How a Lending Circle Architect Became a 'Genius'

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Promoting financial literacy to people outside of the financial mainstream is great, but it isn't enough.

José A. Quiñonez, founder and chief executive of Mission Asset Fund, believes that real change comes from putting tools in the hands of the unbanked so they can access the mainstream financial world. And there are few greater tools than a good credit score and profile.

Mission helps people build better credit scores through formal lending circles. Since the rollout of the lending circles in 2008, Mission participants’ credit scores have risen by an average of 168 points, while the organization maintains a 0.7% default rate. 

Though Mission focuses on the San Francisco Bay area, the nonprofit has licensed its lending platform to 54 other nonprofits across the country so they can do similar work in their communities. Last month, Quiñonez was one of 23 people named as a 2016 fellow of the John D. and Catherine T. MacArthur Foundation. Known as the "Genius Grant," recipients get $625,000 over five years to further their work. Past notable recipients include the "Hamilton" playwright Lin-Manuel Miranda and the journalist Ta-Nehisi Coates.

In the Mission neighborhood in San Francisco, "a large amount of the population doesn't have a credit history or credit score. We needed to address the huge barriers that creates," Quiñonez said. "We wanted to do something tangible and real."

The answer for Quiñonez was "formalizing informality," a concept he adopted from Hernando de Soto, a Peruvian economist and founder of the Institute for Liberty and Democracy. Informal lending circles already existed in the Mission, and Quiñonez saw the opportunity in wrapping a structure around that practice so it could report the loans — and their repayments — to the credit bureaus.

There are no restrictions on how the money can be spent. About 30% of participants in the lending circles use the money for savings, Quiñonez said. On its website, Mission has specific circles for raising the $680 it costs to apply for citizenship, or the $465 it costs undocumented young people to apply for Deferred Action for Childhood Arrivals, the executive order signed by President Obama in 2012 that provides protection from deportation.

As it was designing the lending circle system, Mission realized that traditional lending reporting systems, which tend to be linear, were not a good fit, Quiñonez said, so he worked with Salesforce to develop a platform to support the lending circles. It is the same platform that it now licenses to other nonprofits.

"The technology is like the oxygen that makes it work," Quiñonez said.

With Salesforce's help, Mission is planning a lending circle app where clients can see the faces of the people in their circle, have access to financial education resources and view their FICO scores.

"Mission Asset Fund is making a real difference for hard-working families and communities in the Bay Area — an issue close to our hearts since Salesforce is headquartered in San Francisco," said Rob Acker, chief executive of, the tech company's division that serves nonprofits. "We really believe in their model, and have supported their vision to broaden their impact on more communities around the country with the help of our strategic grants and technology."

Besides Salesforce, Mission's backers have included the Center for Financial Services Innovation, Citigroup, JPMorgan Chase, Capital One Financial, Experian, Bank of the West, Cathay Bank and Charles Schwab Bank.

Quiñonez was "early in identifying credit building as an asset," said Jennifer Tescher, president and chief executive of the Center for Financial Services Innovation.

"He has been a great steward for the message that a good credit score is a passport to a healthy financial life," Tescher said. Mission "has spawned a whole cottage industry of fintech startups who've emulated what has been done on the ground or virtually."

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