Category Archives: Microfinance

Ten Years After, Part 1

There must have been some kind of special “karma” in the air last weekend.  I had an urge to listen to a record album (yes, the kind that are played on a turntable) from the 60’s by a group called Ten Years After, and featuring a song entitled, “I’d Love to Change the World.”  After listening to both sides of the 33 1/3 RPM, I realized that both the song and the group hold special meaning this week: today, October 1, I have worked with Winds of Peace Foundation for ten years.  And naturally I have honed a deep yearning to change the world!

Ten years ago I left my role as corporate CEO with no plan about what I would do for my “next chapter.”  I had two kids in college and two more headed that way, a nice home with its accompanying mortgage, a desire to distance myself from the obligations of corporate demands (both personal and philosophical), and a need to search for meaningful work that was closer to my passions and compassions.  Firmly believing in the shelf-life of a CEO, I chose an early retirement on September 30, an option some companies afford to folks who are not old enough for Social Security but who are old enough to recognize when it’s time for a change.  I had no plan or prospect in mind.

I became involved actively with Winds of Peace the following day. Having served on its Board of Directors since its inception in 1980, I was familiar with its mission and history.  And with one of its founders, Harold Nielsen, in the hospital with pneumonia at age 90, I might have been the most logical and available person to step in on a temporary basis.  But within a week, I recognized the work as something I wanted for my “next chapter.”  By the time I could visit Harold personally later in that week, he apparently had come to the same conclusion.  He offered me the opportunity.  I jumped at the chance and have never looked back for even a moment.

There have been many affirmations about that decision.  The first was that I continued to work with founder Harold and Louise Nielsen, two of the most genuine and selfless people I have ever known.  (Harold was the wise  and entrepreneurial founder of Foldcraft Co., my firm of some 31 years.  Louise was his wife and co-conspirator, as Harold would say.)  The second immediate affirmation  was in the person of Mark Lester, the Foundation’s “feet on the ground” in Nicaragua, a most exceptional man, a student of and advocate for development in the country, and one whom I had met years earlier during my first visit there.  The third affirmation emerged a bit later, during my ensuing visits to Nicaragua when I was able to meet face-to-face with the potential and actual beneficiaries of the Foundation’s work.  This was where the true richness of the work has been experienced, where the longing to serve meets the hunger and thirst of people who are living their very lives on the edge of collapse, continuously.  These and other affirmations are endless and continue to this day.

Ten years is a long enough period to measure any organization´s impact and progress.  Over the past ten years alone, WPF has issued grants totaling over $2MM, loans totaling $7.6MM and maintained a loan default rate of just over  2%.  It has partnered on more than 300 agreements representing thousands of families.  It has underwritten scores of organizational and technology workshops as its focus has become focused on a territorial strategy.  The Foundation has added primary, secondary and university education as additional focal points for funding and development.  We have accompanied.  We have researched and written.  We’ve been busy.

The past ten years have brought about change in the lives of our partners, as well.  Access to capital in some of the most rural settings of Nicaragua has been a critically important element of life for those served by WPF.  For some, it may have meant survival.  The accompaniment in organizational development by our colleagues has illuminated some dark places where myth, falsehood, forgery and undereducation have festered for generations, rarely permitting the light of opportunity to foster growth.  Women’s voices have been heard.  Students bloomed.  People wept.  And smiled.

Well and good; the actions behind these measures what WPF has been called to do.  But there have been personal impacts, as well.  The past ten years have also rather dramatically changed the way I personally experience the world and its complexities.  I have come to understand how incredibly difficult it can be to “give away” resources.  Not the physical distribution of them, but the ways in which such work must be done to achieve meaning and impact; the presence of large amounts of funding does not guarantee success in the move away from poverty and marginalization.  Sometimes it even contributes to the problems.

I have experienced the importance of accompaniment.  I am still surprised and moved by the importance of our accompaniment with partners.  There is a feeling of strength on the part of rural peasants knowing that they are not entirely alone, that someone else knows of their existence and plight.

I now know the face of the poor.  I have established relationships, friendships, partnerships with individuals, real people with real families and real problems.  These are not statistics or photographs, but real human beings for whom my empathy and concern runs as deep as for any member of my community, my neighborhood, or other niches of my life.  That has changed me, as it would you.  I now personally understand why Harold and Louise Nielsen were so easily moved to tears when talking about this Foundation’s work.

In ten years’ time, Harold and Louise have both passed away.  Our focus has both broadened (with the addition of education and research) and narrowed (with the emphasis on a specific territory).  Our processes have sharpened, with the involvement of our three Nicaraguan consultants and their personal commitments to WPF work, and our own experiences in nurturing healthy organizations.  The presidency of Nicaragua has changed, the country’s relationships within the international community are different and so is the landscape within which development must conduct its efforts.

But the poverty remains.  The Nicaraguan poor are as omnipresent as ever, perhaps not in every statistical metric, but certainly according to any reasonable measure of basic human needs.  And therein lies our work agenda for the next ten years, which I’ll envision in Part II of this message, next week….







