Show Me The Ropes: Starting a Campus MFI

Vanessa Carter, Lend for AmericaKatelyn McCarthy, Hoosier Social Impact

Fund at Indiana University

Agenda• Context

– Why students – Define campus MFI– Typical Start Up Stories

• What’s your idea?• Case Study: Katelyn McCarthy• Steps to Start Up

– Before you start– Products and Services– Legal– Team– Fundraising– Set Goals: Start up milestones

• How LFA can Help– Free, Public Resources (webinars, publications, start up kit)– Fellowship– Membership

• Resource Library• Annual Review• Site Visits• Data Collection

• Questions

Why Students

• Time• Low Cost• Underserved Markets• Creativity

Define Campus MFI

Team of students who go off campus and find people who need help. They offer basic financial advice and lend small amounts of money they have raised.

Campus MFI Models

Community Empowerment Fund, UNC Chapel Hill

University of North CarolinaFounded in 2009~200 student volunteersClients served 2013-14: 351

Yale University in New Haven, CT Founded 2001~50 student staff2012 Operating Budget: $13,000501c3 Nonprofit Corporation

Elmseed Enterprise Fund Client: Antoine Scott

Introductions

• Have you started yet? What stage are you in?

• What products or services might be relevant in your community (loans, savings, training)?

• How are you learning about your community?

Common Start-Up Stories

• International Microfinance Inspiration• Struggling Local Community• Business Plan Competition• Lend for America Fellowship• Social Entrepreneurship Class

CASE STUDY: HOOSIER SOCIAL IMPACT FUND

Katelyn McCarthy

Before You Start

• Get to know your community (go to ‘Connecting to Your Community’ at 10:30 in Chevron)– Focus groups– Interviews– Volunteer– Talk to Community Organizations

• Find at least two committed students• Learn about the issues

Products & ServicesTypes of

Products and Services

Definition

Loan Packaging Help prospective borrower with loan application

One on One Coaching Basic advice on marketing, financial management, biz basics

Training Classes Teach a curriculum to a group of individuals

Banking and Savings Help clients open and maintain bank accounts

Microloans Installment loans under $10,000 for entrepreneurs with small, informal, or home- based businesses

Credit Builder Loans Installment loan of $100-$1,000 for the purpose to help client open new, active accounts on credit report

Payday Alternative/Emergency Loans

Installment loan under $1,000 for consumer needs

Financial Products & ServicesProduct or Service 501 c 3

req’d?

Start Up Capital Needed

Campus MFI Examples

Microloans Yes $2,500 Elmseed Enterprise Fund

Credit Builder Loans Yes $1,000 Intersect Fund, Capital Good Fund

Other Consumer Loans Yes $1,000 JIFFI, Capital Good Fund

Consumer Savings No $0Community

Empowerment Fund, Resource Fund

Training classes and one on one coaching No $0 Capital Good Fund,

Elmseed Enterprise Fund

Kiva Zip No $0 Berkeley Microfinance

Financial Service

Checklist – What You Need

Microloans

Lending infrastructure:1) Incorporation in your state2) Bank Account3) Process for application intake4) Access to pulling client credit reports5) Process for approval6) Process for disbursal7) Access to reporting loan payments8) Process for collections9) Team focused on sales

Credit Builder Loans

Credentialed through Credit Builders Alliance1) CBA Member Fee2) Office Space with physical signage3) 501c3 registration4) Three loans5) Two Letters of support6) Metro2 Software

Other Consumer

Loans

Legal research: 1) Do you need a lending license in your state?2) Is there a maximum interest rate you can charge?

Checklists

Financial Service Checklist – What You Need

Consumer Savings

1) Partner depository institution2) Research on local products available for your target market3) Channel to reach clients in your target market

Training classes and one on one coaching

1) Outgoing people comfortable teaching or coaching adults2) Experience coaching3) Training – you need to get trained

Kiva Zip

1) Apply to be a trustee 2) Outgoing people comfortable with sales3) Research and training on Kiva Zip’s process4) Good writers who can help prospective borrowers post

descriptions

Checklists

Kiva Zip Trustee

501(c) 3 Student organization

Academic

Yale; Georgetown; Arizona State; U of Alabama; Rutgers*; Brown*; Southern Methodist University;UNC Chapel Hill*; University of the Pacific; BYU; U of Notre Dame

UC Berkeley; Wesleyan University; Haverford; Claremont McKenna College; U of Houston

University of Michigan; Hamilton College; Northwestern

U of Arizona; St. Cloud State; Bentley; Saint Francis University

Legal Structure

*A 501(c)3 with full-time staff

Rocket Lawyer

• Free incorporation• $49.99 per month

Team

• Structure– Hiring for specific positions– Give people titles and clear

responsibilities

• Plan for Leadership Transitions– Go to ‘Top Strategies for Managing a

Volunteer Run Campus MFI’ – 1:40pm in Chevron

Fundraising

• If you file as a 501c3 nonprofit corporation:– Local banks– Foundations– Corporate sponsors

• If you don’t:– On-campus funding for registered student orgs– Business Plan competitions– Family and Friend campaigns (use gofundme or

indiegogo)– Small grant contests (Banking On Youth,Ashoka)

Start-up Milestones

• Serve a client – At least 8 hours of TA– Business Basics Class– Disburse a loan– One on One Financial Coaching

• Raise funding • Incorporate as a non-profit• Open a bank account

Free Public Resources

• Webinars• Publications• Start-up Kit

Fellowship

1. Hands-on experience at a grown up campus MFI

2. $2500 stipend and travel paid 3. Training and mentorship to build a

plan for new campus MFI

Membership

• Resource Library• Annual Review• Site Visits• Data Collection• Networking • Mentorship

Questions?