NYT story on a diner approach to juvenile justice
NYT piece today (link here) is a good piece of reporting on an unusual idea in criminal justice reform. I think the holistic element here is a nice idea. Teaching young people how to appreciate old diner cars, how to create value, how to manage a business. It seems like a worthy approach to juvenile reform and a worthy social enterprise idea. -pg
Youthful Offenders Restoring Luster to Diners of Old
CRANSTON, R.I. — Classic American diners are dinosaurs these days. Many of them, anyway.
…
Now, some defunct diners are getting a new lease on life from an unlikely source: young people in jail.
Behind the razor wire at Rhode Island’s juvenile detention center, teenage offenders are restoring four vintage diners that have been brought there by preservationists for the New Hope Diner Project.
This fall, the first restored diner, Hickey’s, should open in Rhode Island, with some of the teenagers working the griddles and the cash register, and even preparing to manage the restaurant someday.
“The whole poetry behind it is that these are kids who have been pretty much cast away emotionally and criminally, getting a chance to restore beloved eateries that have been cast off from society, too,” said Daniel Zilka, the acting director of the American Diner Museum, who rescues decrepit diners and helps run the project. “If they continue on the path that they’ve been moving upon they would end up in an adult correctional facility. This is probably their last opportunity.”
M. Yunis at the Skoll World Forum 2007
Dear Readers,
I will be writing several posts about the origins of Micro-Finance and one of the early leaders of this industry: Muhammad Yunis, founder of Grameen Bank in Bangladesh and Nobel Prize winner. Here is a good introductory video of his work from his appearance at the Skoll World Forum in 2007. It is a good primer to the concept of micro-finance. More videos and posts to come.
-Paul
High fences in Micro-Finance?
When does micro-lending become usury?
That’s a question the entire industry is wrestling with as it becomes a larger phenomenon in the banking world and intersects with local NGOs and governments around the world.
Many experts point out that interest rates of 15% to 35% on loans of $100 to $2,000 in places like India and Latin America are the norm. They point out that while those interest rates are higher than typical loans in Western markets, they are not much higher than credit card loans in developed markets. They say the higher rates are required because of the higher default rates and higher administrative costs.
“Young micro-finance institutions often need all that high interest margin to be able to implement their model,” said Brad Swanson, a partner in Delaware-based investment bank Developing World Markets, speaking to a recent class at Columbia Business School. “You can’t start off and be successful from one day to the next. You have to start up with bricks and mortar, sales, client base etc. it is a high-cost business on the operations and administrative side.”
In Mexico, some banks are charging as much as 80% to 100% to make loans to customers. Experts in microfinance point out that these loans are often not micro-finance loans at all but are consumer loans. Micro-finance loans are intended to help locals launch start-up businesses. They often involve applications, interviews and accountability with either a loan officer or a group of neighbors. Consumer loans with higher interest rates – by contrast — are similar to predatory lending practices in America. They don’t care if people are using the money to start a business or buy a TV.
The microfinance industry grows frustrated with media portrayals – such as a recent Business Week article http://images.businessweek.com/ss/07/12/1213_mexico/index_01.htm – that confused consumer lenders in Mexico with microfinance lenders. The consumer-lending bank gave the Micro-finance lenders a bad name. The key, they say, is communicating what Micro-Finance is all about and explaining how it works.
“The high interest rates are important in the early stages but it unwinds in later stages,” said Mr. Swanson, noting that an ongoing portfolio begins to return more equity and attract more entrants to the market. “As more people lend to the clients, competition will drive interest rates down for clients.”