The drought: social injustice and the opportunity for change

The drought: social injustice and the opportunity for change

René Mendoza Vidaurre*

“Behind adversities are opportunities” goes the saying. After the rust that affected thousands of families working in the coffee chain, repeatedly we heard about the adversities of the drought: “the first planting season was lost”, “the families´food reserves have been used up”, “the water table has been reduced”, “there is a risk that the second planting will not happen..nor the third,” “insects are appearing like the flying locust, the cotton weevil, mites and the pink hibiscus woodlouse”, “cattle raising is at risk due to the scarcity of water for drinking and for grazing,” “exodus from the communities”, “increase of cattle rustling because of the economic crisis,” “ microcredit is protecting itself in the face of the drought.” Without a doubt, it is important to be concerned about the effects of the drought in the short term. In this article we call attention to the fact that the drought is being understood as if it were only a natural phenomenon, and the human activities that contribute to it are being ignored. Understanding these actions and their impact would allow it to be seen as an opportunity for thinking about ways of overcoming the challenges that the drought imposes, and developing a possible long term perspective.

The Central American dry corridor

The FAO (2012, Estudio de caracterización del corredor seco centroamericano identifies the dry corridor of the region. Out of a total of 75 million hectares in the region (Guatemala, El Salvador, Honduras and Nicaragua), the corridor covers 15.9 million hectares, in other words 21%; out of this total 42% is low effect drought, 50.5% large effect drought, and 7.5% has severe effects. See map.

corredor seco CA


What is alarming is that the National Oceanic and Atmospheric Agency of the US (NOAA), in addition to confirming the presence of El Niño, points out the possibility that it might be extended into the first months of 2016 (prolonged dry season and early withdrawal of rainy season), and on top of that, concludes that the below normal rainfall for the months of August to October will affect the dry corridor and beyond in each country. (See map below; Central America Agricultural Council, Climate Change and Holistic Risk Management Technical Group, 2015, Current status of El Niño, climate perspective, implications for farming and recommendations for regional measures;


perspective climatica CA

Causes that generate the drought

It is said that the behavior of the current rainfall is similar to that of 1976 and 1982, that the drought is similar to that of 1997, and that the seriousness of the situation is that the drought goes back to last year, 2014. In other words, the drought is becoming something structural. What has caused this? The absence of humidity in the atmosphere, which is made worse by the increasing variability of the rainfall, including the increase in temperature, particularly on the ocean´s surface. This variability has been caused by human actions that generally are interconnected. First, deforestation causes soil erosion, which is why the soil then retains less water, the water is less able to infiltrate and the soil loses its fertility, so then flooding increases, and the creeks and springs disappear, rivers dry up, crop yields decrease, and become more vulnerable to rainy season droughts and infestations, and with this the families lose their capacity to maintain themselves. Secondly, this deforestation is accompanied by another chain of pressures that include the “hamburger effect” (fast food in the United States at the cost of the forests of Central America), increase in extensive cattle raising, the advance of the monocropping haciendas (producing sugar cane, peanuts, sorghum, tobacco…) on large areas emptied of trees, land concentration that expels families from their communities, and the consequent reduction of diversified farms and manual agro-industry (cheesemakers, grinders, cacao drying…). Third, this dynamic of deforestation and land concentration is accompanied by financing, research and technology – by and for – large monocropping production, but it is dressed up as modern economics and even the first “victim” of the drought. There the drought appears as a “natural” phenomenon, as a matter of “those poor” subsistence peasants, and organizations discussing the size of its impact.

One hypothesis for any territory in the dry corridor for the last 70 years would be that the combined effect of these three factors (degradation of natural resources, concentration of the land and accompanying chain of pressures) has increased the variability of the rainfall, and has resulted in less capacity to resist the impact of the drought, which is a human result that underlies the current of injustice “an underwater riptide”.

Opportunity for change

If the drought expresses the social injustice and the merchantilization of the land (and the climate), and it is a human outcome, then it is a changeable phenomenon. Recalling the words of Chesterton, “playing the violin when Rome is burning is amoral, thinking about a hydraulic system is the task of the researcher”, thinking about strategies for overcoming the drought is more than suggesting technical solutions (communal gardens, raising iguanas, drought resistant crops like pineapple, reforestation, agro-forestry and silvo-pastoral practices, protection of water sources, irrigation systems in harmony with the profitability of the crop and without affecting the water basin, combination of agriculture and ranching, and diversified farms), it is thinking about how to implement over the long term. What follows indicates some points along those lines.

First, organizing research and experimentation in specific territories with mostly producer families, doing it in a participatory way so that the families and the researchers can build awareness about the fact that the drought is not “a punishment from God”, nor something “natural”, to just “monitor”, but a changeable phenomenon, and that under certain conditions crops can be rotated and farms diversified, capable of feeding the soil, so that it retains more water, has a greater capacity to allow the water to infiltrate, produces more, and thus families become more capable of maintaining themselves and bettering their situation. In this process one learns to observe, analyze and act preventively, as a family from the municipality of Cinco Pinos (Nicaragua) recounted: “if we plant with irrigation in the dry season, we notice that the insects pile up in green places, in the barrier of corn or sugar cane, and we can fight them there before they get to the crop; while in the rainy season they are all over.”

