Building a peer lending platform to improve transparency and financial security in community finance networks.
David Henderson has spent almost two decades working to support low-income families at the intersection of U.S. social welfare policy, data analytics, and software engineering – as a direct service provider, writer, entrepreneur, and nonprofit leader. He spent the previous 8 years as Chief Technology Officer of UpTogether (previously Family Independence Initiative). In the first years of the pandemic, David helped UpTogether distribute $200m in unconditional cash transfers across the US. David Henderson is now an inaugural Fellow of the Sugarman Practitioner in Residence program at the Princeton School of Public and International Affairs, a Visiting Fellow at the Federal Reserve Bank of Boston, and an Innovation Fellow at SaverLife, a nonprofit that helps build financial security. Behind this career is an understanding of the critical role that informal lending plays, driven from lived experience.
In the US, $89 billion is loaned informally every year. Many people are excluded from the formal banking and credit system and community finance is an alternative that is built on social relationships and trust. This type of lending is especially important in low-income communities of color. But, it puts the lender at risk and doesn’t create avenues for the borrower to access more formal credit. However, without this informal lending, borrowers must turn to expensive ‘payday’ and ‘title’ loan lenders, which often entrap borrowers in a cycle of repayment and debt.
Both in his personal life and during his time at UpTogether, David observed the pervasiveness of informal lending networks and saw an opportunity to use technology to improve upon them. David established Giving Credit as a financial technology platform with the following goals: (i) make clear to lenders how much they can borrow from their network, (ii) capitalize community financial networks through loan guarantees, and (iii) report informal lending to credit bureaus to build a pathway to formal financial networks. The hope is that this will free up more capital in community finance networks, improve transparency, and provide more financial security to both lenders and borrowers (who often play both roles at various times). David’s ambitious goal is to wipe out the $9 billion payday loan market in the US
David is piloting Giving Credit in three locations - Pittsburgh, PA; Trenton, New Jersey; and Haiti. In each of the pilot sites, David has secured nonprofit partners that will identify study participants and provide the capital for a guaranteed loan pool. In addition to testing the model, the pilots will include an evaluation component advised by Princeton Professor Eldar Shafir to validate the potential impact on the lenders and borrowers, including whether it helps extend additional credit and avoids moral hazard issues.
UP is supporting David Henderson in his full-time shift to Giving Credit to pilot the program, test and refine the model, and build out the organization.
Learn more about David Henderson and Giving Credit here.
David Henderson has spent almost two decades working to support low-income families at the intersection of U.S. social welfare policy, data analytics, and software engineering – as a direct service provider, writer, entrepreneur, and nonprofit leader. He spent the previous 8 years as Chief Technology Officer of UpTogether (previously Family Independence Initiative). In the first years of the pandemic, David helped UpTogether distribute $200m in unconditional cash transfers across the US. David Henderson is now an inaugural Fellow of the Sugarman Practitioner in Residence program at the Princeton School of Public and International Affairs, a Visiting Fellow at the Federal Reserve Bank of Boston, and an Innovation Fellow at SaverLife, a nonprofit that helps build financial security. Behind this career is an understanding of the critical role that informal lending plays, driven from lived experience.
In the US, $89 billion is loaned informally every year. Many people are excluded from the formal banking and credit system and community finance is an alternative that is built on social relationships and trust. This type of lending is especially important in low-income communities of color. But, it puts the lender at risk and doesn’t create avenues for the borrower to access more formal credit. However, without this informal lending, borrowers must turn to expensive ‘payday’ and ‘title’ loan lenders, which often entrap borrowers in a cycle of repayment and debt.
Both in his personal life and during his time at UpTogether, David observed the pervasiveness of informal lending networks and saw an opportunity to use technology to improve upon them. David established Giving Credit as a financial technology platform with the following goals: (i) make clear to lenders how much they can borrow from their network, (ii) capitalize community financial networks through loan guarantees, and (iii) report informal lending to credit bureaus to build a pathway to formal financial networks. The hope is that this will free up more capital in community finance networks, improve transparency, and provide more financial security to both lenders and borrowers (who often play both roles at various times). David’s ambitious goal is to wipe out the $9 billion payday loan market in the US
David is piloting Giving Credit in three locations - Pittsburgh, PA; Trenton, New Jersey; and Haiti. In each of the pilot sites, David has secured nonprofit partners that will identify study participants and provide the capital for a guaranteed loan pool. In addition to testing the model, the pilots will include an evaluation component advised by Princeton Professor Eldar Shafir to validate the potential impact on the lenders and borrowers, including whether it helps extend additional credit and avoids moral hazard issues.
UP is supporting David Henderson in his full-time shift to Giving Credit to pilot the program, test and refine the model, and build out the organization.
Learn more about David Henderson and Giving Credit here.