Around the Vittana offices, we talk a lot about sustainability, return on investment and (everyone’s favorite word) “leverage”. Buzz words aside, what we’re really about is delivering student loans as efficiently as we can to as many young people as possible.

Some organizations talk about providing a 2:1 leverage on investments or donations. Here at Vittana, we work hard to provide an even higher social return to our donors and supporters:  53:1.

The Math: $1 donation ==> $11 in student loans ==> $53 student income (53:1 leverage)

A. $1 donation ==> $11 in student loans
(Based on Vittana forecast expenses and loan volume)

Your donations fund our operating budget that allows us to find, launch and fund new student lending programs around the world. (More on our method here.) It also allows us to scale our current partnerships, maintain our website, and keep the lights on.

For every $1 donation we receive, we can fund $11 of Vittana student loans in the field.

Another way of looking at this is by asking: How much do we spend for every dollar we lend? We’re steadily decreasing our spend-per-lend ratio each year, which directly relates to our ability to leverage donor dollars effectively. In fact, our cost to generate $1 in loan volume has dropped significantly since we started tracking it in 2009 – from $3.09 to only $0.17.  Check out the graph modeling our expenses per loan dollar dispersed below:

B. $11 student loans ==> $53 student income
( Loans = School = Better income for students)

Vittana loans help students finish school in a field of their choosing. Once students graduate, they estimate that their income will increase on average 291%.*

For every $1 lent, on average a student’s income increases by almost $5 (or more specifically, for every $11 lent, students increase their income by $53).

An example of how it REALLY works:

1. Donor Rita gives Vittana a $500 donation

2. Vittana uses this donation to send Partnerships Manager Nick to Nicaragua to work with our microfinance partner AFODENIC.

While in Nicaragua, Nick interviews local universities and finds that students are dropping out in their final year due to cost; the universities want Vittana loans to be available to their students. Nick also speaks to local employers and learns that there’s a high need for accountants and nurses.

Nick and AFODENIC staff agree to expand their student lending product to a new segment of youth — students who need extra money to complete their final year of college.

3. Nick helps AFODENIC staff launch the new student lending product. Dozens of students apply and receive loan funding for their education through the Vittana website. The average loan size is $651.

4. Students graduate and get jobs in their chosen fields and start paying back their loans. Students like Dania Mendoza, Danna Bendana, Karen Salazar, Antonio Vargas Osorio and Margaurita Zamora Huete report that they are doubling or even tripling their income.*

Dania Mendoza. Nurse. $800 loan = $2400+ in extra income per year.

Danna Bendana. Accountant. $1529 loan = $1500+ in extra income per year.

Karen Salazar. Accountant. $1019 loan = $5000 in extra income per year.

Antonio Vargas Osorio. Accountant. $1121 loan = $10,000+ in extra income per year.

Margaurita Zamora Huete. Nurse. $307 loan = $1500+ in extra income per year.

* Donation and loan numbers are based up Vittana budget and growth projections for 2011-2012. Student income numbers are self-reported estimates by Vittana students on their projected income after graduation.

Healthcare. People from all ethnicities, ages, and economic backgrounds are talking about one of the most important subjects of the 21^st century. People discuss the merits of the Bill & Melinda Gates Foundation to United Nations Millennium Development Goals to the United States’ recently passed healthcare reform bill. We tend to focus on healthcare in two main geographic areas: the Western world (US, Europe, etc) and Africa (where poor conditions exist). But what does healthcare look like in another country that falls outside of those parameters, like Paraguay? What do current Vittana students think about the healthcare system? Where and what do they hope to achieve after they earn their degree? Each Vittana student will take a unique path to improve the healthcare situation in Paraguay.

A hospital urgent care facility in La Colmena, Paraguay

Overview

Paraguay ranks near the median among South American countries in terms of major health indicators, but spends less per capita (US$13−20 per capita per year) than most Latin American countries. In addition, a 2001 survey indicated that 27% of the population still had no access to medical care (public or private), according to United States National Library of Congress.

Lack of Healthcare Professionals

The health workforce is underserved, which is where many Vittana students can help one-by-one. Paraguay lags behind the Latin America regional average for number of nurses and midwives (with only 18 nurses and midwives per 10,000 people) versus the regional average (of 49 per 10,000 people), according to the WHO (World Health Organization).

Maria will search for a nursing job in rural Paraguay to help combat the lack of healthcare professionals.

