Unitus Advisor Addresses Controversy

This is a guest post from Geoff Woolley, a former Unitus board member who will be leading the next stage of Unitus [see update below] as they exit microfinance and seek a new area of “maximum social impact.” For background see the original Unitus announcement, my post on Unitus, Tim Ogden’s Guide to the Unitus/SKS Story, and the New York Times article.

[Update: Immediately after publishing this post, Geoff emailed me to say that the original press release from Unitus identifying him as the incoming CEO was incorrect. Geoff is currently advising Unitus on the structure of “Unitus 2.0” and his future role with Unitus has not been determined.]

By Geoff “Chester” Woolley

Woolley Thanks to Sean for allowing a few scribbles on Unitus and its directions moving forward. As Sean mentioned, I am a board member of SKS, and the quiet period extends 45 days after the public offering. With that said, there now seems to be plenty of available information on SKS and its IPO in the media. I stepped down last year as a member of the Unitus board, and my views represented in this blog are just that…my views. Please do not interpret my voice as that of the board, the organization, or its affiliated organizations.

After this disclaimer, to understand Unitus, it is important to understand the organization’s original mission and its DNA. Its original vision and mission were straightforward: Unitus wanted to demonstrate that microfinance was scalable and could be commercialized. The concept was simple: from the universe of the many thousands of existing MFIs, partner with select microfinance banks and provide them with management expertise, advice and capital to accelerate their growth.

Unitus believed in encouraging the entrepreneurial power of MFI management teams—without dictating the methodology, program content or structure. Unitus believed that this was the best way to reach millions of people lacking access to affordable capital. In short, the strategy was to provide MFIs with proper tools and let them run. The organization’s hope was that the rapid growth of partner MFIs would attract the coffers of debt and equity players in the capital markets rather than relying on limited non-profit funds. Maybe…just maybe… the enormous global commercial and investment banks would become interested in organizations serving the “bottom four billion” as commercial clients, rather than sending Unitus, our MFI partners, and other strong microfinance institutions to their foundations every time they were approached for financing.

Who knew then that ten years later, in Unitus’s primary market of India, the world’s best known banks and equity funds would be chasing MFIs as prime customers? Who would have guessed in 2002 that a small MFI with 5,000 borrowers (i.e., SKS) would conduct an IPO that would be oversubscribed nearly 15 times on a $1.5 billion valuation? Frankly almost no one except maybe the new prophets of the MFI gossip chain. :^)

Aside from Unitus’ original goals, a few important principles “thou shall not’s” quickly became entrenched into Unitus’ nucleus:

  1. Thou shall not undercut commercial market development and distort markets using donor funds.
  2. Thou shall not duplicate the efforts of – or compete with – other excellent microfinance NGOs such as Accion, Grameen, OI, etc.
  3. Thou shall not purport to be the “end all” for assuring financial access for all the world’s underserved.
  4. Thou shall not try to provide all the services and solutions our partner MFIs might need.

In short, the primary goal was to demonstrate, catalyze and counsel with our partners…then get out of the way.

Over the years, many individuals and organizations in the microfinance industry have disagreed with the Unitus philosophy and goals, while others have applauded them. But in the end, these goals and principles are what made Unitus …well, Unitus.

Over the last two years or more, it started to become evident to the board that Unitus’ original goals were being achieved. MFIs were scaling rapidly, and the commercial world was viewing the provision of financial services to the underserved as a market rather than a cause. Such developments triggered a series of internal strategy discussions and questions related to formulating next steps and goals for the organization:

  • Should Unitus offer more consulting services to its partners?
  • Was the Unitus mission accomplished in India?
  • Was more concentration in major underserved markets such as Africa needed?
  • Did Unitus need to add or reduce personnel and leadership?

Following these discussions, Unitus launched multiple pilots for various services and opened an office in Africa. Some of these experiments were met with moderate success, but none of them quite hit the sweet spot that had always been part of Unitus’ vision…that of acceleration and market demonstration.

