting the earliest-stage MFIs that are not yet at critical mass.  We provided critical catalytic debt financing (funds they can lend to borrowers) and advisory services (technology, human resources, capital raising, marketing, product development, leadership development and strategic planning) to help MFI partners become more efficient and effective in expanding their operations to reach more poor families.  In the past few months, we have:

  • Completed multiple MFI partner engagements, including technology and product development in India and long-term planning and operational efficiency in Africa
  • Completed our Kenyan MFI Growth Centre program (final event in September 2010)
  • Developed final acceleration grants to propel these MFIs forward (some are completed; remaining grants in progress)
  • Began the process of creating a new catalytic debt facility for an African MFI partner (targeting to complete by year-end 2010)

Read the rest of the Announcement on the Unitus Website

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