Trickle Up: Investing in Women to Help Fight Poverty

Written by Mary Welch Tuesday, January 11 2011

Penny Foley is the board chair of Trickle Up, a nonprofit organization that provides business training and seed capital grants to people living in extreme poverty to help them launch or expand a microenterprise. She is a managing director of Trust Company of the West, a Los Angeles-based investment management company, and the portfolio manager for TCW Worldwide Opportunities Fund.

Prior to joining TCW in 1990, she was a senior vice president of Drexel Burnham Lambert where she was involved in the management of DBL Americas Development Association L.P. (the precursor to TCW Worldwide) and in the provision of investment and merchant banking services in Latin America.

Foley attended Northwestern University and holds a bachelor’s from Hollins College. She is a member of the board of Kids In Sports, a Los Angeles-based nonprofit providing after-school sports programs for at-risk kids, and a trustee of The Shipley School in Bryn Mawr, Penn.

Womenetics: Tell us about Trickle Up.
Penny Foley: Today, with an estimated 1.4 billion people living in extreme poverty, there is an immense need for high-quality economic development programs that can produce sustainable change in the lives of the poorest. Trickle Up’s target population studies show that microcredit institutions serve moderately poor and low-income households living on a minimum of $2 a day per capita.

Trickle Up’s approach is designed for households whose per capita income is less than $1.25 a day, the international standard for extreme poverty as defined by the World Bank. Households at this level of poverty lack the collateral to qualify for formal microcredit services and, because of their extreme vulnerability, are not in a position to benefit from an income strategy that involves a significant amount of indebtedness.

Womenetics: Why “trickle up” not “trickle down?”
Foley: Trickle Up began in 1979 at a time when “trickle down economics” was the conventional wisdom. When Trickle Up founders Glen and Mildred Robbins Leet traveled to one of the Caribbean’s poorest nations, Dominica, they saw firsthand that huge sums of money allocated to top levels of society didn’t reach the country’s poorest. In 1979, Glen and Mildred gave 10 people grants of $100 each to launch their own microenterprises. The Leets provided them with Trickle Up business plans and reports to track their business expenses and earnings. New business activities ranged from building blocks to selling eggs, jams, and school uniforms. Some of these businesses are still operating today.

Womenetics: How are your programs designed?
Foley: Trickle Up’s program components are designed and sequenced in a way that takes into account the individual, as well as the local dynamics of the areas in which we work. They specifically target people who are unreached or unserved by microfinance or other service organizations, and the program provides them with the resources they need to build sustainable livelihoods that improve their quality of life. For the womenTrickle Up serves, it is often the first time they have had such an opportunity.

Through our Spark grants, participants receive a seed capital grant that covers start-up costs or helps to expand an existing microenterprise. This grant is a form of equity and, unlike microfinance, is not expected to be paid back.

With our savings groups, Trickle Up connects participants with savings groups that help them build their assets. These groups function like community banks; the members save money, borrow from, and make loans to individual group members from consolidated group savings, and they pay each other interest to grow the group fund.

Via our teaching programs, participants receive training on how to operate and sustain a microenterprise. Training may involve balancing accounts, basic marketing, and livestock management.

We work in some of the poorest communities in five of the poorest countries in the world: Guatemala, Nicaragua, Mali, Burkina Faso, and India.

Trickle Up partners with local community-based organizations, grassroots and larger national agencies that share our vision, values, and mission. Our partners are the linchpin of our programs, essential to our ability to deliver the Trickle Up program. Working through our local partners allows us to adapt our program to fit the needs and context of local communities.

Trickle Up takes a multifaceted approach. We don’t just give a grant and walk away. We know that to rise and stay out of poverty takes more than that. Our saving support and training components are key to sustaining someone’s progress out of poverty.

Womenetics: How did you get involved?
Foley: I have worked in the emerging markets for most of my career, first as an investment banker and more recently as a portfolio manager. During that time, the financial strength of the emerging markets as a whole has improved substantially with debt to GDP ratios falling from triple digit levels to the current 35 percent; foreign exchange reserves increasing from $45 billion in 1990 to $3.2 trillion today; and inflation falling from close to 600 percent per annum 20 years ago to an estimated 5.8 percent in 2010.

And yet there are still close to 1.5 billion people living in extreme poverty today. So it was clear that there was a large part of the population that was too isolated – by geography or training or both – to benefit from developments in the formal economy. And the only way I could see that this might change is through economic intervention at the individual level.