 Second, what is crucial is awakening among the families a vision of change on their farms and their communities, that they cultivate a long term perspective, and that they hold to that vision. One family: “dreams of the day my friends visit me and say, ´how beautiful your farm is´; here the entire family is working to see that day.” This awakening and perseverance is possible when various families, aware of the fact that alone they cannot overcome the drought, organize into cooperatives, associations or some form of community, and do so in alliance with organizations or institutions of the region that are capable of putting on the shoes of those families, commit to their formation, and provide follow up to one another for various years.

Finally, creating the conditions so that the two previous points can become possible. Financial institutions, instead of “shielding themselves” (reducing credit to non-ranching families or vetoing credit to dry zones), increasing their loans to intelligent investments that would allow them to move past the drought. Universities can create interdisciplinary certificates on development in high risk dry territories with the participation of rural leaders and professionals, with follow up intervals on experimentation processes. Commercial enterprise chains that buy products from the dry corridor within a framework of subcontracting relationships for various periods. Fiscal policies that provide incentives for sustainable productive diversification, and penalize land concentration and monocropping.

The drought is an opportunity for change. One family in San Francisco del Norte (Nicaragua) is clear about it, “I am planting land…that is what is going to feed us, and that is what is going to be my inheritance, that is our common home.” Our greatest challenge is to quit planting drought and to contribute to this “common home.”

* René ( has a PhD in development studies, is a collaborator with the Winds of Peace Foundation (WPF) (, an associate researcher with  IOB-University of Antwerp (Belgium) and the Research and Development Institute , Nitlapan-UCA (Nicaragua).

Microcredit, the innovation of the century

 Microcredit, the innovation of the century

René Mendoza Vidaurre *


There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.


(Niccolo Machiavelli, 1532, The Prince)


Grameen Bank (“village bank”) emerged nearly four decades ago in Bangladesh. In 2006 its founder, Muhammad Yunus, received the Nobel Peace Prize “for his efforts in creating economic and social development from below”, achieving world recognition for microcredit. Apart from the criticisms that microcredit pacifies poor families so that they do not fight for their rights, and that the US$130 average amount is not enough to buy a cow, and much less a hectar of land, its achievements are impressive: 3,000 branches, 7 million borrowers (95% are women), and 3% arrears rate; nearly 100% of Grameen children that start their studies finish them; education, health, retirement and pension programs, and services of access to new technology – cell phones in more than 2,000 villages (Grameen Telecom), solar panels (Grameen Skakti) and internet in the villages (Grameen Communications). What made posslbe this change of the century in finances in favor of the poorest of the poor?

Distancing themselves from conventional finance

After years of war, Bangladesh achieved its independence in 1971, a year later Yunus returned to his country as a university professor, and in 1974 the country experienced a great famine. Yunus, his colleagues and students wanted to help, and went to live – and study – in the village of Jobra. There they found usury with interest rates of up to 10%/day, and their dependence on those loans made them live as semi-slaves. In Jobra they counted 42 people under these usurious conditions, and the total loan amount was only US$27. He lent them those US$27 at 0% interest, and to his surprise they paid him back; then he discovered that they were paying interest rates higher than 60%/year to the commercial banks. So he observed something contradictory in the banking system, they were there to give loans, and acted under the principle of “the more you have, the more you get”, but they were exclusive: “when you exclude people for no fault of their own, it is apartheid.” Without the first dollar they could not get the second one, this was the situation of the poor. From there emerged his vision: end poverty.

He requested a loan from the bank to provide “small loans for the poorest.” The banks rejected the request: the poor do not receive loans because they cannot repay them, they do not know how to fill out the forms, and they do not have material collateral. After six months, and after Yunus himself offered collateral, one bank lent him US$300. Yunus and his team organized the credit and recovered up to the very last cent. The manager of the bank attributed this to luck, and when that credit experience was replicated in five, ten and fifty villages, that manager did not change, “because people can make mistakes, but the banking system does not.”

The more he lent, the more they saw the need to found an organization: Grameen Bank (1983) (GB), in order to place the first dollar in the hands of the poorest. What was the motivation for the people to pay and improve their lives?

Microcredit in groups and the social movement

GB followed a path opposed to the logic of the banks and what economics teaches. The bank waits for the client in their offices, requires material collateral, and provides individual loans, high loan amounts, and to people with more resources; it is a system built on the basis of prejudices; “Those who have more resources pay.” GB started microcredit (small amounts), without material collateral, with groups of five people as the basis to build a culture of credit, members with different businesses that mutually support one another, if one member does not pay the rest do not get a loan; the groups meet weekly to pay, save and renew their commitments to 16 norms (have a small family, build latrines, send their children to school, stop the practice of dowries, drink water from healthy sources or boil their water, grow vegetables, vote in elections…); they were mostly women because they were the poorest and those most affected by the purdah norms (conceal women from men who are not direct relatives), because they made better use of the loans and they paid on time. The GB officials stay out in the villages, explaining the microloans and accompanying those that have been disbursed, and because of the role of the groups, the credit and the savings in good measure are administered by the people themselves; the transactions are done in front of everyone. The basis is trust; without lawyers, nor taking people to court for lack of payment.

