More than half a lifetime ago, as a Peace Corps volunteer in Monrovia, Liberia, Patricia Foley Hinnen witnessed a horror that she couldn’t comprehend - which ignited a passion to help level the economic playing field for women around the world.
Hinnen was helping to build a latrine for women vendors in a bustling urban market. Suddenly, a black Mercedes roared into the crowd and stopped short. A man leaped out, and a woman scrambled to get away. Clearly terrified, the woman sliced her leg on rusty sheet metal as she fled.
The man, Hinnen soon learned, worked for a loan shark. The woman had not - probably could not - repay the black-market loan she owed. She was like thousands of other destitute “market women” in developing countries who are subject to interest rates of as much as 20 percent a day. Some of them borrow money in the morning to buy supplies, and hope to repay the loan at the end of the day. Failure to repay can lead to violence.
“I had no concept of predatory money lenders,” says Hinnen. “All I understood was the injustice of it. These women don’t know where dinner is coming from or what will happen if their kids get sick, in spite of working long hours.” Avaricious loan sharks add to their burdens by taking most of their profit margin.
After the Peace Corps, with a master’s degree in program evaluation and public policy, Hinnen landed a job with the U.S. Government Accountability Office (GAO). Between two Peace Corps stints and her international work with the GAO, Hinnen experienced firsthand the overthrow of five corrupt governments by popular uprisings. “The big takeaway is that poor leadership and corruption are the enemies of the people,” says Hinnen.
But it’s worse for women, who bear the brunt of social and economic instability in developing nations. “What I saw through my experiences in more than 60 countries, was the increasing feminization of poverty,” says Hinnen. “Women were becoming more destitute than ever, despite billions in international aid.” Women own less than 1 percent of the world’s private property, less than 1 percent of the means of production, and earn approximately 10 percent of the world’s income, Hinnen says. Women represent two-thirds of the world’s illiterate and 75 percent of the world’s poorest people, living on a dollar a day - or less.
Grim population statistics show lopsided ratios of males to females in cultures that value boys. “We are short about 200 million females from the expected 50:50 ratio due to infanticide, gender selection and poor health, because girls are the last to eat or get health care,” says Hinnen. “Girls are considered an economic burden to the family. If we can bust that myth by showing how women can be economic engines, maybe they will stop killing the girls.”
Hinnen’s own brushes with sexism were instructive. As a schoolgirl, she was told she couldn’t be a “paperboy,” so she helped her mom and five sisters start a much more lucrative babysitting service for the local hotel. When she earned half of what male workers earned at a landscaping job, Hinnen demanded equal pay and got it. To save for grad school, she sought a high-paying job as a hard-rock miner. Week after week, the personnel manager told her there was no work, as men got hired. Hinnen persisted. One of the first seven women hired to work in an underground mine in Colorado, she won honors for redesigning a piece of equipment to improve safety and efficiency. The same manager who initially turned her away gave her the award.
In the 1990s, Hinnen discovered the micro-lending movement, for which she became an evangelist, an organizer, an international champion, and now, in her encore years, a social entrepreneur dedicated to expanding capital and credit to poor women in developing nations.
“It started as a simple idea,” says Hinnen. “If everyone I knew – and everyone they knew - could loan $100 to a woman in a developing country, we could dramatically increase access to credit.”
Hinnen raised $1.5 million through the sale of $1,000 zero-interest “Sister Bonds.”
75,000 people in Guatemela and the Philippines have benefited from 15,000 microloans funded through Hinnen’s “Sister Bonds.”
To date, 100 percent of investors have reinvested their bonds.
She gained experience by helping to launch several domestic micro-enterprise organizations in Colorado in the 1990s. In 1999, she co-founded the Micro-Enterprise Development Program for the International Alliance for Women where she oversaw funding, technical assistance and advocacy for microfinance institutions in Africa, Asia and Latin America for the program’s first decade. She oversaw the creation of 110 revolving loan funds that financed tens of thousands of women’s loans in 24 developing countries. Hinnen also served as the Microfinance and Gender Advisor to the Department of State, representing the U.S. on microfinance and gender issues at international gatherings of the 21-nation Asia Pacific Economic Cooperation Forum from 2001 to 2011.
“Patricia combines high energy with thoughtfulness and passion,” said C. Lawrence Greenwood, former U.S. Ambassador for the Asia Pacific Economic Cooperation group. “I’m known as a champion of gender equity and microfinance, and I owe that reputation to Patricia. I continue to be inspired by her vision and example.”
Hinnen’s encore began in earnest in 2003, when she retired and incorporated Capital Sisters International, a nonprofit social enterprise that provides loans, grants and loan guarantees to microfinance institutions that serve impoverished women. While the impact was impressive, she understood that the need is far greater than philanthropic donors can meet. That led Hinnen to a simple, elegant innovation, which increased funding by tapping into the capital markets and opening participation to the general public. This first of its kind impact bond allows average investors, not just wealthy individuals, to invest.
“It’s a question of scale. I began to understand that if I asked friends to donate to a loan pool, I could get $250 or $500. But if I asked them to invest in a loan fund with a guaranteed return of principal, I might get $1,000 or even $5,000.”
She was right. To test the concept, Capital Sisters issued its first round of $1,000 zero-interest Sister Bonds in 2011 and raised $1.5 million - just in Colorado. With scant marketing and no website, they funded 15,000 microloans benefitting 75,000 people.
Sister Bonds are a gender-lens investment product and a zero-interest regulated security that exclusively funds microloans to women. The bond’s modest cost enables investors of average means to directly respond to global poverty - and then, get their money back.
A renewable one-year bond funds ten $100 loans; bonds are also available for two, three and five years. To date, 100 percent of investors have reinvested their bonds. In lieu of interest, bondholders receive a “social dividend” - a report that includes photos and stories about the borrowers and the businesses they funded. The loan pools are administered for Capital Sisters by established, reputable micro-lending nonprofits. Sister Bonds currently support women in Guatemala and the Philippines; short-term future expansion plans include an African nation.
“When Patricia approached me about supporting Capital Sisters, I immediately saw the wisdom of the work as well as Patricia’s keen expertise,” says Cynda Collins Arsenault, president and founder of Secure World Foundation and Capital Sisters investor. “My one $10,000 bond, renewed for seven years, will provide business loans for 700 women, benefiting 3,500 family members. It costs less than $3 a person and still shows up on my financial statements. I couldn’t ask for a better return on an investment!”
Fast forward to March 2015. With proof of concept established, Capital Sisters launched its website – a first step in scaling up bond sales and securing additional philanthropic funds to support its operations. By 2020, Capital Sisters plans to have raised $15 million via Sister Bonds (in compliance with securities regulations in all 50 states). This will fund 150,000 microloans in five countries and benefit up to a million people.
“My mom always said my first two words were ‘How come?'” Hinnen says. Challenging injustice is her lifelong quest; helping level the playing field for impoverished women is an expression of the same idealism.
“When you ask ‘How come?’ and the answer is ‘Because you were born a girl,’ says Hinnen, “that’s not an acceptable answer.”
“When I see a starving woman holding a baby girl, it gets a lot more personal,” Hinnen says - nearly as personal as the bonds between sisters.