Our Revolving Fund System

Explaining in detail how Pedals for Progress works isn’t always easy. The simple version is we collect used bikes and ship them overseas to partner organizations who then distribute them within their communities. And really, this is all there is to it. However, the logistics of this are much more involved, and, of course, nothing moves anywhere without money paying the way.

So, early on, Pedals for Progress innovated a revolving fund system that jumpstarts our overseas projects. Then once it’s off the ground, it stays in operation for as long as the project needs bikes. For some of our partners this has been nearly as long as we’ve been around.

The concept of our revolving fund system is simple: let the bicycles pay their own transportation. However, the first container of bikes we ship to an overseas partner is on us. We fund this initial shipment by raising a minimum of $10 with each bike at our collections, which essentially pays for processing the bikes for shipment and storing them in inventory. To then ship the bikes from our storage facility to our partner organization overseas requires an additional $20 to $30. We raise this money in a variety of ways—fundraisers, mail solicitations, grants; sometimes we’re fortunate enough to get a program sponsored. But this first shipment is the most critical, because it provides the financial means for our partner to get started and keep their project going. It’s the lynchpin of our revolving fund system.

Once our overseas partner receives their first shipment, they then distribute these bikes among their community. This is usually arranged before the bikes even arrive. In many cases, financial assistance and small loans are provided so the poorest people can afford what are already modestly priced used bikes. And usually from 450 to 550 bikes arrive per shipment. But the bikes are never given away, and for good reasons.

First of all, selling these bikes gives them a nominal value, so recipients are more apt to value them, rather than treat them as handouts that can easily be replaced. (Most of us tend to care for things we pay hard-earned money for.) Selling the bikes also generates much needed income for our partner organization. After all, they have to keep the lights on, maintain a payroll, and pay rent and phone bills. So bike sales provide important operating capital.

Most of all, bike sales secure funding for our partner’s next shipment, typically defraying at least a third of the shipping cost, and sometimes nearly all of it. Subsequent shipments keep the revolving fund going, and that keeps the bikes flowing into our partner organization’s community. Getting more and more people in a community on bikes also generates more business for the local bike shop. Naturally, when a thousand or two thousand bikes arrive in a given community, they’ll need service. And often with the first shipment of our bikes, a bike shop is created, providing stable permanent jobs. In some cases, successful bike shops have even provided the revenue to start up other businesses.

Having a large percentage of a community’s adult population on bikes is critical to both a project’s success and ours. One shipment is not enough—our programs can’t end there. Apart from funding the next shipment, the benefits of more bikes are many. To begin with, bike recipients start earning more money almost immediately. They’re more able to find work, create businesses, or even get the education necessary to land higher-paying jobs. As they earn more money, and more bikes arrive, the next recipients begin to earn more money. The community begins to thrive. This inspires entrepreneurship, and when new businesses succeed, they can then advise and even fund other enterprises.

The ultimate goal of our revolving fund system looks well beyond providing the first “free” shipment of bikes. Once bicycles get a foothold, they help the local economy bubble up rather than trickle down. Because our program doesn’t simply provide hand-outs, recipients of our bikes understand it’s up to them to make the most of owning a bike. And our experience has shown that that’s exactly what they do.

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