By Annie Brown,

Microfinance Focus, April 2, 2011 (WASHINGTON, D.C): On March 8, the Cooperative for Assistance and Relief Everywhere, better known as CARE, began its annual conference with a celebration of International Woman’s Day at the Dupont Hilton in Washington, DC. The mood of the evening was festive, celebrating 100 years of women’s achievements as well as 65 years since CARE delivered its first physical CARE Packages to Eastern Europe. However, the days following the celebration consisted of a more serious and carefully directed energy.

The 2011 CARE conference focused on educating attendees about the issues that surround continued female oppression and the looming foreign aid budget cuts.
The second day of the conference was dedicated to preparing the attendees to lobby Congress on behalf of CARE the next day. As CARE supporters learned more about the current political climate in the United States there was an increasing sense of urgency to be effective during their meetings with legislators and legislative aides. “If this budget passes,” USAID Administrator of USAID Rajiv Shah warned conference atendees, “we will effectively end six decades of US leadership in development.”

Keynote speakers at the event included Rajiv Shah, Melanne Verveer, U.S. Ambassador-at-Large for Global Women’s Issues Ambassador, Former first lady Laura Bush and billionaire philanthropist Melinda Gates. All spoke about the importance of US foreign aid and women’s issues to the U.S.’s national security and position as moral leader. Verveer was met with applause when she said, “Women’s empowerment is essential, because it is a fact that no country can get ahead if it leaves half of its people behind...women and girls are one of the world’s greatest untapped resources, and investing in them is one of the most powerful forces for international development.” These high-profile speakers spoke between educational sessions  concentrated on issues to be discussed with legislators on the 10th.

[ Image:The Honorable Melanne Verveer speaks to a room of over 1,000 CARE supporters at the 2011 CARE conference]

Village Savings and Loan Associations

CARE representatives presented three “asks” to Congress on lobby day: prevent deep cuts to foreign aid, provide girls and women access to education, and empower women through microsavings. Village Savings and Loan Associations (VSLAs) were the focus of CARE’s microfinance educational sessions. In 1991 CARE harnessed the African practice of group savings to create a sustainable system of microfinance. Since 1991, CARE has launched 54,000 VSLAs in 21 African countries and over 1.9 million women have received intensive training in money management. CARE’s VSLA program is part of a larger "Access Africa" program that aims to help 30 million people in 39 different African countries gain access to financial services.

According to a VSLA information sheet provided at the conference, “By using their own savings to meet basic household needs, like food and supplies, [VSLA members] avoid incurring debt.” Once VSLA members have stabilized their cash flow, they can request loans from the VSLA to start businesses, or fund community projects. VSLAs are also “a pathway to...broader financial services,” according to CARE.

During a breakout session entitled “Microfinance in Africa: Smart Investments and Innovative Partnerships Making a Difference,” CARE representatives presented information on VSLAs based in Uganda. With funding from the Gates Foundation, Barclays Bank and the UK Department for International Development (DFID), Uganda’s VSLAs aim to help the 52% of Ugandans with no access to financial services.

These VSLAs are self-selected groups of 15 to 30 people, usually women. In these groups, members meet regularly to discuss savings and loans and CARE staff provides a year of money management training, as well as health education. As soon as the group saves enough money, they loan it out with interest. Loans are usually short term (about 1-3 months). James Bot, Country Director for CARE Uganda explains, “They set the interest rates by themselves, and since they are self-selected, they know each other and what they are capable of.”

Bot told the audience that this program is low cost and high return. The establishment cost for a VSLA ranges from about 20 to 30 dollars to purchase the lockbox (for groups to store money safely) and record books. He did not mention how much funding goes towards CARE staff salaries or overhead costs. The challenge, Bot said, was the “limited funds at CARE.” However, with support for new legislation, VSLA programs could receive funding from USAID.

Previous to the conference, CARE staff members worked with Congress members to develop a bill that would advocate for U.S. funding to support VSLAs. The bill was introduced to CARE attendees during a legislative briefing on “Women’s Economic Empowerment.” The panel briefed the room on VSLAs and what makes them an important innovation in microfinance. VSLA programs focus on savings, education and community loans, they explained.When asked if the mentioned legislation supporting VSLAs included provisions to prevent indebtedness Abbie Laugtug, Policy Advocate for CAREUSA said, “You won’t run into those problems...the women don’t come into [VSLAs] as borrowers.” Laugtug also mentioned CARE worked with the Center for Financial Inclusion to develop the bill.

In the question and answer session following the “Women’s Economic Empowerment” briefing, the audience seemed unconvinced about the legislation that they were being asked to lobby for the next day. CARE provided extensive evidence to why VSLAs are an effective development program, but as far as the bill was concerned, the panel could only state that it had bi-partisan support from two unnamed senators and that the bill authorizes the use of funds from the foreign aid budget to support VSLAs. One woman in the crowd asked why Congress would be motivated to support programs like VSLAs, when the primary beneficiaries would be people in other countries. This is a reoccurring concern for U.S. foreign aid advocates such as CARE. 

The U.S. Foreign Aid Budget and Microsavings

During a time of much fiscal conservatism in Washington, it is extremely difficult to convince legislators that your cause is worth funding. When your organization works exclusively outside US borders, it is even more difficult to gain financial support. Also, there has been much debate on the effectiveness of foreign aid. Citizens and politicians alike are asking, does the money we put into aid make a significant impact? CARE argues that microsavings programs like VSLAs can make a large positive impact without much cost to taxpayers. However, whether or not federal funds will be allocated to support VSLA programs depends on how much money is allocated to the United States foreign aid budget in the 2011 and 2012 fiscal year.

