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Half of the adults in the world (about 2.5 billion people) are “unbanked”—meaning their money is not housed in a secure institution. That’s the central concern of a new book, Banking the World: Empirical Foundations of Financial Inclusion, co-edited by Jonathan Morduch, a professor in the Robert F. Wagner Graduate School of Public Service.
To reach those billions of people, Morduch argues that we need to think about banking in radically different ways. Promising solutions involve using new technologies like mobile phones, as well as re-imagining ideas such as self-governing, village-based saving groups. Understanding those possibilities is a focus of the Financial Access Initiative (FAI), the NYU center that Morduch, an expert in public policy and economics, founded with colleagues at Yale and Harvard.
NYU Research Digest recently sat down with him to discuss old perspectives and new ideas.
How does your research connect two typically incongruent issues like banking and poverty?
Let’s start with poverty, rather than banking. If you’re reading this, you’re probably not poor, but you may have ideas about what it’s like to be poor. Over the past decade, I’ve come to see that my own ideas about poverty were wrong. Elements that I had thought were very important, I now believe are much less important. I had been locked into a logic that was shaped by the available data—large surveys designed to test formal hypotheses, but that turn out to give a very blurry sense of how people actually live their lives.
Rather than surveying thousands of households, a group of researchers started with just a few dozen. Rather than collecting data only once, the researchers visited and revisited the same households many times over a year. Everything bought and sold was noted—all financial transactions, whether at a bank or with family and friends. The intensity of the engagement allowed us to see and understand activities that had been out of view.
This is the data from India, Bangladesh, and South Africa described in your previous book, Portfolios of the Poor: How the World’s Poor Live on $2 a Day. What did it tell you?
The evidence showed that a vast problem for many poor families is not low incomes per se, but the fact that incomes are unreliable and often unpredictable. We often talk about the 40 percent of the world living on under $2 a day per person, but we lose sight of the fact that people don’t literally earn $2 a day. They earn $10 one day, for example, and then very little for a few weeks. Those ups and downs mean that families spend a lot of time figuring out how to borrow and save and deal with risk. We also see people often borrowing to pay for health emergencies, school fees, and simply getting food on the table. But their financial tools are often expensive and unreliable—if they even exist.
You’ve written a lot about microfinance over the years. Is that the solution to “banking the world”?
Microfinance centers on small loans for small-scale entrepreneurs, mostly poor women, who seek capital to grow their businesses. The idea is associated with Grameen Bank of Bangladesh, but the sector has grown quickly, now serving 200 million customers globally, including some here in New York.
Microfinance is an inspiration, but it can also box us in. The starting point of Banking the World is that we need to go beyond the kind of entrepreneurial finance celebrated by microfinance. More fundamental is access to basic money management tools. A huge group of the 2.5 billion unbanked adults are not entrepreneurs. They have jobs, but they still need financial tools—a safe place to save, a convenient way to make payments, short-term loans for general purposes. Entrepreneurs too have needs beyond business. In these ways, the poor are not so different from the rich. It’s been a hard message for some people to hear, but conversations are shifting.
Banking the World collects empirical studies that point to viable solutions, and push us to take a critical look at popular ideas like financial literacy. The chapters also draw new links, like those between finance and under-nutrition. All that, I hope, takes us another step toward solving a problem that is huge—but solvable.
In 2010, nonprofits in the U.S. numbered 1.5 million, with $1.51 trillion in revenues, and to find particulars or overall trends about this vast and growing sector of the economy, many people use the Form 990. This is the financial and organizational report that every tax-exempt organization submits annually to the Internal Revenue Service.
Yet, like many public documents, the forms are not so easy for researchers, practitioners, and others to access and analyze.
Writing in a recent paper, Beth Noveck, a visiting professor at the Robert F. Wagner Graduate School of Public Service, along with co-author Daniel L. Goroff, a program director at the Alfred P. Sloan Foundation, asked whether government transparency could be enhanced with technology to better support innovation, engagement, and outcomes in the nonprofit sector.
Noveck, who formerly led President Barack Obama’s Open Government Initiative, is immersed in studying the broad, important issue of how governments can better use tech-enabled platforms to engage the citizenry. In her Aspen Institute paper with Goroff, entitled “Information for Impact: Liberating Nonprofit Sector Data,” she finds that, like other data collected by the U.S. government, the information in the Form 990s could be far more beneficial “if it were not only ‘public’ but ‘open’ data.” That is: “Available to all, free of charge, in a standard format, published without proprietary conditions, and available online as a bulk download rather than through single-entry lookup.
