HOPE International Uses Microfinance to Lift Families Out of Poverty

By standard measures, Jeff Rutt’s first major foray into organizing a charity was an utter failure. After years of mission trips to the Ukraine with his church, the Lancaster, Pa., home builder learned that their shipping containers of food and medical supplies did little to help the people of Zaporozhye. What they needed, he learned, was a way to take care of themselves. Raise money for this purpose and other purposes.

Rutt responded by researching possible businesses the villagers could operate and settled on sunflower seed processing. He raised the money to buy the necessary equipment, only to have it sit untouched.

It led to a light bulb moment that was so obvious, it bordered on embarrassing. The equipment wasn’t used because no one would buy the product. The Ukrainians knew what kind of businesses would succeed in their local economy, just as Rutt knew what kinds of houses would sell in his market. What he had that they didn’t was access to credit to get started.

In 1997, he incorporated HOPE International , a Christian micro-credit organization. In its first year, the organization issued 12 loans in the Ukraine. Today, it serves 265,000 clients in 14 countries in Europe, Asia, Africa and Central America. More than 99 percent of its clients repay their loans.

Rutt recently met one of his clients, an entrepreneur named Kambe, who used a $60 loan to buy a copier in Kinshasa, the capital of the Democratic Republic of the Congo. As the business grew, Kambe repaid the loan, bought another copier, a color printer, computers for offering customers graphic design services – and a generator to keep everything running during the city’s frequent power outages.

“We call him the Kinko’s of Kinshasa,” Rutt says. “He told me, ‘Three and a half years ago, I had to teach my children to sleep on their stomachs to hold down the hunger pangs and I had to decide which of my children to send to school. Now, look at me. I support my local church, I feed my children nutritious meals and send all my children to school.’ Someone loaned him $60 and he paid it back. No one gave him anything except the opportunity to access capital. This is amazing.”

Another client, a woman named Gloria in the Dominican Republic, used a $110 loan to buy a sewing machine. As her sewing business became successful, she wanted to get involved in her community. She and two other mothers decided to start a small school for the neighborhood children.

“We as an organization could have tried to set up a school for those kids, but there’s no way it would have been as effective and efficient as having Gloria do it,” Rutt says. “We take that back to our donors. Their donations are being leveraged to incredible levels.”

In the last couple of years, Rutt says, several HOPE International affiliates have begun experimenting with a group savings programs that has its roots in a system that is hundreds of years old. Here is an example of how it works: A facilitator might bring together 20 people in a remote village. “The premise is that it will take $20 to help teach them to the next level in their business, to buy tools, open a kiosk in the market, or whatever,” Rutt explains. Each week, every person in the group contributes something of value.

“Let’s say everybody has a dollar or a chicken,” he says. “Each week, one person will get a $20 loan until they go around the circle. As they’re paying the loans back, with interest, it becomes self-funded like a little HOPE bank. There’s a lot of excitement and interest in that.”  

Financial support for HOPE International comes both from individuals and from a fund-raising program called Houses for HOPE. Builders across the country participate in the program, in which they solicit donations of materials and labor to build a house that’s sold at market rates, with the proceeds going to HOPE. Even with the economic downturn and the housing crisis, participation in Houses for HOPE has increased, and donations to HOPE International are up 15 percent this year, Rutt says. The average gift is lower, but there are more donors. He attributes that to the fact that more people are finding out about the organization; Rutt was honored in 2007 with the Hearthstone BUILDER Humanitarian Award, the top philanthropic honor in the home-building industry. Plus, he says, “a lot of people are interested in Christ-centered micro-finance.” 

As the organization continues to grow, Rutt says he’s committed to maintaining its spiritual focus. (Clients of the organization come from all religious backgrounds.)

“That helps differentiate us from the rest of the pack of micro-finance organizations that are springing up around the world,” he says. “My main goal – it’s been this way since I started with 12 loans – is to stay true to our mission. I don’t have number goals. I just want it to be the best it can possibly be to the people we serve and bring it to many people as we can around the world.”

Learn more and make a donation to HOPE International through Razoo.

By Pat Curry