In January 2010 following a long search, a capable CEO was brought on board to consolidate ideas and agree upon a go-forward strategy. Efforts were redoubled to create consensus on Unitus’ future by the 2nd quarter of 2010. The highly skilled management and staff at Unitus looked deeply at areas adjacent to and outside microfinance, including: micro-insurance, SME lending, credit scoring initiatives, mobile banking, deposit-taking solutions, and many other programs targeting poverty alleviation. In light of Unitus’ capital base, expertise and mission, the board could not get comfortable with any of the proposed strategies as a fit for Unitus. To be clear, all these problems and potential solutions are critically important to poverty alleviation, but will require organizations with significant resources and the in-house expertise to take them on.

After this long search and the undeniable reality that Unitus was spending nearly US $700,000 each month, the Board began to ask some tough questions internally.

Unitus’ original goal was accomplished by almost all metrics. Most Unitus MFI partners had become self-sufficient, and many quality for-profit and NGOs organizations had moved into the microfinance space to provide various resources and services. Was it time to declare victory and reduce the organizations significant burn rate until a consensus could be reached on the Unitus strategy going forward? The board’s painful but truthful answer was to meet present obligations and reduce overhead. A majority of Unitus’ cost base was compensation, so reducing staff became necessary.

With major existing commitments to partners in India, some Unitus employees in India are likely to join other industry players – or even form a new independent consulting company – to fulfill those commitments. Unitus is very supportive of these efforts and may fulfill outstanding obligations to its partners through these existing firms or this new group. A small number of other Unitus staff members will be retained for Unitus 2.0 and ongoing operational work, while the remainder were let go (with a month’s notice and a solid severance package). Luckily, Unitus has been staffed with some of the world’s experts in microcredit so many folks already have multiple offers in hand.

So the truth of Unitus scaling down is fairly pedestrian. After meeting its goals and looking for a new focus, the organization decided to cut back until a new strategy was devised. Yes, it is true that most non-profits don’t operate in such a manner—but once again, it seems like this is a part of the Unitus DNA. A friend of mine who has advised non-profits over the last 30 years recently informed me that after advising more than 80 percent of his firm’s non-profit clients to consider merging, scaling back or closing, not one of these organizations acted on the advice.

In closing, I would like to shed some light on some of the questions/issues that have surrounded Unitus’ recent move.

1) Unitus Donations: All remaining and new donations held by Unitus will be used solely for non-profit purposes (e.g., grants, technical assistance). “Unitus 2.0” will not use funds for commercial purposes, equity investments, or start-up capital for new businesses. Not sure that doing such things would even be legal.

2) Unitus’ Non-profit Backing of SKS: It was recently stated in the press that Unitus used US $6.6 million of donor cash and services to assist SKS in its early growth. This figure is incorrect. Unitus gave a $150,000 grant, along with a $500,000 loan guarantee that was repaid. $6 million in equity was invested by Unitus Equity Fund (UEF), but no donor funds from Unitus were used to buy equity in SKS.

3) Unitus Proceeds from SKS: Unitus will receive economic benefit from the SKS IPO. Unlike Accion, which invested directly into Compartamos, Unitus is and always has been the general partner of a limited partnership called UEF. The US $23.5 million of partnership investment funds came from a unique group of forward-thinking limited partners (i.e. investors) who believed in UEF’s potential to have a demonstrator effect in private equity markets before anyone else was willing to do so. UEF’s limited partners pay Unitus a 2 % management fee and 20-percent carry from the profits of the Fund (i.e., a typical venture capital fund structure).

To further lay out the cash flows from UEF investments, Unitus sponsored UEF, which invested in SKS. The proceeds from SKS and other investments will go to the UEF investors, who in turn give Unitus 20 percent of the profits for being the General Partner. All those “carry” proceeds go the same place as donations, with some carry and fees allocated to the UEF managers under a contractual agreement that was agreed upon when the managers were initially hired.

