A student-run fund based on a Nobel-prize winning concept
At a time when credit is tight, Rutgers students are using a homegrown version of a Nobel-prize-winning microfinancing concept to provide business loans and training to low-income and other disadvantaged entrepreneurs in New Brunswick.
The nonprofit Intersect Fund – founded by two students and completely student-run – empowers local entrepreneurs to lift themselves from poverty while giving about 20 student interns the opportunity to apply lessons from school and life in a substantive way. The effort has created a buzz, both in the community and the university..
“The Intersect Fund should really help a certain segment of the community by providing financial help, training, and mentorship to emerging Latino business people trying to move their businesses out of their garages and kitchens and on to the next level,” said Christopher Paladino, president of the New Brunswick Development Corporation (Devco). It’s another example of the really important bond between the university and the community. If they are able to impact four or five businesses a year, they are doing something really important.”
Joseph Shure, a Rutgers senior majoring in history and political science, and Rohan Mathew, a School of Engineering junior, founded the fund in 2007. Mathew first read about the concept in a New York Times article describing Grameen Bank in Bangladesh, which turns conventional banking practice on its ear: Emerging entrepreneurs require no collateral to get loans. “The system works on a kind of social collateral,” Mathew said. Entrepreneurs form groups after their business training; if any member of the group defaults on a loan, other members of that group cannot get loans. The idea won a Nobel Prize in 2006.
What’s in a name? Grameen Bank means “bank of the village” in Bengali. The name "Intersect Fund" refers to the intersection of campus and community: students gain a way to apply their knowledge, while community members gain a pathway to economic self-sufficiency.
So far, three entrepreneurs have graduated from the Intersect Fund’s six-week training course. Lessons in marketing, pricing, and cash flow are taught by students and facilitated by student translators. Charter alumni include an insulation installer who wants to start his own insulation company, a baker who works at home and needs better equipment, and a computer expert who wants to make business software accessible to Spanish-speaking entrepreneurs. Graduates can apply for an initial loan of $2,500. Once they repay it, they can apply for double the amount, and so on until they reach $20,000.
“One of our goals is to foster a sense of community among city entrepreneurs,” Shure said. “We instill this idea from the beginning, when we require each business owner to visit the homes of his fellow group members. Social collateral helps ensure repayment.”Business training is held in Sacred Heart Church on Throop Avenue and Elijah’s Promise on Livingston Avenue on weekends, and sessions are booked through March.
Shure and Mathew have inspired some real confidence among community organizations, donors, and individuals. After a seed grant of $1,000 from Magyar Bank in October, the Intersect Fund went on to receive $10,000 from the Catholic Campaign for Human Development, and $25,000 from national real estate developer Paul V. Profeta, who has also agreed to serve on the fund’s board.
“For young men still in college, Joe and Rohan have tremendous poise, perseverance and sophistication. They are running a well-thought-out program, an educational program,” said Profeta, who serves on the board of Rutgers Business School–Newark and New Brunswick, and also chairs the Profeta Urban Investment Foundation at Rutgers Business School, Inc. which partners with the school’s Newark-based Center for Urban Entrepreneurship and Economic Development. “The Intersect Fund program makes so much common sense that we’re pirating some of the ideas for the business school.”
Shure said that he and Mathew became familiar with the problems of New Brunswick entrepreneurs while covering the city for the Daily Targum. “We saw the city in transition, with a great deal of new construction and economic development. The other side of the story was a large immigrant population struggling to make ends meet,” he said. Many entrepreneurs had taken second jobs to supplement their incomes; and although they had the drive to become successful entrepreneurs, they didn’t have training or savings to invest in their businesses. “They're stuck in five-dollar-an-hour jobs and their microenterprises never have a chance to become sustainable sources of income,” Shure said. “When we realized the microfinancing concept could break the cycle, the decision to start the Intersect Fund was easy.”
Mathew characterizes the fund as an example of how education can be used as a tool to serve the communities we live in. “We have a tremendous amount of resources and opportunities available to us as students, yet most of us probably couldn't tell you where Remsen Avenue is. It's not that students don't want to help – they just don't know how,” Mathew said. “We offer them a service opportunity along with an incredible learning experience.
Paladino agrees. “Rutgers students live in the city and adopt this place for a while,” he said. “They work in our schools, day care centers, and hospitals as volunteers, as interns; they work here for Devco. The Intersect Fund is a place for them to really penetrate the community at a new level, and whenever we can do that and help that along, it’s important.”
Paladino downplayed his role on the Intersect Fund’s board of directors. “The older folks are the window dressing,” he said. “It’s the students who are going out and getting tens of thousands of dollars worth of start-up money. Their enthusiasm and preparedness and intellects make it very hard to say no to them. That’s really exciting. These are guys with an idea, and that’s what makes universities great – people with ideas. We need to do whatever possible to cultivate that.”