I was introduced to Trickle Up at their 2005 gala through a friend who was an honoree that year. I was intrigued by their approach for a number of reasons. The program was a combination of money and training and therefore was likely to produce more sustainable results than money alone. The savings element of the program enabled participants to learn budgeting skills, earn interest on their savings, and have access to additional funds to expand their businesses as necessary. And the focus was on women, that part of the population which tends to use additional financial resources to improve the health, living conditions, and educational opportunities for other family members, thereby having a positive impact on the family unit as a whole.

I was very impressed by the experience and commitment of the staff and the quality of its board. I was also taken by the sophistication of the monitoring and evaluation measurement systems Trickle Up has in place. Charities often just write a check and declare victory. Trickle Up ensures that its programs are having the desired effect and is in a position to tweak elements of the program to improve outcomes as necessary.

Womenetics: Why focus on women?
Foley: In 2010, Trickle Up served 7,690 new participants, helping them start or expand microenterprises. Of these participants, 94 percent are women and 12 percent have disabilities.

The key to economic development lies in unleashing women’s potential and investing in women’s capabilities. Women bear a disproportionate weight of the world's poverty, representing 70 percent of the world's poor. At the same time, it has been widely recognized that women have the potential to be the engine of economic and development progress. Addressing gender inequalities is a crucial factor in enabling women to transform their lives and the lives of their families and communities.

Trickle Up is committed to actively including people with disabilities, a chronically underserved population. One out of every five people has a disability, and 82 percent of people with a disability live below the poverty line. People with disabilities, particularly women, consistently rank among the poorest of the poor yet they continue to be overlooked.

Womenetics: What does Trickle Up mean by sustainable living?
Foley: We build sustainable solutions for our participants so that they may continue their livelihood activities once the Trickle Up program has ended. We do this on a number of fronts. We train participants to establish and grow a microenterprise that will continue after the end of the Trickle Up grant period. We also help people form savings groups to build assets and have ongoing access to capital. The longevity of these groups lasts well beyond the Trickle Up intervention period. Our results show these measures at ensuring sustainability are effective in each region:

• In Guatemala, 93 percent of participants increased their income after one year. 72 percent expanded a livelihood activity; 26 percent diversified their activities, and 15 percent of participants sold goods in new markets.
  
  
• In Mali, more than 98 percent of participants remain members of savings groups after four to five years.
  
  
• In India, 82 percent of participants have successfully diversified their livelihood activities after three years, thus reducing vulnerability. Diversification is continuing beyond program completion.

Womenetics: How do you select the countries, villages and women you support?
Foley: We work in some of the world's poorest countries, which rank at the bottom of the U.N. Human Development Index.

Our selection process is an exhaustive collaboration with our local partner organizations and the communities we work in. Trickle Up program staff members complete a rigorous check on potential partners, and we evaluate partners' missions to be sure that their vision is compatible with our own. We partner only with organizations that have experience providing business or other training and which have excellent working relationships with the local community. We also conduct thorough audits of potential partners' programs, outreach, target communities, and financial practices.

Our partners in turn work with people in the local community using a variety of targeting methodologies in deciding who will be the participants in the program. In India, for example, community members literally “map” their village. By engaging in these discussions with community members, our partners are able to locate the poorest inhabitants. This is followed up with door-to-door double checks by both the partners and Trickle Up field staff to ensure that the poorest have been reached. This two- to three- month process encapsulates the development industry’s best practices for poverty targeting and ensures Trickle Up remains true to its mission of reaching the poorest of the poor.

Womenetics: What are some of the results of your actions?
Foley: In 2010, Trickle Up served 7,690 new participants, helping them start or expand microenterprises. Every person who launches a Trickle Up livelihood helps support, on average, another five people, which means that in 2010 nearly 41,000 people benefited from the Trickle Up program.

Mary Welch is a freelance writer for the Atlanta Journal Constitution, Dawson Times, Plan Your Meeting magazine, and Atlanta Business magazine. Previously, she held many positions with Leader Publishing, including editor-in-chief of Atlanta Woman, editor of Business to Business magazine, and editor of Catalyst magazine. As editor of Business to Business, she assigned, edited, and conceptualized a series that was awarded Silver in the 2005 GAMMA Awards for Best Series. Welch was a reporter for the Atlanta Business Chronicle for eight years and freelanced for publications including Glamour, Advertising Age, South, Georgia Trend, and Oz. From 2000 to 2003, she served as vice president of media relations for Bank of America, during which time she authored Forever Green: A History and Hope of the American Forest with Rolling Stones keyboardist Chuck Leavell.