However, students like Maria Dielma will soon enter the workforce and help combat the lack of medical professionals. She will graduate with a four-year nursing degree, and she chose this profession because her father has been sick for many years, and she wants to help people like her dad. She still has a lot of work to accomplish before reaching her goals – both figuratively and literally. She works at a convenience store 7 days a week for a total of 59 hours in addition to her studies. However, the short-term sacrifices will provide her an opportunity to work in the nursing profession. After graduating she will search for a nursing job in rural hospitals.

Disparity in Healthcare

Ceneida is studying to become an obstetrician and is looking forward to educating mothers about the health of their unborn babies.

There are many inequities in healthcare based on two broad factors: economic and geographic (i.e. rural and urban). For example, births attended by a skilled healthcare professional vary significantly between those two groups according to the WHO. In urban areas 87% of births are attended by a skilled healthcare professional versus 48% in rural areas. The economic variance is even larger with 98% of Paraguayans in the top 20% of the population having a skilled healthcare professional present at a birth versus 41% for the poorest 20% of the population.

But Vittana student Ceneida Zorilla hopes to facilitate many birthings as an obstetrician and reduce those statistics for the rural and less economically advanced portions of the population. She is ¨interested in learning more about reproductive health issues.¨ Furthermore, she wants to help mothers by educating them about the health of their unborn babies and facilitating healthy deliveries.

Maria Noguera will take a different path to help the under-served areas of Paraguay. She will graduate in December 2010 with a nursing degree and wants to work in emergency situations in rural Paraguay. ¨Nursing is about taking care of other people’s lives, and through my career I want to help my community; especially since we are far from the metropolitan area and it is difficult to reach a medical facility.¨ You can read her full story and see her photo in my last blog here.

Process improvements

In Paraguay, there is both a public and a private system. The private system is very expensive and is under-utilized by many people. Conversely, the public system is over-utilized, more reasonable from a cost perspective, and even has some limited free services. Neither are ideal.

US Peace Corps Coordinator Lauren McCullough presenting about HIV prevention

According to Paraguay US Peace Corps volunteer, Lauren McCullough, who has been in Paraguay for 3.5 years and is currently the Coordinator of an HIV/AIDS Initiative, the public system ¨works on paper but does not work in real life.¨ She explains that there is a limited supply of medical supplies (plastic gloves, bandages, etc), medicine, and comfort items (such as blankets in winter and functioning air conditioners in summer, when temperatures are often above 100 degrees). Patients often wait for a long time to see a doctor. For example, many patients arrive at 7 AM and wait for several hours or even a full day to consult with a physician.

One student already has experience and success in the system, but she is looking toward the future for more innovation. Gladis Galeano has prior experience as a nurse and delivering babies. She started working as a therapist in a hospital and was promoted in six months later to manage 50+ nurses. She will graduate with a nursing degree in September and will start a two-year business/hospital administration degree in December. Ultimately, her goal is to manage a hospital or a region of hospitals. However, she wants to be ¨more than just a boss¨ and make systemic changes in healthcare.

Gladis already manages 50+ nurses and is looking to make systemic changes to the healthcare system.

Specifically, the Paraguayan public health system does not do a good job with prevention – it is only reactive and not proactive. In addition, the pharmacies are basic and do not offer the necessary medicine. According to Gladis, pharmacies need to expand. In addition, she wants to create medical ¨best practices,¨ so that other medical facilities can leverage those ideas to improve the entire system.

In addition to her professional goals, Gladis is helping on a personal level by purchasing a medical kit to help sick kids in her neighborhood because she just wants to help.

According to United States Peace Lauren McCullough, foreigners ¨can only educate the general public and hospital workers about healthcare overall; but the future ownership of healthcare, ultimately, is with Paraguayans.¨ The Paraguayan healthcare industry will be impacted by people like Maria Dielma, Ceneida, Gladis and Maria Noguera, and it is their Vittana loans from lenders like you that will make their contributions possible.

To provide an opportunity to other Vittana healthcare professionals click here.

To provide an opportunity to fellow Vittana students so that they can improve their respective professions, whether business, education or the sciences, click here.

In the first minute of my conversation with Maria I could sense that she had a tremendous enthusiasm for life and was focused on helping other people.  Both traits will undoubtedly be advantageous when she graduates in December with a degree in nursing.

Meet Maria de los Angeles Noguera from Carapeguá, Paraguay.

