Calmeadow Metrofund:
A Canadian Experiment in Sustainable Microfinance

Cheryl Frankiewicz
April 2001

hose who have been exposed to the world of microfinance are no doubt familiar with the success stories of institutions in Bolivia, Bangladesh and elsewhere, which have not only lent successfully to large numbers of poor microentrepreneurs, but have done so sustainably. These institutions have shown that the provision of microfinance can be an effective strategy for promoting economic development in developing countries.

In the last decade, a growing number of institutions in more developed countries have also been experimenting with this strategy. Calmeadow, a Canadian-based nonprofit organization, was one of the first institutions to test the peer group lending model in North America and for years was the largest microlending institution in Canada. Between 1987 and 1999, it disbursed more than C$4.6 million in 2,558 loans to microentrepreneurs across the country.

Calmeadow has now spun-off, sold or closed all of its microloan funds. In September 2000, its largest and most prominent initiative, Metrofund, was transferred to a local credit union. The sale of Metrofundís portfolio was provocative because it effectively ended Calmeadowís fourteen-year experiment with microfinance in Canada. Calmeadow decided to sell Metrofundís portfolio after concluding that the stand-alone, microloan fund model upon which Metrofund was based was not viable in the current Canadian context. The process through which it arrived at that conclusion is the focus of this analysis.

Certainly, Calmeadowís decision to find a new institutional home for Metrofund closed some doors, but it also opened up new possibilities for serving microentrepreneurs more effectively in the future. Calmeadowís thorough testing of the stand-alone model yielded a great deal of information about the market for microfinance in Canada, as well as the effectiveness of a minimalist approach in meeting those needs. The insight it gained into what works, what does not, what might work and why will be useful to anyone interested in supporting microfinance or community economic development in a developed country.

This document is arranged chronologically to explore how Metrofund evolved over time and why it eventually closed its doors despite being the largest microloan fund in the nation. The first section of the document looks at the fundís origins. It briefly describes the experiences that led to the creation of a stand-alone microlending facility for microentrepreneurs in Toronto and it clarifies what Metrofund was designed to achieve. The second section describes the fundís first two years of operation and the challenges it encountered as it tried to establish itself and consolidate a peer group lending product that its clients found valuable. The third section continues the story by tracing Metrofundís development phase ĀEthe time period during which the fund introduced new products and began to focus more intensely on growth.

The fourth and fifth sections of the document explore Metrofundís remaining years as a Calmeadow project. They chronicle the various methods through which Metrofund tested the viability of its stand-alone model and they highlight some of the fundís most interesting findings. An analysis of those findings sheds some light on Calmeadowís ultimate decision not to continue operating the fund. The document concludes with a sixth section that looks at Calmeadowís search for an alternative microlending model, and offers some optimistic observations on the resolution chosen.

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