30172: Leiderman, re 30159, 30153: (background) remittances, Fonkoze (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: leiderman@mindspring.com


9 March 2007

dear Readers:

thanks to John Rigdon for mentioning Fonkoze.  it is active in Haiti, with an American partner [Fonkoze USA], and offers money transfer service that seem below Western Union fees and perhaps below conventional bank wire service transfers.  recipients need to be Fonkoze account members.  the information is not conveniently organized on the web, but here are some excerpts that make a reasonable patchwork:

first, trying to summarize the remittance situation and where Fonkoze currently fits, and a possible larger role in the future, two recent papers:

-- "Remittances to Least Developed Countries (LDGs)," International Organization for Migration February 2006, 28pp <www.old.iom.int/en/PDF_Files/benin/ Remittances_to_LDCs_Background_Paper_English.pdf>
[included mention of Haiti - in 2003, $811 million remitted to Haiti (pg5), Haiti and Fonkoze remittance discussion and table (pg11); and

-- "Transition from a Microfinance Institution to Regulated Bank: Technology Infrastructure Planning in a Developing Country," Winston Tellis and Aaron Seymour, Fairfield University, Fairfield, CT, USA, Winston@mail.fairfield.edu aseymour@mail.fairfield.edu - Informing Science, InSITE, June 2002 - <www.informingscience.org/proceedings/IS2002Proceedings/
papers/telli211trans.pdf>
"...In this paper, the authors describe the process of converting from a microfinance organization to a regulated bank in Haiti. The literature was helpful as far as some of the procedures were concerned, and the organization was able to use the recommendations. However the researchers found some major omissions in those recommendations as far as infrastructure was concerned. In some developing countries, it is impossible to install PCs because there is no electricity. Similarly network connections and access to the Internet without telephone service would be impossible. A comparison is made between the recommendations and the realities of the environment in Haiti. Future implementations could benefit from the findings of the authors...."

then, among the websites specific mentioning Fonkoze:

www.fonkoze.org/
Established in 1994, Fonkoze currently has over 90,000 depositors, over 30,000 active borrowers (97% of whom are women), and 26 [now 28 per below] branch offices spread throughout every department of Haiti.

http://www.fonkoze.org/sendmoney.htm
Fonkoze's Direct Deposit Service: Ayiti DirÃk DirÃk
Send Money to Haiti Quickly, Safely, and Inexpensively with Fonkoze
Service To Haitians And Their Friends In The Diaspora . Does your parish, organization, or family in Haiti need financial     assistance from time to time? Let Fonkoze assist you quickly, safely, and inexpensively. Fonkoze offers the lowest available rates to send funds to Haiti. Our fee schedule is as follows:

$10 - $1000           $10
$1,001 - $2,000       $15
$2,001 - $3,000       $20
$3,001 - $4,000       $25
$4,001 - $5,000       $30
$5,001 and above      $50

For churches and other non-profit organizations, Fonkoze charges only $10, regardless of the amount sent.  Fonkoze's online deposit service is unavailable.

If you would like to make a transfer using a check, money order or wire transfer, all you need to do is: Make sure the person receiving the funds has opened up a savings account with Fonkoze in Haiti. (If not, you can open one for them by phone or by sending in an application form.) Application to open a savings account for individuals Application to open a savings account for organizations Contact our Customer Service Representatives by phone at 1-800-293-0308 or by email at FundNotice@fonkoze.org.   They speak English, Creole, and French.

To send a Wire Transfer to City National Bank of New Jersey, you will need the following information: City National Bank of New Jersey, 900 Broad Street, Newark, NJ 07102, (973)624-0865.  ABA Number: 0212-0163-9 City of NJ Newark Account Number: 1613979  For further credit to: Beneficiary's Name Beneficiary's account number (Fonkoze Haiti)

To send a check: If you send a check or money order, make it payable to Fonkoze and mail it to City National Bank at the following
address: City National Bank, 382 West 125th Street, New York, NY 10027.  On the memo line of the check, write down the account number and the name of the beneficiary in Haiti.  At the same time that you send the deposit to City National Bank (CNB),  let us know (1) how much you sent; (2) the name on the account(s) in which you want the money to be deposited; and (3) the number of the account(s).

CNB reports all deposits to our account on a daily basis. As soon as
we see that your deposit has arrived at CNB, the funds will be
immediately deposited into the proper account in Haiti. You will in
turn receive a written confirmation that the deposit has been made.

For Customer Service in the United States or Canada, call toll-free:
Thompson Smith, Fonkoze Customer Service Representative
1-800-293-0308  email: fundnotice@fonkoze.org

It's that simple! Call now to ask questions or to send your first transfer!

- - - - - - -

http://www.mixmarket.org/en/demand/demand.show.profile.asp?ett=1387
Microfinance Information Exchange -- Profile for Fonkoze

Anne Hastings, Executive Director
FONKOZE
Ave Jean Paul II #7 (a lenteryÃ)
Port-au-Prince, Haiti
director@fonkoze.org
Ph +509 513 7631
Fx +509 221 7520
www.fonkoze.org

Fonkoze USA
PO Box 53144
Washington, DC 20009
(202) 667-1277
fonkozeusa@cs.com

Background and Main Challenges
Today, Fonkoze â Haitiâs Alternative Bank For The Organized Poor â is the largest microfinance institution offering a full range of financial services to the rural-based poor in Haiti. Currently, Fonkoze has over 90,000 depositors, over 35,000 active borrowers, and 28 branch offices spread throughout every department of Haiti.

