This is the second of a three-part blog series. If you haven’t had a chance to read the first you can view it here. In the last post, we attempted to look closely at what Edify does and why we do it. We established the importance of low-cost, Christian schools in developing nations and how Edify comes alongside of these schools to support in 3 ways;
1) Access to Capital
2) Teacher and School Leadership Training
3) Access to Curriculum and Technology Resources
Today’s post will focus on the first of these 3 things, access to capital. The majority of the schools we work with operate like a business in the sense that they have income and expenses. If the income doesn’t meet expenses, the school can’t continue operating for long. Income primarily comes from student’s monthly tuition, cafeteria sales and occasional fees for materials or school uniforms. Schools have fixed expenses, variable expenses and like any business they incur unexpected expenses as well. Throughout this cycle there is usually a need for additional capital that a school does not have on hand, thus the need for a loan. A school’s typical option for a loan would be from family members (which comes with many strings attached), a loan shark (interest rates often over 100% APR) or a commercial bank. Unfortunately, most schools can’t access a bank loan due to the small size of the loan they’re requesting, lack of credit history, or the lack of a wealthy co-signer. Often, by the very nature of being a school a bank will not lend to them because the bank can’t foreclose on the school in the event the loan goes bad for fear of ruining their public image. As these options come at a high cost or are inaccessible, that is where Edify and our lending partners are able to meet school’s need for capital.
Most loans range from $1,200-$25,000 and are paid back over the course of 1-5 years. Loans are often used to construct new classrooms, repair desks and doorways, buy a vehicle to transport students, replace a tin roof with a cement roof, or other assett purchases and renovations. As of September 30th 2012, Edify has disbursed over $2.7 million USD to 442 schools in the Dominican Republic alone. These loans primarily represent 2 fundamental improvements to the low-cost schools that we work with;
1) * Increasing the physical capacity of the school
2) * Increasing the quality of the school through better facilities
By meeting the schools capital needs with a loan that has market-rate or below market-rate interest rates, Edify helps schools to expand the capacity of their operations and improve the quality of the education by means of improving the physical environment. In the coming post, we will discuss how providing training to school teachers, directors and administrators of the school is as well as providing access to quality curriculum and technology resources is a critical part of serving low-cost, Christian schools in the developing world. The end result is better run schools, better quality Christian education, and better facilities that more students can access.