The novelty is in the learning capacity of GB and in its social movement nature. Yunus and his team immersed themselves from the beginning in order to understand the reality; so they understood the bottleneck of usury, discerned their vision and maintained it. Then they experimented, it if did not work out, they would study the banks to do “just the reverse”; trial and error forming groups with women. These circles remind us of the microfinance institution known as Bora founded by Munro and 50 beggars in Kiberia (Kenya) (“small loans, big changes”), Toyota (“if one worker makes a mistake another worker corrects him”), and Wikipedia (“one writes and others anonymously correct, improve and edit the text”). The key: combining decentralization (circles) and centralization (GB), economics (credit) and social-cultural movement (freeing women from the conservatism of Islam), and personal and social change.

Erosion of microcredit and the imperative to recover its novelty

Thousands of NGOs and microfinance institutions got involved in microcredit since 1980, they even adopted the circles called “solidarity group lending” (SGL). Most of them fell by the wayside, or turned into conventional banks, brandishing the prejudices that GB fought against: “the poor do not pay”, “credit only with material collateral”, “arrears are recovered by lawyers”, “credit is done by people who have studied it”, and “SGL only for recovering the loans.” In spite of the path shown by GB, those who followed, took it and added the microcredit discourse and SGL in the old form of making credit exclusive, and have been “scaling up” to social groups with more resources. Albert Einstein said it well that  “it is easier to split an atom than it is to break a prejudice.”

How can this innovation of the century be recovered? Following the path of Yunus and his colleagues, doing immersion and creating conditions for experimenting. Recognizing that in our countries upward of 70% of the population continues to be excluded from credit, and that they constitute an enormous sector to innovate (e.g. with larger amounts for family agriculture). Rethink SGL as “pressure among themselves to pay”, to believe in themselves, improve their businesses, take on norms like erradicating domestic violence and having sustainable practices. Understanding credit (from the Latin credititus, “having trust”) as the “door” for a strategic alliance between SGL with the poorest organized into associative forms, groups with more resources and better organized, and financial institutions, around financing and social change, and scaling up in that alliance, combining technical assistance and commerce.

Even though the government of Bangladesh has been working to take over GB since 2013, and there are growing criticisms that GB is being dragged along by the market, GB has shown that is can change the world with $27 dollars, and do it bringing the people from the base of the pyramid to a financial system open to learning and to alliances with the poorest of the poor. This can be an initiative that begins “a new order of things”.

* I thank F. Huybrechs and J. Bastiaensen for their comments on the draft of this article.

René Mendoza has a PhD in development studies, is a collaborator of the Wind of Peace Foundation (, an associate researcher for IOB-University of Antwerp (Belgium) and for the Nitlapan-UCA Research and Development Institute (Nicaragua).


Hearing Voices

We all receive lots of materials to read these days, whether over the Internet, in the mail or some even by our own choice.  Sometimes it’s difficult to discern what is worth reading and what is not; certainly, it’s impossible to read everything that’s available.  But I was introduced to something of significant value this week and am compelled to share it here.

The book is entitled, Time to Listen: Hearing People on the Receiving End of International Aid, by Mary B. Anderson, Dayna Brown and Isabella Jean.  Our colleague in Nicaragua, Rene Mendoza, sent the link to the book only with the comment that it was “very interesting.”  But upon a thorough reading of the research done by the authors- interviewing over 6,000 recipients of funding around the world- I found the book to be a completely revealing look at the world of international philanthropy.

While not exactly a blueprint for international aid providers, it nonetheless lays open some of the most important and limiting facets of international project funding, told honestly from the voices of those who are intended to benefit.  For those beneficiaries, the book served as an opportunity to express the frustrations and suspicions experienced by the very people we seek to assist.  For the readers who are in the funding community, the book is a valuable checklist of pitfalls to avoid and strengths to cultivate.

In the spirit of full disclosure, I have to admit that a majority of the observations in the book are directly in line with the experiences and conclusions of WPF over the past 30 years.  Naturally, any treatise that affirms one’s own world views is likely to be embraced.  But with the observations coming from the recipients themselves, my inclination is to ascribe great credibility to these perspectives, whether the views are in concert with our own or not.  But in this case, they align almost perfectly.  I’m pleased to now have an independent, objective source of affirmation for the very philosophies and protocols that guide the work of WPF, voices coming from the very heart of the field.

For the philanthropic industry, as well as for those not necessarily associated with international aid, the conclusions offered provide a stark picture of the “business of giving,” and why the results from significant philanthropy are often much less than expected.  If you are simply a charitable donor, the book offers help in terms of what to look for in organizations which you might wish to support.   If you are affiliated with any organizational charitable activity- and especially on an international basis- then I strongly recommend this book for your careful reading.  This is how we often look to the people we most want to help.

This research was published in 2012, after almost six years of listening to recipients and distilling their observations.  It is a simple format, made up of the real-life assessments of poor people who have lived the experience, and the authors’ synthesis of what improvements might look like.  One might choose to ignore the opportunity to improve the efficacy of aid delivery, but there is no denying the reality of so many voices….


