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 Finanças 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 the work carried out by non-governmental organizations.
According to Letelier, the bank's loan fund is entirely made up of donations from individuals, corporations 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$ 100k to R$ 400k 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 another is in arrears. “In the latter case, we are studying the situation to understand what is happening with this organization, how we can help them before evaluating any other option”, explains Letelier.
The idea of replacing the simple donation with a loan increases the applicability of the donated resources, because the money loaned by the bank goes back to the wallet to be applied again in other social impact initiatives. Sitawi estimates that the loans it has already granted (R$ 1.5 million) have benefited 15,000 people.
One of the social organizations supported is the Center for Integration of Education and Health (CIES), created by doctor Roberto Kikawa. The project brings specialized mobile medical care to low-income populations. The organization, headquartered in the city of São Paulo, forms 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 thousand to refurbish the truck'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 truck circulates in São José dos Campos, where CIES maintains a partnership with the city hall. The organization also works with the municipalities 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 to manufacture 30,000 bags made from recycled PET bottles. To fulfill the order, they needed R$ 150 thousand to purchase production inputs. “We used several traditional banks, but the loans offered were very high, from 3 to 4% at the time”, he explains. The agreement made with Sitawi was paid in just two months, with around 300 artisans participating in the making of the bags.
Today, Sitawi is racing against time to employ, by the end of this year, R$ 1 million in loans to meet the demands of the clients that own the funds it manages. The bank makes loans only to social organizations that operate some type of business to support themselves. The other criteria used by the financial institution in the approval of credit are: assessment of the social impact of the organization's core activity; the ability to repay through the cash flow of 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 seriously assess this point”, completes Letelier.
According to IBGE data, there are around 400,000 NGOs in Brazil. Letelier explains that annually they all 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”, he says.
Preliminary information from a study by Sitawi, not yet published, indicates that less than 50% of social organizations in the country operate some business to support themselves. The work also revealed that the share of partner organizations that feed lines of business is usually higher in terms of social impacts and financial sustainability than those that survive only on donations. Still, Letelier highlights that both small business and donations are important for the financial health of social organizations.
Originally posted on: http://www.advivo.com.br/blog/luisnassif/banco-multiplica-capital-de-organizacoes-do-terceiro-setor
