Microfinance consultant and Seattle native, Adam Sorensen, recently commented on the closure of the nonprofit organization Unitus, which is based in the US city of Seattle. As MicroCapital reported on July 8, 2010, Unitus has recently announced that it will discontinue its microfinance-related activities and will direct its remaining assets to ‘new early-stage, poverty-focused philanthropic activities.’ Mr Sorensen recently commented in the Seattle Times Newspaper about the closure of Unitus’ offices. He argues that Unitus represented a different kind of nonprofit in the microfinance industry, one that advocated for commercial capital. He notes that in 2009 roughly 50 percent of total funding for the microfinance industry came from donors and investors. Given Unitus’ preference for commercial capital, Mr Sorensen asserts that it “promised better results by bringing commercial discipline and business practices cultivated by the leading companies that it often recruited [staff] from.”
Mr Sorensen claims that Unitus’ decision to close comes at a time when the microfinance industry is faced with serious issues, citing the recent financial crisis, the rapid growth of microfinance providers that has destabilized the industry in certain countries and randomized-control studies that have called into question the impact of microfinance as a strategy for poverty-reduction. He states “Cumulatively, these developments demand the participation of Unitus as a proponent of commercial capital to spur the rapid growth of microfinance to reduce poverty – not a victory lap.”
Unitus was established in 2001 and has since raised USD 40 million in donor funding to support 12 microfinance providers in India, three elsewhere in Asia, four in Latin American and three in Africa.
About Unitus Inc.:
Unitus Inc. was an international nonprofit organization that aimed to accelerate the growth of microfinance to alleviate poverty. It drew on employees from a variety of backgrounds, including microfinance, banking, technology and consulting, to provide microfinance institutions (MFIs) with expertise and funding. As of 2008, Unitus worked with 23 MFIs in India, Southeast Asia, East Africa, South America and Mexico. Unitus also participates in the Unitus Equity Fund I, which is managed by Elevar Equity Advisors and invests in MFIs in India and Latin America. As of 2009, Unitus had total assets of USD 19.4 million. As of July 2010, Unitus has closed its offices and plans to refocus its efforts away from microfinance toward other ‘poverty-focused philanthropic activities.’
By Matthew Fox, Research Assistant
Sources and Additional Resource
Seattle Times: Microfinance Mission Accomplished, Hardly, Experts Say, 19 July 2010: http://seattletimes.nwsource.com/html/thebusinessofgiving/2012398307_unitus_the_seattle-based_non-p.html
MicroCapital Brief: Unitus to Discontinue Microfinance-Related Activities to Focus on Other Povert Alleviation Strategies, Will Release 40 Staff Members in India, Kenya, United States, 8 July 2010: https://www.microcapital.org/microcapital-brief-unitus-to-discontinue-microfinance-related-activities-to-focus-on-other-poverty-alleviation-strategies-will-release-40-staff-members-in-india-kenya-united-states/
MicroCapital Universe: Unitus Inc.: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Unitus+Inc.#Description
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