Coordination and collective action to mitigate the impact of climate change: the case of the regional project CamBIO

Coordination and collective action to mitigate the impact of climate change: the case of the regional project CamBIO

René Mendoza Vidaurre

 “if you think one year ahead, you will plant a seed…if you think 10 years ahead, you will plant a tree “. Chinese poet, 500 AC

 In response to the question about what practices contribute to the climate, in the previous article “Coordination and collective action to mitigate climate change” we listed the recommendations laid out by different studies and organizations for forestry and agriculture. Then we pondered the implementation within the coordination between science, conservation and economics through the case of the Galapagos Islands of Ecuador. Now we will study the CamBIO project (Central American Markets for Biodiversity) within this same framework.

This project (2007-2013) was a tripartite GEF initiative (Global Environment Fund)-UNDP United Nations Program for Development with the financial support of the GEF (Global Environmental Facility), and the CABEI (Central American Bank for Economic Integration). This project sought to ”ensure that the micro, small and medium enterprises of Central America increase their contribution to sustainable development and environmental protection, incorporating biodiversity in their businesses, products and services” ( This project was implemented by CABEI through intermediary financial institutions (IFIs) in Honduras, Nicaragua, Costa Rica, Guatemala and El Salvador. In Nicaragua CABEI worked with the LDF (Local Development Fund), Lafise-Bancentro, the 20th of May Cooperative and FUNDESER.

According to the report of the UNDP-GEF-CABEI 2011 the most innovative case was that done by the LDF and the Research and Development Institute, Nitlapan in Nicaragua. As such, this case was systematized among the most innovative experiences of Latin America (see: Mendoza, Dávila, Fonseca y Cheaz, 2011, “Modelo de Adaptación al Cambio Climático a través de la Reconversión Productiva y transformación territorial, Proyecto CAMBio en Nicaragua”, en RIMISP, The LDF and Nitlapan promoted four systems: silvo-pastoral, agroforestry, sustainable tourism and sustainable wood system in 22 municipalities in the buffer zones of interconnected protected areas: San Cristóbal, Tisay, Quiabú, Miraflores, Cerro Yalí, Kilambé, Peñas Blancas, Bosawás; Cerro Colorado, Quiragua, Musún; Juan Venado, Casitas; La Flor, Mombacho, Guatusos, and Indio Maiz. The rules were: the LDF provided credit to its best clients, and Nitlapan provided them with technical assistance; a contract was signed with the producer who chose a system (e.g. silvo-pastoral system) and chose an indicator (e.g. “establish native trees on pasture lands”, “riverbank forests”, “native foraging bushes” or “living fences with native species”). Then they defined the area to be reforested in a year, and at the end of the year CABEI would verify whether the producer complied. If he did, the producer paid only 86% of the amount of the loan, with the policies on term and interest rates remaining the same. This compliance enabled the LDF to claim 6% of the loan given to that producer, and Nitlapan 10% of the amount lent in the portfolio to cover the costs of technical assistance.

Looking at the environmental projects that generally failed in Central America, the results of this case were commendable for slightly more than 1500 producers with around 2,500 hectares reforested, springs (and creeks) recovered or protected, living fences and honey waters decontaminated. What explains this innovation? There is a shared vision among the actors: if the producers with a good credit record transform their farms, their success generates a “snowball effect” of economic and environmental improvement. Then the innovative part is that what the families do and know gets recognized, correspondingly the technical assistance has a systems-approach and not a crop-approach (trees); the myth is broken that the agricultural frontier is advancing felling the trees, they can transform their farms; a credit institutional setup that rewards the good payer with an environmental sense of responsibility; and an approach of combining ecology and economics from the perspective of  “farm trees” instead of forest plantations or compact forests. These innovations remind us of Heraclitus some 2500 years ago: “when there is no sun we can see the stars at night”. The stars in this case are the innovations, while the sun is the approach of an ecology divorced from the economy, reduced to the economy, or seen only as compact forests, a vision of credit and technical assistance that only responds to the market from the logic of crops…

The sun moves, and also can keep us from seeing the most important stars in the CamBIO project: the collective action. Part of it comes from the coordination between financial institutions (LDF, CABEI), technical assistance (NITLAPAN) and production (producer families), within a framework of incentives contributing to environmental and economic sustainability, but this is not enough. Another part of the collective action is left truncated, because of the need for science and collaboration with local organizations. The limited research that there was came from other organizations; it was assumed that those who are doing credit and technical assistance “already knew” the reality. Forcella (2012, Payments for Environmental Services and Microfinance: Proyecto Cambio in Nicaragua, Belgium), studying the project, found that the largest clients with the most cattle tended to invest the difference of the credit more in activities at odds with the environment (purchase of cattle, pastureland without trees, …), while the smaller ones tended to invest the different of the loan more in environmentally friendly activities (shaded cacao and coffee, etc.), which in addition shows that places and organizations are political arenas, that no policy is implemented as planned. The project ignored the local organizations, under the assumption that the producers are isolated individuals, thus losing opportunities to multiply the positive externalities, and undermining in part the sustainability of the project post-2013. This mutual exclusion between institutions that provide services and local organizations tends to be a common pattern, likewise the execution of projects without research. The country lost the opportunity to see more stars, and maybe more interesting stars.