So the true and proper story is that Unitus doesn’t use donor funds for equity investments. Unitus did use a small amount of donor funds to help launch and raise UEF as a demonstrator fund for the microfinance industry. Those donor funds were subsequently repaid by UEF’s limited partners as organizational expenses of the fund, after UEF’s fundraising was closed. Unitus, as a the GP of UEF, has received and will continue to receive fees and profits that will number in the millions, and will be used to fund grants that will back innovative solutions to global poverty. Not a bad deal for Unitus the non-profit.

Further for all those “profiteering doubters,” some Unitus board members did invest in UEF and have pledged all their profits to charitable works. I am confident this explanation doesn’t violate any quiet period rules around the SKS IPO.

4) Unitus 2.0: As stated before, Unitus is scaling down and not going out of business. Once again for the record, Unitus is down scaling not going out of business. Key individuals, experts, and board members are currently in the process of defining “Unitus 2.0.” Once the board decides on Unitus’ next major initiative(s), it will be communicated to the public in a timely manner. Individuals with expertise in the areas related to Unitus 2.0 initiative(s) and experienced board members will thoroughly study and formulate a strategy for deploying donor funds in an effort to generate the same impact Unitus has always strived for. This approach and answer may not satisfy some critics or seem opaque, but this is the reality of the situation and will allow Unitus to chart its course efficiently and effectively in backing innovative solutions to global poverty.

5) Stepping Down from the Board: I did step down from the Unitus board last year, after more than five years serving in multiple roles, including Treasurer and Capital Markets Chair. As Unitus Capital, Elevar Equity and Huntsman Gay Capital Impact (an impact investing firm I’m heading) have scaled up, the time I was able to spend at the non-profit was limited. Additionally, to avoid any improprieties and even the appearance of conflicts of interest given my involvement with the various for-profit entities that Unitus had spun-off (e.g., Unitus Capital, Elevar Equity) to generate impact and drive capital to scalable MFIs and social enterprises, I felt it was necessary to step down from the board.

6) PR Announcement: Unitus did a fairly poor job of announcing these changes… That is true, but I can assure you that the board did not announce the reorganization of Unitus in a way to minimize attention or as “bury the news.” The announcement was made prior to the July 4th weekend, but it was not done for a strategic or calculated reason. The board candidly made its decision after long deliberation and discussions in the weeks prior to the announcement, and communicated the decision to staff in the few days prior to the weekend. While the board underestimated the impact the announcement would have in the media and microfinance industry, it was certainly not a calculated move to hide Unitus’ intentions or future moves.

Thanks again to Sean for allowing me to share a few thoughts on Unitus, and hopefully this sheds some light on what I have seen while working with some of the most dedicated and well-intentioned folks in the fight against global poverty.


  1. Tim Ogden says:


    a few follow-up questions:

    1) If you are confident that these details do not violate the quiet period rules, why has it taken 6 weeks to disclose them? All of these supposed misunderstandings would not be an issue if these details had been shared from the beginning.

    2) If the board was planning on donating the proceeds from their for-profit UEF investments, why wasn’t that disclosed earlier? When was that decision made?

    3) Your note doesn’t reference the widely known Omidyar Network sponsored study that looked at conflicts of interest at Unitus. Will you share that report? What role did that report play in your resignation?

    Thanks for engaging.


    • Anonymous says:

      Tim, I was wondering if you received a response from Geoff relative to the three questions you posed? Being a former Unitus employee, I’ve been following the story and am interested in understanding the whole story. Thanks!

  2. Another good post by a Unitus Board Member, Dave Richards, can be found here:


  3. Tim Ogden says:


    I didn’t receive any further communication regarding these questions. But I did ask similar questions at the post referenced by Dave Schappell. I also wrote a post for Harvard Business Review here: http://bit.ly/cSGS2o to which Joseph Grenny posted a reply (and I responded in turn.)

    I’d also recommend Jonathan Lewis’ piece which can be found on http://www.ionpoverty.com