Maria de los Angeles Noguera will graduate in December 2010 with a degree in nursing

Along with going to school Maria is also the owner of her own perfume business she started 3 years ago.  She sells her perfume utilizing her network of friends, classmates, and family.  She sources her product from Mercado Cuatro – one of the most famous markets in Paraguay – which is a 2.5 hour bus ride to Asunción.  She provides samples to her customers so they purchase the right scent for them.

She currently lives with her parents and her brother, who is in his second year of studying accounting.  Her parents raised her with a strong set of values and determination.  Her mom recently demonstrated that determination by returning to high school to graduate with the full support of her family.  Maria explains that values are important in order to be successful; ¨You need to be humble and sensitive to other people.  I learned that at home, then practiced at school and now with my work.¨

After graduating she wants to help people in need, both professionally and personally, as a nurse.  In addition, she will utilize her nursing skills to help her parents live a healthy life along with supporting them financially.

Maria is extremely inquisitive and asked several questions about Vittana.  She was concerned that the student loan was a short-term promotion and would not be available for other students including her brother.  I explained that Vittana was approaching funding $300,000 of student loans (check to see the current Vittana loan volume) along with expanding in Paraguay and globally.  She was happy because student loans will be still be available to her brother, friends, and other people throughout the world.  She commented about how important the student loan is because many people have the intelligence and the motivation but simply lack the financial resources to graduate.  She talked about how student loans are a big step forward for Paraguay and for South America.

Her family´s education story is common to many people in Paraguay.  Paraguay is the second poorest country in South America next to Bolivia with $2,365 USD per capita according to the World Bank in 2009.  Maria is the first person in her family to attend college. In Paraguay, less than 1% of women finish college.

Fundación Paraguaya office in Carapeguá, Paraguay where Maria received her loan

Her parents were unable to go to college because they lacked money – the same reason that she was almost unable to finish her studies until she found Vittana.  She understand this irony and is grateful for the opportunity that the student loan has provided.

With the help of Vittana (one of the first microfinance institutions in the world to provide student loans) and Fundación Paraguaya (the first NGO in Paraguay and the first Vittana partner) Maria is rapidly approaching her graduation and her new career in nursing.

If you want to lend to students like Maria, click here.

I recently spent a few days with the wonderful and innovative staff of the Paraguayan microfinance organization Fundacion Paraguaya.

Before my week in Asuncion, I knew practically nothing about this landlocked country, snuggled in between Brazil and Bolivia to the north and Argentina to the south. Here’s a quick primer on what I learned:

After winning its independence from Spain in 1811, by 1865, Paraguay was involved in another even bloodier battle — the War of the Triple Alliance — against Brazil, Argentina and Uruguay. One staggering statistic from this war is that Paraguay is said to have lost not only much of its territory, but also more than two thirds of its male population.

As you might imagine, this plunged Paraguay into a time of deep economic depression and resulted in much political instability. Between 1904 – 1954, Paraguay had 31 presidents, many of whom took and left their office by way of military coups. This was followed by the brutal 35 year dictatorship of Alfredo Stroessner, ending in 1989. While in later years, Stroessner’s rule helped bring Paraguay into the 21st century economically, there were hundreds of accounts of human rights abuses, including kidnappings, torture and corruption. Currently, the political climate is slowly getting better and Paraguay held it’s first successful democratic election in 2008.

And now for a few statistics on on Paraguay’s society and (drum roll) education system.

• With about 6 million people, Paraguay is the 2nd poorest country in South America (just after Bolivia).
• 30-50% of Paraguayans live in poverty.
• Primary school is free and compulsory for 7-13 year-olds (1st – 7th grade) That being said, children are only required to attend school for ~700 hours annually, compared to ~1100 hours for students in the US and up to 1500 hours for students in Chile.
• Stated literacy rates are quoted as beings as high 93% for women and 95% for men, but I found these numbers are often based on the number of people who attended primary school, rather than the number of students who completed primary school or passed a literacy test. This is “a dubious assumption given the large number of monolingual Guaraní speakers who entered but failed to complete elementary school. Such speakers represented an estimated 90 percent of the children entering rural primary schools.” (Country Studies)
• In 1997 there were 905,813 students in primary schools. In that same year, there were 327,775 students at the secondary level.  Only 1/3 of students move onto high school, and drop out rates remain high.

