I recently met with Narinder Dhami, Executive Director of Rise Asset Development, a microfinance program for people living with mental illness and addictions. (Please click on the link to learn more about Rise.) Narinder was part of the project incubation while working at the Lee-Chin Institute for Corporate Citizenship at the Rotman School of Management(where she also earned her MBA and she followed this with work in microfinance throughout West Africa – Burkina Faso, Mali and Côte d’Ivoire. Rise provides loans, leases, and lines of credit up to $25,000 throughout Ontario so is an ideal model to look towards. I asked Narinder for advice on moving forward with a microfinance for artists project.
When I first dreamed up this project, I thought an eventual program might be set up in communities through partnerships with local microfinance institutions. Then I learned about programs with dedicated funds. At the December meeting of the MARProject Partners I proposed that we pursue partnerships with community-based microfinance institutions (lenders) operating with agreements with a centralized program fund with capital generated by impact investors. This is now looking too ambitious and unrealistic and I am back to the idea of partnerships with existing microfinance institutions.
Rise Asset Development operates from a position of tremendous benefits and privileges but even in their position there are many challenges to building a microfinancing organization. Rise started with a $1 million donation from Sandra Rotman! The program is supported by Rotman School of Business and CAMH, which means advisory support and lowered administrative expenses. Narinder repeated what I have learned elsewhere, that the success of domestic microfinance depends on achieving scale, which is difficult with targeted populations (such as artists), and that programs in Canada to date remain dependent on donations and grants.
Duplicating the Rise model would mean finding an angel prepared to donate start-up funds at the level that Sandra Rotman provided. Maybe it’s the February blahs but it seems next to impossible to me. It became clear during our conversation that partnerships are a more feasible option than starting a dedicated fund.
Of course there are many challenges also to finding microlending partners prepared to expand to include artists (or for that matter, finding microlending partners at all). We want to build a program with lower than regular interest rates – Rise offers 3.5% fixed interest. There are very few microfinance lenders currently operating in Ontario and some of them are credit unions that offer loans at prime plus a percentage to cover administrative costs. Avoiding them means an even smaller pool of microlenders. However, we might be able to “sell” artists to microlenders because we would be increasing their client base. (You can tell I’m an artist whose work is not object-based because of I can’t seem to use the word “sell” without quotation marks.)
My research supports the idea that the importance of education and support cannot be over-emphasized for successful microfinance programs. This make sense when one considers that programs are supporting people who don’t have money which means they (we) don’t have experience in working with money and require education. Rise has a very strong support component to their program and this of course requires human resources. My thoughts on this for MARProject are that arts service organizations are already offering professional development workshops such as WorkinCulture’s The Business of Art, so a foundation has been laid for building the necessary supports and education for a loans program through constellations and partnerships within the arts community.
However, right now the main thing is for me to complete my research and find the right person/team to build a program because I am an artist not an MBA. I never imagined that I could wave a magic wand and create a microloan program for artists, and I know from much life experience that it is more difficult to implement new ideas when they are in the early stages in the larger society than once they have become better known. However, I remain firm in my belief that artists and arts organizations should be getting in on domestic social finance on the ground floor. The survey required an overhaul and I’ve been putting that off but resolve to complete it this week.