The Origins

How was the MicroConsignment Model (MCM) developed?

New Development Solutions Group (NDS Group) co-founders Greg Van Kirk (recognized as an Ashoka Fellow in 2008) and George Bucky Glickley were Peace Corps Volunteers in Guatemala from 2001 to 2003. While still in the Peace Corps Greg recognized that tourists were regularly visiting the Guatemalan town of Nebaj where he was working and leaving quickly without spending any money due to a lack of infrastructure. Identifying a problem, he received special dispensation from the Peace Corps to invest some of his own funds that he had saved working in investment banking to start several tourism businesses with local residents, including a restaurant, a Spanish language school, a hiking and trekking service, and an artisan store. The idea was to help the local economy by creating local jobs and to motivate tourists to stay an extra day or two in Nebaj spending money on goods and services. The long term strategic vision was to have local entrepreneurs earn ownership of the ventures through sweat equity and take over when financial and administrative self-sustainability was achieved. This “hand off” successfully took place in early 2004 and these ventures continue to function profitably to this day.

The MCM first emerged when Greg donated money from the profits of these tourism businesses to a wood-burning stove project. This donation supplied a handful of stoves to an equal number of families in a local village. Like millions of Guatemalans, these families had always cooked campfire-style on their dirt floors. Cooking this way had long been recognized as extremely energy inefficient and harmful to the health of family members, particularly women and children. Relief agencies had determined that the construction of inexpensive, locally manufactured, concrete stoves could immediately and dramatically reduce energy costs and improve the health and safety of family members. Greg realized, however, that merely donating stoves severely limited the capacity for distribution. Once the relief money was spent, nobody else could get a stove. Greg concluded that many more people could obtain these stoves if their distribution was built on a sustainable economy.  As a response to this ongoing challenge he developed what would become the MCM. Stoves would be locally manufactured, with materials provided to local entrepreneurs on consignment, and marketed and sold to low income families in villages on on an interest-free basis. The money saved in energy costs allowed the stoves to essentially pay for themselves as families made payments over six months. The health, economic, and environmental benefits would go on for years. This model would not only provide an essential, high-quality product at an affordable cost to villagers, but would also provide new income generating opportunities to local individuals as entrepreneurs. Soon after this initial iteration of the model was launched, George joined Greg to further develop and expand this initiative amongst others.

Upon completing their Peace Corps responsibilities, Greg and George stayed in Guatemala and formed New Development Solutions as a means to provide consulting services to USAID, Chemonics, Soros Foundation and the like.  In March of 2004, they were contracted by Scojo Foundation (now VisionSpring) to work in El Salvador to help them find an effective way to distribute reading glasses to low income villagers. It is estimated that more than 90 percent of people over 40 years old will need near-vision reading glasses to see up close. VisionSpring was utilizing a micro credit model at the time to provide local women with a means to distribute the glasses, but it wasn’t working effectively.  Greg and George noted that micro credit is very effective for people who already have established businesses and purchase raw materials from a local distributor to meet unmet demand. However, selling reading glasses, much the same as selling wood burning stoves, requires a different approach. Awareness needs to be created, a high quality service is the driver, there are no local distributors, training is essential, and the perceived and real financial risk by potential entrepreneurs is very high. They concluded that micro credit was a suboptimal model to achieve VisionSpring’s desired outcomes because micro credit is generally neutral regarding what the businesses buy and sell. Any effort to deliver new “medium and high intervention” products and services to vulnerable villagers must first look at the villager’s needs and then inductively create an entrepreneurial structure that meets those needs. Greg and George concluded that the MCM could effectively mitigate the challenges that VisionSpring was confronting in utilizing micro credit. After in-depth analysis and testing, VisionSpring decided to adopt the MCM as its implementation mechanism. For Greg and George this was the moment in which they realized that the MCM could work as a unique means to get villagers potentially myriad products and services that addressed health, economic, environmental and educational needs. It was this realization that led to them to establish the US non profit 501 (c) (3) Community Enterprise Solutions (CE Solutions) in 2004 as the engine to test, develop, implement and expand the MCM in Guatemala and ideally other countries in the future. Their concept was to devise a way to create national scale and local self-sustainability. The key was to train a growing number of primarily women entrepreneurs who could offer a growing mix of essential products and services in an increasing number of remote villages. And as in the case of the tourism businesses, the concept was to create a local social enterprise, owned and run by the leaders that emerged through their entrepreneurial work, which could achieve financial and administrative self-sustainability. This led to the idea of establishing a Guatemalan owned social enterprise called Soluciones Comunitarias (SolCom) in 2006.

Greg and George continued to consult for VisionSpring to help them expand their reach until 2008. This included running the El Salvadoran operations and facilitating expansion of their MCM reading glasses initiatives in Mexico, Paraguay and Nicaragua.

The successful growth of the MCM in Guatemala through CE Solutions support led to a common challenge associated with expansion: the need for additional human and financial capital. During the first phase of this development, Greg and George depended solely upon donor contributions to provide the necessary financial capital. They did not, however, want successful growth to be 100% dependent upon oftentimes-sporadic donations.  As sustainability in the field was a primary driver and was being slowly achieved through the income that SolCom earned on product sales, they additionally wanted to create a sustainable mechanism from an overall organizational perspective. They solved this problem by establishing Social Entrepreneur Corps in 2005 as a sister organization to CE Solutions to offer opportunities for students and recent graduates to volunteer in Guatemala supporting the entrepreneurs and the MCM’s continuous innovations and growth. They had learned through working with recently graduated volunteers that fairly inexperienced individuals from diverse backgrounds could make a measurable impact in a short period of time. In addition, these volunteers had conveyed to them that they had gotten more out of their experience working within the model than they had in other more traditional study abroad experiences in which they had participated. Creating a mechanism for students to volunteer in Guatemala thus offered an elegant solution to the financial and human resource constraints that Greg and George had been confronting. Training and supporting students as apprentices who in turn supported and funded the MCM work was a much more efficient and effective use of time than bifurcating work between fundraising and field implementation.

As of September 2009, through the combined efforts of CE Solutions and Social Entrepreneur Corps, SolCom has trained over 180 local entrepreneurs who have executed approximately 1,800 village campaigns in approximately half of Guatemala’s 22 departments.  The product offering has expanded to include not only wood burning stoves  and reading/near vision glasses but also UV protection eyeglasses (January 2005), eye drops (January 2006), water purification buckets (December 2008), vegetable seeds (January 2008), energy efficient light bulbs (January 2008), and solar lamps (January 2010). In addition, entrepreneurs now distribute a free small business newspaper to 10,000 rural constituents bimonthly and a new entrepreneurial channel has been created whereby local community organizations are provided with product kiosks and training in order to serve their constituents in new ways and earn extra income in the process.

By our calculations approximately $1,000,000 of direct economic and immeasurable health and environmental impact have been created. In 2008 the MCM reached approximately 375 villages in Guatemala and served 16,200 beneficiaries. This equates to a direct economic impact of $288 per village served and $6.66 per beneficiary.

Social Entrepreneur Corps has been fortunate to establish strategic relationships with the University of Notre Dame, Duke University, the University of Connecticut, Columbia University, The College of William and Mary, Miami University (Ohio), and Franklin and Marshall.

Our work continues in Guatemala and Ecuador, where we began working in January of 2009.  In January of 2010 we expanded into Nicaragua.

 

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