Institution multiplies loans to the social sector
By Lilian Milena, Do Brasilianas.org
Brazilian non-profit bank offers loans at 1% per month to third sector organizations. The institution created five years ago has already made loans totaling R$ 1.5 million to 11 social organizations, and was also recognized with the beyondBanking award, from the Inter-American Development Bank (IDB), as the best socially responsible investment in Latin America, at the beginning of 2012.
Sitawi Financeira do Bem was founded five years ago by engineer Leonardo Letelier with the aim of bringing business experience to the social sector, thus improving the efficiency and impact of work carried out by non-governmental organizations.
According to Letelier, the bank's loan fund is entirely made up of donations from individuals, companies and foundations, including Grupo +Unido, a partnership between the US Agency for International Development and 18 multinationals, including Cargill, Motorola, 3M and IBM.
Sitawi offers from R$ 100 thousand to R$ 400 thousand for loans. Of the 11 social organizations that have already resorted to Sitawi, nine have settled the entire debt, one is up to date and the other is in arrears. ?In the latter case, we are studying the situation to understand what is happening with this organization, how can we help it before evaluating any other option?, explains Letelier.
The idea of replacing a simple donation with a loan increases the applicability of the donated resources, because the money loaned by the bank goes back to the portfolio to be applied again in other social impact initiatives. Sitawi estimates that the loans already granted by it (R$ 1.5 million) have benefited 15 thousand people.
One of the social organizations assisted is the Education and Health Integration Center (CIES), created by doctor Roberto Kikawa. The project takes specialized mobile medical care to low-income populations. The organization, headquartered in the city of São Paulo, makes partnerships with city halls or states charging for services based on the SUS table.
According to the press office, CIES has two health boxes, a van and a trailer. At the end of 2011, the center needed R$ 200,000 to renovate the trailer's medical equipment, carry out the construction of the men's health box and also invest in staff specialization. The feature was funded by Sitawi. Today the cart circulates in São José dos Campos, where CIES maintains a partnership with the city hall. The organization also works together with the city halls of São Francisco do Sul and Itapema, in São Paulo, and in Três Lagoas, in Mato Grosso, the latter, in partnership with Metalfrio S/A.
Another example is Solidarium, a network that brings together 6,600 handicraft micro-entrepreneurs, supplying products to large retailers. The organization's executive director, Tiago Davil, says that, in 2009, they received an order from Wal-Mart for the manufacture of 30,000 bags made from recycled PET bottles. To meet the order, they needed R$ 150 thousand for purchases of production inputs. ?We resorted to several traditional banks, but the loans offered were very high, from 3 to 4% at the time?, he explains. The agreement made with Sitawi paid off in just two months, with around 300 artisans participating in making the bags.
Today, Sitawi is running out of time to employ, by the end of this year, R$ 1 million in loans to meet the requirements of clients who own the funds it manages. The bank makes loans only to social organizations that operate some kind of business to support themselves. The other criteria used by the financial institution in approving credit are: assessment of the social impact of the organization's core activity; the ability to repay through cash flow from the business operation; analysis of the management team and, finally, "the ethical fiber of the organization's leaders". ?We know many people from the social sector, directly or indirectly, so we can evaluate this point seriously?, adds Letelier.
According to IBGE data, there are around 400,000 NGOs in Brazil. Letelier explains that annually all of them receive close to R$ 10 billion, ?this results in an average annual income of only R$ 25 thousand for each one, which shows that donations in themselves are not capable of sustaining the third sector? evaluate.
Preliminary information from a study by Sitawi, not yet published, points out that less than 50% of social organizations in the country operate a business to support themselves. The work also revealed that the share of partner organizations that feed business lines is usually higher in terms of social impacts and financial sustainability than those that survive on donations alone. Still, Letelier points out that both small business and donations are important for the financial health of social organizations.