As part of my job, I have the privilege of speaking to groups of students and young professionals about Opportunity International. I’m always struck by the consistency of questions that these groups present. Of course, there are unique inquiries related to personal interests and experiences, but largely I’m faced with the same questions no matter who is in the audience.
The questions I get most often go something like this:
- Does Opportunity work?
My answer is yes.
- How do you know?
My answer is some combination of Social Performance Management metrics, anecdotal evidence and measures of repayment rates and other key data points.
- How is this success possible?
The truth is, there are many reasons for Opportunity International’s success in lending to people living in extreme poverty, not least of which are the tenacity and incredible work ethic of Opportunity clients. But there are also systematic tools in place to encourage clients’ (and Opportunity’s) success. And the most notable of these tools is the Trust Group.
What is a Trust Group?
A trust group is a group of 10-30 people who are all receiving loans from Opportunity International. While each individual is building her own unique business, the group as a whole is responsible for paying back the full loan amount lent to the entire group.
What does a Trust Group do?
Each group meets weekly or biweekly to pay portions of their loans, meet with a loan officer from Opportunity and receive training on business, social or personal topics. Together, the Trust Group ensures full payment of the loan and encourages its members to build thriving businesses. It mitigates the risk associated with individual loans and vets potential loan recipients.
Why lend to Trust Groups instead of individuals?
Lending is risky – especially when clients do not have much collateral or history with credit. The Trust Group allows us to focus on the clients we most want to serve – those who cannot access traditional banking services – while also mitigating our risk and ensuring our success. The group is responsible for ensuring the loans of its members, so the community works in lieu of collateral.
Do Trust Groups work?
For us in the United States, it seems crazy to tie our personal success to that of our neighbors and friends. But for many around the world, the community acts as a safety net. I have seen incredible friendships between Trust Group members – friendships that are not only wanted, but needed for survival. And as people build their businesses, their friends are walking alongside them, cheering them on and encouraging them in times of challenge. These relationships are foundational to the success of Trust Groups.
Statistically, Trust Groups do work. Opportunity’s loan repayment rate is 98 percent – an incredible number considering that most banks have deemed our clients unbankable! This success is directly related to the Trust Group model – and the love and support that exists between friends who want each other to thrive.