Considering all this, you might imagine that hope is hard to find when talking to Paraguayans about the future of their young people. However, I found exactly that while talking to the staff of Fundacion Paraguaya (FuPa).

With the FuPa student lending team: Nancy Ramos and Tania Almada

FuPa is an organization built on the pillars of hard work, optimism and innovation. In 1985, it became the first microfinance organization to open its doors in Paraguay. Now, with 20 regional offices and more than 37,000 microfinance clients, FuPa has become more than just the first MFI in Paraguay, it’s become a leader in the field of bringing business-building credit to the under-served, and it’s building on its success in new and exciting ways.

For this reason alone, we are proud to partner with them. However, in addition, FuPa has a unique and ongoing focus on supporting education efforts in Paraguay. Specifically, FuPa has developed two landmark programs directly targeted at young people.

The first, Junior Achievement, is a program that teaches entrepreneurial skills to high schoolers by helping them develop their own real businesses. This not only teaches real-life business skills to youth, but also is having a dramatic impact on graduation rates among its members.

Photo of a student business from FuPa’s Junior Achievement program

The second is FuPa’s self sufficient Organic Agricultural School. To quote their mission, “In a country where agriculture dominates the economy and where over half the population is rural, the sustainability of environment is critical.” This program teaches modern business, ranching and farming skills to Paraguay’s rural youth who will most likely maintain an agricultural lifestyle throughout their lives. By teaching these vital skill sets, FuPa is helping the next generation of Paraguay’s farmers be more competitive in the global marketplace. They hope that this will contribute the economic well being of their students’ families, to the environmental health of their country and to the financial success of Paraguay as a whole. This school has been lauded as one of the most successful demonstrations of sustainable rural economic development in the world and is being replicated in multiple countries.

Photos from FuPa’s Agricultural School

With this type of leadership, innovation and commitment to creating educational programs for the underserved youth of Paraguay, it’s easy to see why we picked FuPa to help us develop a loan product targeted a sending young people to college. In a country where education is not just a way up the corporate ladder, but a way out of poverty, we see our partnership with FuPa as providing hope and opportunity to hundreds, if not thousands of Paraguay’s youth.

FuPa currently has 82 students and counting on the Vittana site, with students interested in everything from accounting to nutrition. Their history of successfully meeting difficult challenges with visionary solutions leads me to believe not only will they continue to add more and more students every month, but we’ll also see them serving the poor in new and exciting ways for years to come!

Here at Vittana, we talk a lot about the value of education.  And while we may often ruminate on the intrinsic value of what we learned in college–the beauty of learning for learning’s sake–we also know know that simply having an education doesn’t let us pay our bills or (start to) pay back our student loans.

The same is just as true, if not more so, for our students in Nicaragua, Peru, and Paraguay.  Vittana students go to school for a variety of reasons: to follow a passion, to make their families proud, to be an expert in their field.  But, no matter what their passion or profession, every Vittana student sees their education as a means to one common goal:  a well-paying job to support themselves and their families.

With that goal in mind, the team was thrilled to hear last week that Paraguayan student David Antonio Adorno Arriola had become the first Vittana student to land a job because of training paid through a Vittana loan!  David’s passion is computer programming and he used his Vittana loan to pay for a short-course program that awarded him a programming certificate.  The certificate made his resume much more marketable and he quickly found work after the program.

Upon finishing this program and with his new source of income, David Antonio decided that he wanted to continue his education and pursue a bachelor’s degree in computer science.  (Many university students in Paraguay attend night school and have to simultaneously work at full-time jobs to pay for their tuition.)  Given Vittana’s technology roots, we think David is particularly awesome.

Congratulations David!

As of this morning, two new students are online from our Paraguayan partner, Fundacion Paraguaya! Gerardo is attending Servicio Nacional de Promoción Profesional, a vocational school headquartered in downtown Asuncion, for a year-long course to become an automotive mechanic.  Natalia is attending a short 2-month course to become a bank teller, which is considered to be quite the respectable position in Paraguay at a private bank.  Despite how short the course is, Natalia could make up to $300-400 per month when she graduates.

Our microfinance partners are working as fast as they can to bring on new students and, in turn, we’re working as fast as we can to bring on new partners. When we first launched a couple weeks ago, our first 3 students and initial $2140 in loans were completed in less than 33 hours.  We — and our students — are truly humbled by you all and your support.

As always, if you have any questions, no matter how big or small, please email us at questions@vittana.org.