In conclusion: the synergy between ecological, economic and scientific communities within an institutional framework of coordination with incentives is a key path for reducing the crisis of climate change. Science makes a difference, but in CamBIO, CABEI-UNDP-GEF they fell into the mistake of other projects, not studying their own experiences in the region in a comparative manner. Rather they adhered to the custom of providing resources and forgetting about the impact of their actions. The participation of local organizations is essential in any measure to reduce the crisis of climate change; if the local organization is weak and “coopt able”, it has to be strengthened, so that it might be an autonomous counterpart and capable of negotiating, representing the interests of the families. The individual farm is not the motor of change, but the entire local and global infrastructure. Instead of believing that “more market is better for the environment” and “there are only trees in the forest”, we should turn our attention to the reality of the country: there are more trees on farms than in protected areas! The ones who can contribute more to the climate are the small producers!

A producer of San José del Bocay said: “If I take care of a tree from the time it was planted, I will think twice before cutting it down.” If we recognize this, if the financial institutions and technical service organizations expand on these capacities, if the state and the international organizations support this infrastructure, we would understand that the success of the entire chain of institutions passes through the success of the producer families, who, with social, economic and political incentives, can think 10 years ahead and plant a tree, and can think 100 years ahead and take care of that tree. That would make a difference.

* René Mendoza V. ( has a PhD in development studies and is a collaborator of the Winds of Peace Foundation (


Loose Change

We cannot solve our problems with the same thinking we used when we created them.                            –Albert Einstein

Insanity is doing the same thing over and over again and expecting different results.                     -Albert Einstein

Change in the effectiveness of development work in Nicaragua will occur as the result of change in its development practitioners.      -Steve Sheppard

Next week’s workshop with rural Nicaraguans will focus heavily on the notion of change: its necessity, its difficulty, its potential and its universality.  Winds of Peace has been invited to make a presentation on the topic based on our own organizational perspective and from the viewpoint of change experienced in a more corporate setting in the U.S.

We’re always eager to share ideas with our Nicaraguan partners when asked.  But in preparing remarks for this session, I found myself perplexed about exactly how to speak with this group of producers, cooperative leaders, second-tier coop organizations and a few other funders.  It’s a great audience for addressing the issues found in the production chain of coffee or other agriculture.  But it seems like the wrong audience for addressing the topic of change in Nicaraguan development efforts.  That audience would best be comprised of international funders, because that’s where the majority of development troubles lie.  The change exhibited there has been loose and not particularly effective.

Let me acknowledge a couple of important facts.  First, as I have said here previously, there are a great many organizations from the U.S. and all over the world which have done great work in making a difference in the lives of the poor.  The intentions of their work are right-minded and their sincerity is unequivocal.  Second, the WPF perspective offered here is not simply an impression or feeling, but rather based upon 30 years of both experience and research in the Nicaraguan field; there is substantial study to support these views.

WPF does not claim to corner the market on development expertise.  We have been involved in Nicaraguan development long enough, however, to know that the most substantive changes which would bring about sustainable development within Nicaragua are those that can only be made by the funders themselves.  And until funders as a group embrace an alternative means of relating to their Nicaraguan partners, development will not accelerate to any meaningful degree beyond its current snail’s pace.

That alternative relationship implies a close and local accompaniment by the funder, knowing the details of the organization being funded, their realities, their obstacles, whatever temptations toward dysfunction they may exhibit, and the methodologies needed to help strengthen the cooperative or association toward healthy collectivism.  Tolerance of “gatekeepers,” autocratic leadership or the presence of self-serving figureheads may ensure the ultimate repayment of a loan, but does not establish a foundation for long-term economic life.  In such cases, the real objective of the lender is the recovery of the funds rather than any development that has occurred.

If the responsibility for development change is in the hands of the funders even more than the recipients, then by extension a significant role is also in the hands of the everyday contributors who make it possible for publicly-funded organizations to operate in the first place.  Neither the amount of money provided by such groups nor the amount they have successfully recovered in their lending programs provide a very reliable barometer of their effectiveness.  It’s the responsibility of donors to truly understand how their contributions are impacting the end users; otherwise, it can be like throwing clear liquid on a flame and hoping that it isn’t gasoline.   It turns out that it’s hard work making effective development investments, but the effort is worth the result to those who seek to improve their circumstances.

Rural Nicaraguans, whether educated or not, are quite perceptive when it comes to the process of requesting funding.  After all, many have had a great deal of experience in it.  And what they have come to learn is that very often donors are focused on the placement and retrieval of their capital, and not so much on the outcomes that result.  Essentially, loan recipients are savvy enough to recognize what they need to say and do in order to achieve funding.  If the primary objective is simply repayment of funds, then that is what will be their priority, as opposed to anything longer-term or more foundational in value.  Repayment of a loan is a good and important thing, but by itself it does not build a future.

All things considered, I guess I’d rather be addressing an audience of funders next week, rather than a group of production chain actors.  While it’s true that change in the expectations of lenders can be driven by the people they serve, the real impetus for substantive strengthening of economic development will come from the lenders tightening their process, or change will be slow to come at all….








I just need to vent a little.

I receive a number of newsletters and communications from organizations who have a presence in Nicaragua.  It’s very helpful to know about the initiatives and successes being created, and within the development community it’s often valuable to hear what is working through the efforts of others; good ideas were invented to be replicated elsewhere (as long as there’s no copyright involved!)  But I also receive puzzling reports from time to time, missives that defy my understanding (which sometimes doesn’t take much) or which misrepresent reality (which sometimes defies my understanding).  I probably shouldn’t let such things bother me.  But they do bother me when they inaccurately portray the circumstances of those whom they serve, whether intended or not.

