Grameen Foundation

SUMMARY The Association for Enterprise Opportunity (AEO), a membership organization and network that represents the interests of underserved entrepreneurs in the United States, is seeking a team of volunteers to refine and develop a toolkit that practitioners and investors can use to identify and size segments of underserved business owners. This toolkit will enable microfinance institutions (MFIs) to better meet the needs of their existing clients and reach individuals presently not served. BACKGROUND AEO is a membership organization and network that represents the interests of underserved entrepreneurs in the United States. We are the leading voice of microenterprise, with member organizations in every state (+ Washington, DC and Puerto Rico) and a growing network of partners in the private, public and non-profit sectors. Our work on behalf of microenterprise is focused in three areas: 1) advocacy; 2) member services; 3) industry-wide initiatives. AEO’s membership base presently includes >400 non-profit organizations representing every state, the District of Columbia and Puerto Rico. About half of our members offer financing to underserved business owners and their companies. (The rest offer a range of services.) These organizations all have 501c(3) status but represent a mix of organization “types” including community action agencies, non-profit community development corporations and non-profit loan funds and others. Nearly all offer debt financing to their clients (vs. equity or equity-like structures). Most are certified by the Department of the Treasury as a Community Development Financial Institution (CDFI) and/or are designated a “Microlenders” by the US Small Business Administration. In the two decades since AEO was founded, its focus on underserved entrepreneurs has not wavered. Long before microenterprise captured the imagination of the general public, AEO was working with its members to improve the policy environment and channel resources to meet the needs of entrepreneurs left out of the mainstream. CHALLENGE When non-profit microfinance institutions serve business owners, outcomes can be impressive including high-value job creation, improved business survival rates, and sizable economic returns to communities. Yet the current structure of the US microenterprise development industry is not sustainable and not all non-profit microenterprise development organizations are achieving their potential. At present, only a fraction of the more than 3 million low-wealth small business owners in the United States or the estimated 10-14 million underserved entrepreneurs are reached by the hundreds of non-profits whose missions include enterprise development. Reaching 80% of these underserved entrepreneurs at current costs would require >$20B, which represents just under 50% of total giving by independent US foundations in 2009. Fortunately, there is no shortage of ideas to better meet the needs of underserved entrepreneurs. There are, however, significant constraints on available resources. We believe that both new product development and resource allocation would improve significantly if non-profit leaders, their corporate partners, social investors and others had a sharper understanding of the size and structure of the underserved entrepreneur market. As part of a larger initiative underway to accelerate needed changes in the capacity and reach of U.S. microenterprise development, AEO intends to develop a standard approach and toolkit to size demand for capital and services. The framework and tools should be applicable for different units of analysis: nationally, regionally, across a state and within a community. Once developed and tested, this toolkit will be rolled out nationally to our members and network partners. We believe that identifying and quantifying various dimensions of demand will accelerate necessary funds flows in support of low-wealth business owners. Moreover, we believe that a standard approach, coupled with deployment support and strong incentives for adoption, will permit resources to flow to the highest impact uses. PROJECT DESCRIPTION AND OBJECTIVES AEO seeks a volunteer or a team of volunteers that will develop a methodology and toolkit to answer the following questions: -What is an “underserved entrepreneur? -How many of the underserved entrepreneurs are there? -Where are the underserved entrepreneurs located? The team of volunteers will refine and improve AEO’s current framework to define various segments of underserved entrepreneurs and then develop an approach and toolkit to size the market and identify tailored metrics to track improvements for each segment. This approach and tools will be tested with a group of stakeholders in the southeast region of the United States and then rolled out nationally. The team of volunteers will work directly with AEO and selected member organizations. We will ensure that the volunteers have adequate knowledge of the context and objectives. Volunteer deliverables: -A needs-based segmentation of underserved entrepreneurs in the US context -A model to generate rough sizing for each segment nationally, regionally and with increasing degrees of granularity VOLUNTEER REQUIREMENTS AEO seeks 1 volunteer or a team of volunteers with experience in: -Quantitative market research and analysis; -Business consulting; -Knowledge of the US microfinance industry is a plus, although not required PROJECT DURATION AND LOCATION The project will begin May18, 2011 and will last for 8 weeks. The project can be done remotely. Timeline is negotiable.