The continuing resolution (CR) from the 2010 fiscal year currently allocates 56 billion dollars (about 1% of the national budget) to foreign aid programs. However, the latest continuing resolution recently adopted by the US House of Representatives provides only 46 billion, a 19% cut from FY2010’s budget. The Senate’s budget for FY2011 proposes less severe cuts to the foreign aid budget, but still only allocates 52 billion. When making cuts, politicians targeted development assistance programs included in the State Department and USAID’s current budget.

How does an international non-profit organization like CARE lobby the US Congress to fund programs designed to benefit the working poor of other nations? Aid advocates argue that foreign aid both assists “national security” and demonstrates “moral leadership of the US.”  CARE representatives argued that if the U.S. government funds humanitarian efforts in other countries we can prevent future international conflict and relieve suffering.

After the first set of legislative briefings, Helene D. Gayle, CEO and President of CARE spoke to a room of CARE supporters while they ate lunch. Before introducing Melinda Gates, a keynote speaker at the event, Gayle spoke of the US’s role in foreign affairs. “We are here to bring about a safer and more peaceful world,” she said. Similarly Gates told the crowd, “they have a voice through you all.”

Todd Preston, Director of Government Relations at the U.S. Global Leadership Coalition presented at a conference educational session on foreign aid. “Development and diplomacy are included in the national security budget,” Preston continued, “military leaders are calling for bolstered funding.”

In the week following the conference, General David Howell Petraeus argued against any USAID cuts at the hearing, saying foreign aid should be viewed as a national security expense. U.S. Secretary of Defense, Dr. Robert M. Gates has advocated for large State Department and USAID budgets. “Development is a lot cheaper than sending U.S. soldiers,” Gates has said at several public appearances.

During his luncheon speech at the conference, Administrator of USAID Rajiv Shah told the audience, “The evidence is clear, development assistance does further our national security and our economic interests....it is also a core expression of our basic values.” Towards the beginning of his speech Shah remarked, “We have an interesting dialogue occurring in this country...I hope my comments will help you in your efforts over the next few days.”

His speech went on to argue the importance of microenterprise and a focus on women and girls were important parts of an updated USAID plan. Microenterprise, Shah believes, facilitates national security by engaging the “two to three billion consumers on the bottom of the pyramid” and promoting the economic growth of U.S. trading partners.
Shah used microenterprise as an example of efficient plans and programs that should be spared from federal budget cuts. “The goal of these investments is not just to...provide microcredit access, but to create the institutions and human capital that can allow those countries to grow and become donors themselves.”

Even though Shah is an influential figure in Washington, he has yet to convince Congress to scale back their cuts to foreign aid. As the second day of the conference ended, CARE and its supporters hoped their lobbying efforts as concerned constituents would change policy and promote financial support for international development.

Lobby Day

I stood in line with CARE supporters huddled under umbrellas as we waited to board buses headed for Capitol Hill. It was a rainy Thursday morning, the last day of the conference, and a miserable day to walk through the rain between congressional office buildings. Once we arrived at The Hill, I tracked down the Virginia state group, led by volunteer Abi Dini. I found them in the Cannon House Office Building. The group’s first meeting was with Republican Representative Eric Cantor at 10:30am.

Majority Leader in the House of Representatives, Eric Cantor does not support continuing robust funding for development assistance. Representative Cantor voted for the House version of the FY11 budget and the deep cuts to foreign aid. I walked into Cantor’s office just as Katherine MacGregor introduced herself and led the group into Cantor’s conference room. MacGregor, who introduced herself as Kate, sat at the head of the conference table, with Abi sitting to her left as the rest of the group sat and stood, barely fitting comfortably into the space.

While meeting with a staffer might discourage someone new to lobbying, legislative aides have a lot of influence. Experienced staffers like MacGregor advise representatives to support or reject legislation. The Virginia CARE lobbying team was aware the aide had a lot of power in this situation, and respectfully asked for Cantor to support educational programs for women, VSLAs and federal spending on foreign aid. However, at the end of the presentation MacGregor explained to the group that Cantor’s priority was “getting control of spending” and that the focus must be “here in our nation first.”
At the end of Lobby Day, I asked the group leader Abi Dini, if she found the experience to be rewarding. Dini replied, “We had a great day lobbying... The legislative aides we met with seemed to understand our issues and why they are so important. I believe that everyone should feel empowered to talk directly with the legislators...We have to remember that they work for us.” 

She pointed out that other congressmen were more positive than Cantor. “Chris White from Senator Warner’s office is the new National Security Aide (at Warner’s office) and he seemed to really understand the impact that a cut to the foreign aid budget would have on national security,” Dini said. The group was well prepared for the day, but it has yet to be seen whether or not CARE’s lobbying efforts convinced Congress.

As we watch the debate surrounding the foreign aid budget unfold into policy it is important to understand the viewpoints of all stakeholders, including the American people who want to see the national debt shrink, the politicians who represent them, the activists who work to improve the lives of people living in extreme poverty outside of U.S. borders and of course, the people whom U.S. foreign aid is meant to help. CARE views itself as a spokesperson for the voiceless millions who benefit from programs funded by USAID and the State Department. Both arguments for aid, national security and moral leadership, are difficult to measure. However, maybe the difficulty lies in the way we measure progress. Perhaps, the most powerful argument for foreign aid programs (like VSLAs) is how effectively they impact the lives of people in poverty.