“Making the 990 data truly open… would not only make it easier to use for the organizations that already process it,” the authors write, “but would also make it useful to researchers, advocates, entrepreneurs, technologists, and nonprofits that do not have the resources to use the data in its current form.”
The move would also encourage greater transparency by nonprofits, spur innovation in the sector, and “above all, help us to understand the potential value of the 990 data,” note the authors.
At present, the IRS creates Form 990 image files and sells DVD compilations to subscribers.
“Just as most people have gotten accustomed to sharing large files via a service like Dropbox, it would be simple for the IRS to publish the returns online for anyone to download in bulk for free,” Noveck wrote in a recent blog post about the paper.
But if converting the Form 990 into an open-data government document sounds straightforward, the co-authors find that it isn’t a simple delivery. Liberating government data of all kinds, they write, typically requires overcoming technological, political, and cultural barriers to change.
[Originally appeared in NYU Research Digest, Spring 2013].
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Gara LaMarche, a senior fellow at NYU Wagner, was the recent co-sponsor of a highly successful conference at New York University on philanthropy and the new, post-2012 election landscape of policymaking and politics.
Foundation executives, individual donors, and civic leaders came together to examine what philanthropy’s evolving relationship with public policy and government means in the context of the rapidly changing political scene. Participants engaged on such issues as K-12 education, health care reform, and poverty. Among the questions examined were:
- How is America’s polarized political culture changing philanthropy?
- How has the political culture shaped the types of projects we fund, demands on grantees and partnerships with government?
- How successful or challenging have philanthropy’s investments been in the realm of policy change and with government? At the start of this new political cycle, what should we do now (or not do) given the ongoing polarization?
The Feb. 12 event was titled “Money and Power in Post-Election America: Where is Philanthropy?” It was co-hosted by NYU, Duke, and Philanthropy New York.
Lauren Bush, an NYU Wagner MPA-PNP second-year student and Wagner Review staff writer, is set to testify at a public meeting of the U.S. Food and Drug Administration today (2/28/13) as the FDA considers draft regulations for implementing the landmark Food Safety and Modernization Act. Her appearance arises in part from her research for an op-ed for the Review. Lauren is the Events Chair on the Wagner Food Policy Alliance board. Beyond her involvement with the Alliance, she has spent the last three years as an advocate for food safety reform.
Get ready, get set: NYU Wagner is looking to make it two-wins-in-a-row at the upcoming National Invitational Public Policy Challenge hosted annually by the Fels Institute of Government at the University of Pennsylvania and presented by Governing magazine. The Challenge invites students to develop creative policy proposals and civic engagement solutions to pressing social problems.
Last year, a team of Wagner students won the inaugural Fels Challenge with their pattern-busting proposal "Kinvolved," a project involving a new app to help New York City teachers keep track of student attendance and communicate with parents. Upon winning, the team received $15,000 to bring the project to life.
This year’s Fels Challenge is annother exciting opportunity for future leaders in public service to make a difference on issues that matter. Modeled after MBA business plan competitions, the Challenge asks student teams from policy schools around the country to develop a policy that can bring about significant change in their community.
In all, nine student teams at Wagner have drafted proposals. From these promising submissions, three semi-finalists will be selected, and one will go on to the nationals on March 17 at the National Constitution Center in Philadelphia.
To attend the event, please RSVP here.
The plans submitted by the Wagner students offer fresh thinking and solutions to challenges such as gun violence, food waste, childhood obesity, and gestational diabetes.
Wagner competed in the nationals against three other policy schools across the country in 2012. This year, nine schools have joined the competition. Good luck to all the participants!
The Aspen Insitute today released a new report in Washington, D.C., by NYU Wagner Visiting Professor Beth Noveck and Daniel L. Goroff. The report, "Information for Impact: Liberating Nonprofit Sector Data," shows how new technology designed to improve data on the nonprofit sector can prompt greater innovation and effectiveness.
Noveck is former director of the White House Open Government Initiative. Goroff, while at the Office of Science and Technology Policy, helped establish the new Interagency Task Force on Smart Disclosure. He is a program director with the Alfred P. Sloan Foundation.