One very well-known organization in Nicaragua is particularly renowned for its credit work with small producers.  (I referenced our interactions with the organization in an entry here dated February 9, 2014.)  I’m still a bit frustrated with their abandonment of the small coffee producers in  that case, but maybe especially so in light of the fact that representatives of the group will be speaking to an upcoming conference about the virtues and values of accompanying  “little guys. ” I’m not at all certain how our mutual small producer partners might be depicted.  And they certainly deserve a realistic representation in front of such an audience as potential U.S. funders.  Will their voices be heard?

Then just this week I’ve received a piece sent by an organization which performs significant work in Nicaragua, and which has done so for many years.  Unlike WPF, it relies on investments from the public, so fundraising is never far from their consciousness, which may also be a reason for what was written.  In any case, I always choose to digest their communications first as a potential investor, as though I had no personal experiences within Nicaragua.  It provides an opportunity to hear something new, or at least to hear about Nicaraguan reality through a different voice, hopefully enhancing my own perspectives about the work WPF does and the context in which we do it.

In this issue, I was quickly and sorely disappointed.   The lead article was little more than a self-promotion piece about how terrific this organization is, especially in the eyes of its Nicaraguan partners.  Now, that’s nothing new for institutions that rely on the image of good works for their fundraising success; indeed, often they must “toot their own horns,” because there are few others who can.  It’s fair to do so.   But the article moves into the shadows of misrepresentation when it suggests that a.) their poor, rural partners have many funding options, b.) that their partners  strongly prefer to work with this funder due to loyalty and c.) that the quality of this funder is as important to the borrowers as the money itself.

Wow.  Development groups can tout themselves all they like, and I won’t care a bit.  But to suggest that the truly poor have a wide range of funder options is simply not true.  To state that Nicas “choose” this particular funder because of its mission is an attribution to the poor that is inaccurate, and misrepresents the desperate circumstances of those in need.   Even quoting one of their partners as using the term “corporate automaton” breaches credibility: it doesn’t sound like the language of Nicaraguans I know.

The reality of the rural poor as I have experienced it is quite different.  Credit is a precious resource that is nearly non-existent to the poor who reside in the rural sectors of the country.  There are fewer funders who venture into these areas.  Inability to provide collateral renders potential borrowers ineligible for funds that otherwise might be available.  And where loans are somehow available, the often usurious interest rates makes access to such funding unattainable.  Selection of a funding partner from a wide range of competitive options is simply not the rural reality.

The idea that their partners have chosen this organization primarily from a sense of loyalty suggests that the urgency and desperation for access to credit is a secondary consideration for the poor in Nicaragua.  Now, I am quite sure that the recipient partners are very grateful for the availability to credit which this organization provides; indeed, the access fills a niche that too few other institutions are willing to inhabit.  But the truth of rural Nicaraguan circumstances is that while gratitude and appreciation are heartfelt, such emotions do not put seed in the ground nor fertilizers in the soil.  Financial transactions in this part of the world are built upon needs.  Partners will be grateful for accompaniment, will rejoice in receiving funding visitors in order to show off what they have accomplished.  But years of economic disadvantages and the hidden agendas of potential funders (“do it our way” or “only if you observe this form of faith”) have taught the lesson to Nicaraguans well: whoever has the money at the right rate of interest has their attention.  Survival sometimes makes fickle friends of us all.

Finally, the quality of the lender, claimed to be as important as the funds themselves, is a relative thing.  We all tend to see ourselves through our own range of experiences and values.  When I think of WPF as a “quality partner,” I imagine it through my own definitions of quality and partnering.  Those values may or may not be the same as held by Nicaraguans, whose primary needs are to obtain credit at low interest rates and without political, social or cultural strings attached.   Those serving the poorest sectors of the world’s populations can too easily be pulled into what might be called “a messiah complex,” where we gradually come to see ourselves as as something more than a needed resource.  We can too easily exaggerate who we are.  But in dire circumstances- and with all due respect to motive and friendship and human empathy- the money is what is most important.  What I think funders owe to their partners is an effort to discern their needs and their solutions and the quality of their lives.

I don’t mean to disparage the good works being done by any organization in Nicaragua or anywhere else in the world.  Thank goodness for the care and the caring that is rendered every day in the name of helping the poor.  It’s just that every once in a while I feel this nagging awareness of a self-serving business motive that, frankly, feels out of place in the work of serving others….



Anatomy of a Betrayal

Stories about unscrupulous behaviors visited upon unsuspecting innocents are commonplace these days.  From politics to business, from banks to non-profit organizations, from developing countries to supposedly well-developed nations, from organized fraud to scam artist, the tales all seem to end with a similar result: somebody entrusted with power and/or authority has stolen from somebody else who could not see the deception coming.  Nicaragua, unfortunately, has had more than its share of  such history and the result is that such acts have tended to spawn more of the same.

