John Haines: Filling a Niche

BY DAN SADOWSKY
December 1, 2007

Photo: Mount Burns for Mercy Corps When Mohammad Yunus won the 2006 Nobel Peace Prize for championing small-scale lending to the world's poor, most U.S. microfinanciers probably took it as an affirmation of their own good works. Not John Haines.

The 48-year-old Haines leads one of the most successful and innovative microfinance institutions in America. Mercy Corps Northwest helps low-income entrepreneurs in the Portland metro area by offering loans, financial education and a variety of technical-assistance programs.

But he's also one of his industry's biggest critics.

Whatever anecdotal success the industry has achieved, he says, is overshadowed by its failures: a reliance on expensive, lackluster technical-assistance programs and an inability to create systems that help more than a handful of people. Of the 500 microfinance programs in the U.S., only about one-third served more than 200 clients annually, according to a recent Aspen Institute survey.

By contrast, Mercy Corps Northwest worked with more than 700 clients last year, and reached another several thousand online with a freshly unveiled community knowledge base. It has the potential to grow its cadre of volunteers exponentially through Mercy Corps' acquisition of MicroMentor, an online service that helps entrepreneurs grow their businesses through mentoring relationships with experienced business professionals.

"I see the opportunity to transform the domestic microenterprise field by scaling up our operations and making them more efficient," says Haines. "The way to do that is to use technology to connect entrepreneurs to the right strategy and the best help."

"The idea is to aggregate community assets to make good information accessible to anyone, anytime. If someone can self-navigate to independence, great. If not, we're still here to help them."

And few organizations in the nation integrate savings, training and lending services to the same degree Mercy Corps Northwest does; its programs run the gamut from matched-savings programs to financial literacy classes to start-up loans. Proceeds from its loan programs cover the programs' costs: the agency's share of operating expenses covered by interest payments has risen nearly fivefold in four years, from 4 percent in 2004 to 19 percent this year.

Seventy percent of its clients are women, and more than four in every ten are racial or ethnic minorities. And perhaps no domestic microfinance agency boasts the same range of innovative initiatives, such as delivering entrepreneurial skills training in a state prison or securing land, diverse market access and organic training for recently arrived refugees to become the nation's newest farm entrepreneurs.

In October, the agency kicked off the second 26-week curriculum for women at the Coffee Creek Correctional Institution, a multi-security female prison in the Portland suburbs. Classes are designed to develop interpersonal skills, financial literacy, business plan development, and practical planning for the transition from the prison to open society. The aim is for women inmates with children to successfully reintegrate into their families and into society, and - should they choose - start and succeed in a small business.

"When you factor in recidivism rates, incarceration costs, the likelihood their kids will be involved in crime … the range and duration of public assistance required is extensive," says Haines.

One woman in the first graduating class is now a success story: she's making payments on a car loan that has allowed her to be employed as a courier. "But the true test," Haines says, "will be two years down the line: Do these women go back to prison? How is the family doing?"

Investing in newly arrived refugees is a long-term investment, too. Mercy Corps Northwest's Refugee New Agriculture Project finds land, incubates farming enterprises and secures market access for refugee farmers from Laos, Tajikstan, Russia, the Ukraine and Cambodia.

It's a far cry from Haines' first job as a loan officer with Portland's First Interstate Bank, which mainly lent to timber interests during the logging industry's heyday in the 1980s. But in 1993, Haines, a Wyoming native who earned a degree in business, became executive director of an economic development fund in Trenton, New Jersey, where he tested innovative ideas in community investment (such as trying to persuade large, locally based investment banks to donate fractions of stock shares to low-income women).

In 1998, after two years advising the Czech National Environmental Fund on its investments, he returned to Portland to start ShoreBank Pacific, the first U.S. commercial bank with a commitment to environmentally sustainable community development. He's been executive director of Mercy Corps Northwest since December 2002.

How long he stays may depend on how successful he is in putting himself out of business. He's fond of saying that if the industry can successfully democratize the information and access to capital that microentrepreneurs need, specialized outfits like Mercy Corps Northwest won't be needed.

But before that happens, he says, "the whole microenterprise field must evolve — if not dramatically change — to meet the economic needs of low-income communities and the unmet demand for services from low-income entrepreneurs."

That evolutionary process may be long. But Mercy Corps Northwest has already found its niche.

Next in this series: Jonathan Dill: Far From Typical

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