Exchange Rate,
Haitian Gourdes per US Dollar:

on 31/12/00 21
on 31/12/01 24.857
on 31/12/02 35.236
on 31/12/03 39.37
on 31/12/04 35.958
on 31/12/05 42.15

[note the devaluation of the Haitan Gourde from 2000 to 2005. does this mean that the value of remittances has been effectively halved in that period?  if so, the recent IADB/Bendixen data of very high Diaspora remittances probably ought to be (choke) corrected to reflect actual buying power.  how to fool around with statistics about Haiti is a subject for another day.]

- - - - - - -

https://shop.fonkoze.org/contactUs.hg

Fonkoze USA
305 Seventh Avenue
15th Floor
New York, NY  10001
212.822.9553 212.822.9594
fax) 212.989.0983
fonkozeusa@fonkoze.org

- - - - - - -

http://CharityReports.give.org/Public/Report.aspx?CharityID=1955
Give.org -- BBB [Better Business Bureau] Alliance

January 2007

Fonkoze USA
305 7th Avenue, 15th Floor
New York, NY 10001
212-822-9553
212-822-9556
www.fonkoze.org

Year, State Incorporated: 1997, New York
Affiliates: None
Stated Purpose: "to build the economic foundations for democracy in Haiti."

Evaluation Conclusions
Fonkoze USA (Fonkoze USA) does not meet the following 6 Standards for Charity Accountability:

Standard 3 : Frequency and Attendance of Board Meetings - An organization shall have a minimum of three evenly spaced meetings per year of the full governing body with a majority in attendance, with face-to-face participation. A conference call of the full board can substitute for one of the three meetings of the governing body. For all meetings, alternative modes of participation are acceptable for those with physical disabilities.

Fonkoze USA does not meet the meeting frequency provision of this Standard for meetings held in the past fiscal year because it reports holding two meetings of the board of directors.

Standard 8 : Program Service Expense Ratio - Spend at least 65% of its total expenses on program activities.

Fonkoze USA does not meet this Standard because according to the organization's audited financial statements for the year ended December 31, 2005, the organization spent $336,734 or 43% of its total expenses ($787,326) on program service activities.

Standard 9 : Fund Raising Expense Ratio - Spend should be no more than 35% of related contributions on fund raising. Related contributions include donations, legacies, and other gifts received as a result of fund raising efforts.

Fonkoze USA does not meet this Standard because according to its audited financial statements for theà year ended December 31, 2005, the organization's fund raising costs were 50% ($388,244) of related contributions which totaled $771,499.

Standard 14 : Budget - Have a board-approved annual budget for its current fiscal year, outlining projected expenses for major program activities, fund raising, and administration.

Fonkoze USA does not meet this Standard because it states that it does not have a budget for the current fiscal year.

Standard 17 : Web Site Disclosures - Include on any charity websites that solicit contributions, the same information that is recommended for annual reports, as well as the mailing address of the charity and
electronic access to its most recent IRS Form 990.

Fonkoze USA does not meet this Standard because its website, www.fonkoze.org, does not include all of the recommended information for those charity websites that solicit for donations. Specifically, provide electronic access to the organization?s most recent IRS Form 990.

Standard 18 : Privacy for Written Appeals & Internet Privacy - Address privacy concerns of donors... <snip>

Fonkoze USAÃ does not meet provision (b) of this Standard because its website, www.fonkoze.org, does not provide access to a privacy policy that contains the recommended information. Fonkoze USA meets the remaining provision of this Standard.

In response to the finding for Standards 8 and 9, the organization stated that:

"The legal expenses were pro bono and higher than usual in 2004 because Fonkoze USA issued a new offering and distributed a rescission offer ot its investors. In addition, for the first time in 2004, our auditors, which were new, decided to classify pro bono legal expenses as 100% fundraising. In the past the expense has been shared among program, administrative and fundraising expenses. Without the in-kind legal expense, the program service expense ratio would be 76.88%."

Fonkoze USA (Fonkoze USA) meets the remaining 14 Standards for Charity Accountability.

Programs

Fonkoze works to build viable businesses outside of Port-au-Prince by providing loans that create jobs or business owners or that help farmers export their products. Currently, Fonkoze provides loans to both individual business owners and agricultural cooperatives. Fonkoze also develops and tests innovative financial products that fit the needs of rural Haitians. These products might be as diverse as microinsurance, shelter financing, or mini-loans to get the poorest started in business. <snip>

Tax Status

This organization is tax-exempt under section 501(c)(3) of the Internal Revenue Code. It is eligible to receive contributions deductible as charitable donations for federal income tax purposes.

<snip>

- - - - - - -

I still have some unanswered questions.  maybe some readers can provide answers to:

1. how much does account membership cost?

2. where exactly are Fonkoze locations in Haiti and what is the contact information [a not-very-legible map of locations is at <http://www.chez-nous.net/images/fonkoze.gif>]

3. in addition to Fonkoze's transfer fee, is there a bank service charge at either end for wired money? [banks usually charge approx. $20-30 at each end]

4. how much remittance traffic does Fonkoze currently handle? and what is its strategic plan for the future?

finally, I think the deficiencies mentioned in the profile above can (and should) be fairly easily and quickly corrected by Fonkoze. certainly, pressure from Haitian-Americans would speed things along.

thank you,

Stuart Leiderman
leiderman@mindspring.com