by Alexis Grant ’00


Patricia Devaney in the field
Patricia Devaney ’95 in the field with a recipient of funding from the nonprofit Root Capital.

In the world of economic development, microfinance is hot. After all, if you’re going to put money into a developing country, why not help farmers and small-business hopefuls directly as they work toward their dreams?

But a nonprofit lender called Root Capital is pushing a new way to support agriculture in Latin America and Africa: by funding cooperatives that buy (and later sell) farmers’ crops and by funding businesses to help communities as a whole. Microfinance might offer $500 to buy a farmer a cow; Root Capital would lend $500,000 to a small business that will buy milk from hundreds of rural families.

“There are these small- and medium-sized businesses that are, frankly, the engine for growth. They don’t get a lot of attention,” said Patricia Devaney ’95, who heads the social investment fund’s impact and assessment department. “So building an industry around those businesses, especially in rural areas and especially in agriculture, is our goal. … Strengthening them actually does a good job of strengthening the communities that they’re working in.”

Of the 120 people who work at Root Capital, three are Colby alumni: Devaney, who joined the team in 2007 and works out of the main office in Cambridge, Mass.; Chris Engstrom ’86, a techie who’s redesigning the organization’s website; and Elicia Carmichael ’01, a lending officer based in Root Capital’s international branch in Costa Rica.

Elicia Carmichael
Elicia Carmichael ’01, a lending officer at the nonprofit’s offices in Costa Rica.

While Root Capital is a not-for-profit organization, it acts like a business, Carmichael said in an interview at a café in San José, Costa Rica’s capital. The fund aims to become sustainable over the next few years using the interest it charges borrowers to cover the costs of lending.

“This has never really been done before,” said Carmichael, who joined the organization last July. She spends about a third of her time traveling to Peru, Nicaragua, Ecuador, and other countries in the region, meeting with cooperatives and farmers who benefit from the loans the organization makes. To qualify, enterprises have to meet certain financial, social, and environmental standards. “[It’s] very boots on the ground,” she said.

Most of the fund’s beneficiaries work in agriculture. They include a coffee cooperative in Haiti, a business in Burkina Faso that exports mangoes, and a Peru-based business that processes artichokes and chili peppers. In some rural communities, those enterprises also play a municipal role, building infrastructure like hospitals and schools—yet another reason it makes sense to support them, Devaney said.

“The life of a farmer is pretty vulnerable,” she said. “There are so many things that can happen, from bad weather to bad prices. … So creating some stability in their lives and some long-term things like a health clinic and a school and a stable market for their goods makes a huge difference.”

Making that difference is what drew Engstrom, a web developer, to the organization last summer. After a decade working in corporate environments, plus three years working for another nonprofit, Engstrom loves having a job that “proves you can really work in finance and still have a social impact,” he said.

Carmichael and Devaney echoed that sentiment, saying they enjoy doing work that makes a difference in the world. And both traced that impulse back to Colby. “I went to Colby to become a chem major, and I came out international studies,” Carmichael said. She and her husband, Ben Heneveld ’00, are in the process of reforesting a plot of land in Costa Rica, where they recently planted 300 trees.

Funded through loans from philanthropic foundations, individuals, and corporations including Starbucks, Root Capital makes average loans of about $300,000, Devaney said. The organization often connects with new clients via the big-name companies that buy from them. Purchasing companies want those cooperatives to be reliable so they can buy their cocoa or coffee or whatever product they need, but banks often won’t work in agriculture because it’s too risky. Contracts with those companies serve as hard collateral for enterprises that borrow from Root Capital.

After working with more than 360 enterprises since launching in 1999, the organization’s goal now is to expand —not an easy feat when the work is so hands-on. They’re also aiming to convince others to join the effort so they can help more businesses, more farmers, and more developing communities.

“As we push forward, we’re kind of inventing as we go,” Engstrom said. And that, he said, “is what makes it exciting.”