Financial advisor Charles “Chuck” Steege’s client base, so to speak, includes people at both ends of the global wealth spectrum. As principal owner and president of SFG Wealth Planning Services Inc. in Doylestown, Pa., he focuses on serving senior-level corporate executives in both the public and private spheres. On his own time, he has worked with an organization called Opportunity International to facilitate micro loans to poor people in Nicaragua to help bootstrap local businesses and alleviate poverty in that hardscrabble Central American nation.
Since August 2005, Steege has visited Nicaragua about 10 times to see projects he has helped financially support, as well as to lead insight trips to get people involved with microfinance projects in that country.
“My personal driver in this is as an entrepreneur and an advisor, where I’m working every day to help our profile clients of senior-level executives reach their financial peace of mind and independence, is to on a much smaller scale be able to help smaller entrepreneurs reach their own financial independence,” says Steege, 55. “This is a chance to lend a hand up, not a hand out.”
Steege first heard about Opportunity International through a client whose son-in-law was formerly the CEO of the organization’s worldwide network that works with NGOs. “He introduced me to the concept, and it took off from there,” he says.
Opportunity International (opportunity.org) is a Chicago-based global non-profit company that since 1971 has loaned more than $9 billion to people in developing countries who don’t have access to capital. The goal is to help them start and grow businesses and, ultimately, develop sustainable local economies. The organization says it has served more than 14 million people in 24 countries in Africa, Asia, Latin America and Europe through its loans, savings accounts and insurance—the latter protects against flooding, drought, hospitalization or a death in the family. Nearly all of its staff are locals in the countries where the non-profit operates.
The vast majority of the organization’s loans go to women, and recipients form trust groups of 10 to 30 entrepreneurs who meet weekly to provide advice, get financial training and vote on loan-related matters.
In Nicaragua, Steege says, most of the trust groups are located in major cities, including Managua, Granada and León. “Entrepreneurs form a group, money is lent to the group and parceled out according to individuals’ capital needs,” he explains. “After 90 days, the group as a whole is obligated to pay back their loans, plus interest. The interest becomes a higher water mark for the next loan cycle. They’re essentially paying interest that is re-lent to them in a subsequent round.”
Opportunity International says this structure turns an initial $1 investment into $6.
“What’s powerful about the trust group concept is twofold: One, accountability, and two, support,” Steege adds. “Accountability means that if somebody isn’t pulling their load, they’re essentially voted out of the group. The support comes from other people from the group stepping up to help them if needed to make sure they can keep their obligation.”
According to Opportunity International, this support network has engendered a 98.9% repayment rate on loans across the board.