Today’s breakfast for the brain was another serving of Toxic Charity and a hot cup of Good African Coffee. Lipton shares 3 essential elements for successful microloans:

1. An ingrained work ethic
2. A demonstrated entrepreneurial instinct
3. A stable support system

How am I supposed to measure these criteria?! It’s not effective to simply ask someone if they meet these criteria.  I wouldn’t expect someone pursuing a micro-loan to say “I am a mouth-breathing slacker who sits around all day rarely moving unless I happen to be

threatened by imminent death or dismemberment – I want you to give me money so I can perpetuate my laziness and lack of  initiative.”  So, how do we identify evidence of an ingrained work ethic?  As with many things, I think it takes time. There has to be opportunity to see the evidence in the context of normal life.  We can all put on our best behavior when we need to perform, but the real proof is in the small decisions we make everyday. In our work in Uganda, I find that it is helpful to spend time talking with people about life in general and then reflecting back through the stories of daily minutia to identify patterns and snapshots of a person’s character.  By spending time in seeming small talk, truth is often revealed, one puzzle piece at a time. I don’t assume that people are hiding the truth on purpose  – but it is my experience that in order to connect with someone’s character, you need to enter through the garage and sit at the kitchen table rather than the front door and sit in the parlor.  Another simple reality is that a good work ethic produces.  One of my foundational beliefs is that “all hard work brings a profit” – which leads me to assume that if an individual truly has a strong work ethic then there will be something measurable to show as a result.

The second and third questions are easier to test and identify – but it is this intangible value of self-governance that is the real crux.  Especially when considering investing capital with someone – it’s a gamble on the individual and while bad instincts can be compensated for with education and mentoring; and a lack of support can be under-girded with new relationships; a lack of strong work ethic is not easily corrected.  So this elusive element is the big area of risk – it is THE field on which decisive battles against poverty are often won or lost.  It is also where an optimist such as myself can often falter as I try to see the bright side of everything.

What are your thoughts? Is the Three Legged Stool an accurate model – is it overly simplistic?  Would you put your money down under a different set of criteria?