I recall meeting the members of a second-tier cooperative up in a coffee growing town in the Madriz province area years ago, and discovering a philosophy and practice that really got me excited about what might be possible in working with rural coffee coops.  Here was an organization which spoke of holistic, community development, educating its members on all aspects of what it means to become whole and healthy, and involving its women members in financial education.  We provided loans which were always repaid timely.  The coop grew in stature among producers in the countryside and in many ways modeled what was possible when peasant producers linked up with a progressive, connected leadership.  In several subsequent visits over the years, we re-connected with this organization, always coming away with a renewed sense of hope that organizations like this one could be replicated elsewhere in the countryside. On more than one occasion, we referenced what was happening there to other coops with whom we met.  When Winds of Peace began funding a series of workshops in the area, including all members in the coffee value chain, this group responded with its presence and its participation as a leader in the territory.

Quite suddenly two years ago, there came “rumblings” from the territory that something was not right with this second-tier coop, that some mishandling of coffee and revenues had occurred and that the family occupying the primary leadership role within the organization had been misappropriating resources.  The claim was a bombshell in the region, both for the members of the coop and the people of the surrounding communities.  Police were involved, auditors came to assess, funders nervously checked in with the leadership.  We did, too.

Not wanting to believe that the accusations were true, WPF met with the president, who is also the son of the original founder and president.  We spoke directly about our concerns arising from the accusations.  We asked point-blank whether the principles and objectives espoused years earlier were still in place, or whether they had changed in some ways.  We asked whether there was any hint of truth to the allegations and, if not, what might be precipitating such claims.  (Politics was the culprit, we were told.)  More importantly, we had the opportunity to look straight into the eyes of this young man and discern for ourselves whether we were hearing the truth.  We came away convinced that the coop was still on very solid footing.

The sad truth is, he lied.  In subsequent months it became clear to everyone that in recent years the coop had been used for the personal enrichment of its leading family, that some loans received by the coop never made it into the hands of its producers, that coffee commitments made by the leadership could not be fulfilled, and that an enormous indebtedness had been incurred in the name of the coop, while none of the funds could be accounted for.  This once brightly shining star had tarnished seemingly overnight, and the tarnish had been spread to the unsuspecting peasant producers who had trusted in its integrity and promise.  This has been a tale of corruption and betrayal of profound impact, and its victims completely undeserving of such fate.  Except for one small matter.

The cooperative is nothing more or less than its name implies, an entity owned by its members, its benefits and responsibilities shared by those members.  Therein lies a significant piece of the problem.  For as deceiving as the perpetrators have been in this episode, it is the closed system that they created which allowed them to syphon coop assets for their own use.  The lack of transparency made for an easy cover-up, long enough for the family to temporarily cover their tracks, recruit several key confederates, avoid suspicions and establish a set of outcomes which would both insulate them from prosecution and further enrich themselves even as the coop’s bankruptcy plays out.  Their plan was fiendishly clever and utterly without regard to the financial impact upon the hundreds of family members who had trusted them.  But this closed system which allowed the cover up was also the direct result of coop members who did not pay attention, who trusted blindly, who shed their own responsibility in exchange for the ‘ease” of letting someone else do it.  Too little knowledge, too little participation, too much trust, and too late to prevent a collapse.

It’s a formula all-too-common in Nicaragua.  The “gatekeepers” of coops and Indigenous governance and other organizations occupy a place of  control, whether intended or not.  And in that space they can come to recognize not only the power they wield but also the  ease with  which they can deceive.  It’s a temptation that might infect any of us, but especially after being in a position of want and need for so long.  Finally, we might think to ourselves, there is a chance to do something for myself, for my own family, even at the expense of my neighbor.  It might be a price that any of us would be willing to pay and that too many elected leaders have chosen to accept, and never with good result; in the end, somebody must absorb the hurt.

That pain is not the burden of WPF.  We have sustained disappointments in the past and there will be more in the future; the human condition does not encourage perfection.  Nor does the continuance of our work depend upon the performance of any one actor or group.  The pain is the burden of those brothers and sisters who relied on the integrity and honesty of their leaders only to discover that the enticements of easy money were too great for such leaders to ignore.  And the pain, eventually, is also the burden of those who would abuse the trust of their neighbors.  Because in time, the easy money is spent away on things that do not last.  But the scars of betrayal last forever and leave a legacy of shame that remains long after the violation.  The pain burdens both the victims and the perpetrators alike, and the circle of loss is complete.

Such a postmortem as this may seem to offer a despairing view of future development progress.  But the remedies for this ailment are relatively available, clear and demonstrably effective.  The wall of betrayal is prevented when members of a group stay connected and active.  The disease of unilateral decision-making is cured when participants decide to participate.  The veil of deceit is pierced when leaders are held accountable for transparency and truth by the peers who they represent.  These remedies could be cited as requirements by funders and technical groups which purport to serve our sometimes inexperienced partners; organizational leadership and governance are hardly topics taught in whatever limited schooling partners may have had.  And the irony of these actions is that they not only maintain the integrity of the organizations, but also enhance their performance, as people can openly see the cause-and-effect of their actions.  In the U.S. it’s sometimes referred to as “open-book management” or “ownership thinking.”  Whatever its label, it represents the curative for the ailment of the closed system.  And in the case of a once-promising coop in Madriz, it might well have derailed what has become an organizational and community train wreck….