William Foote
Ashoka Fellow since 2007   |   United States

William Foote

Root Capital
Willy Foote is enabling poor, rural communities in developing countries to get more of their products to ethical and green world markets. By reassessing and sharing risk among producers and consumers,…
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This description of William Foote's work was prepared when William Foote was elected to the Ashoka Fellowship in 2007.


Willy Foote is enabling poor, rural communities in developing countries to get more of their products to ethical and green world markets. By reassessing and sharing risk among producers and consumers, Willy’s idea legitimizes the potential of future production as collateral for loans so that poor farmers can get loans and expand their businesses. Coupled with other support, such as financial education, this approach is radically changing the landscape of opportunities for producers and is ensuring steady product supply to consumers who demand ethically sourced, green products.

The New Idea

Willy is pioneering a new lending methodology that provides affordable, accessible loan finance for the rural poor. With the organization he founded, “Root Capital,” the inherent potential of rural small and growing businesses (SGBs) is being harnessed and turned into increased production, profits to the producers, and product supply to global markets.

By using fixed-price forward contracts as loan collateral, Willy is creating a shift in the traditional paradigm in which risk is borne solely by the most vulnerable producers to one in which it is shared and minimized in direct trading relationships. This change allows Root Capital to take a new approach to underwriting and providing much-needed finance to rural SGBs.

This reassessment of risk means that Willy is able to provide prefinancing and term lending to small-holders cooperatives and associations that previously were considered unbankable. This approach to securing commodities contracts removes the major barrier that many rural communities faced in maximizing their access to relevant supply chains (such as Fair Trade coffee).

By proving that rural SGB lending is viable, Root Capital is able to take the system to scale through mainstream financial institutions, opening up business lending to millions of previously unbankable rural poor. In this way, global and local banks will become key players in the eradication of rural poverty and the improvement of livelihoods and conservation of the environment.

The Problem

Root Capital was borne out of the premise that one of the greatest threats to vulnerable communities and environments is poverty, most of which is rural. Chronic lack of access to capital leads the rural poor to make short-term decisions for food and income security that are often harmful to the environment and long-term economic development. This approach keeps rural communities in poverty and perpetuates a vicious cycle of environmental and social degradation.

Banks are stuck in their ways. Their current lending policies mean they do not view lending to rural grassroots enterprises as either viable or beneficial to their business. In the developing world in particular, banks lend against hard collateral in the form of traditional securities such as deeds of land and buildings. The majority of the world’s rural poor lack collateral, either because they do not own land or they lack legal titles. Thus, rural producers cannot get capital, making it difficult, if not impossible, for them to provide commodities to the new supply chains created by consumer demand for ethically sourced goods. The banks need to see a successful new model proven if they are to change their ways.

Currently, the vast majority of commodities are traded on the commodities markets with no mechanism to ensure a stable price for small-holder producers. Risks such as crop failure and price fluctuation reside solely with small-holders and mean that they are effectively unbankable within the current supply chain and banking paradigms.

A lack of financial literacy on the part of the rural producers compounds the problem.

The Strategy

Ethical commodities purchasers such as Starbucks, Green Mountain Coffee Roasters, Whole Foods, and The Body Shop are increasingly looking to build stable, long-term relationships with producer organizations to serve their growing markets. This desire is being driven by two interlinked factors: Consumer demand for high-quality, ethically sourced goods and fluctuations in commodity prices that undermine the reliable supply of those commodities to the consumer. Willy has recognized that the evolving supply-chain dynamics require an evolution in lenders’ risk analysis and that fixed-price forward contracts from ethical buyers make it possible to lend to organizations made up of even the most vulnerable small producers.

By lending against such contracts, Willy redistributes risk in the supply chain away from vulnerable producers in a way that reveals the true creditworthiness of organizations of small-holder producers. In this way, Willy is providing credit to rural communities that were previously considered unbankable.

With capital, grassroots businesses are more stable and can pay their producer members on time for their goods, thus attracting more rural producer members. This stability benefits the enterprises, their members, and their international buyers because they can reliably deliver high-quality goods. Willy employs local investment officers who are familiar with the rural areas in which they are lending, who can better support the development of these enterprises.

Willy has also recognized that credit cannot be divorced from capacity and that cooperatives and small businesses in the developing world often require specialized financial management training to realize their potential. Root Capital has, therefore, launched a financial literacy education service to borrowers. The service provides further underpinning for their creditworthiness, maintains their high repayment rates (currently 99.5 percent), and strengthens and diversifies their businesses.

By lending to enterprises that offer examples of how small-scale producers can reach economies of scale, Willy is showing the way for others to follow while reducing transaction costs through the development of replicable models. Once a particular production approach has been proven, Root Capital loan officers are then able to apply those approaches to other geographic areas and across different commodities.

To bring about the steep change in banking practice that he is seeking, Willy needs to bring Root Capital’s lending portfolio to sufficient scale (number of loans, amount, range of commodities, and country coverage) to definitively demonstrate the viability of its approach to lending. He is also codifying this new lending practice through the development of underwriting and financial education manuals in order to transfer this methodology to other financial institutions.

Now that Root Capital is approaching scale, Willy is starting to engage with mainstream financial institutions to share his lending methodology. One early example of such knowledge transfer is a local bank in Kigali, which has stepped in and taken over Root Capital’s loans in Rwanda after observing that such an approach is viable. Willy is also working more actively with decision-makers in local and global banks, thus educating and supporting them in implementing his lending methodology.

Willy has a number of champions within the global banks that are supporting Root Capital and actively collaborating and exploring the adoption of his lending methodology. For example, the head of risk for the microfinance department of one of the top five global banks sits on Root Capital’s risk management committee. Willy is also undertaking a number of joint ventures with much larger socially oriented investment funds (Calvert Social Investment Foundation and Rudolf Steiner Foundation) to develop partnerships and to share templates of his lending methodology. Finally, Willy is one of the founding members of Finance Alliance for Sustainable Trade (FAST), an association established to develop a long-term vision for SGB financing that creates a platform for the nascent rural SGB finance industry to present itself as a viable asset class to the rest of the finance industry.

Root Capital’s 2007 lending capital was US$20.6M and generated disbursements of US$27.6M. By 2012, Root Capital expects its lending operations to break even with US$82M in lending capital fueling disbursements of US$125M. This level of profitable lending activity will effectively define a new viable asset class, one that might be called the “rural SGB” and is capable of exploiting the growing market for ethically sourced and green goods.

The Person

Willy went from Lehman Brothers to working with the poor, taking skills learned at the former to help the latter. In doing so, he affirms his “deep sense of moral obligation,” which he developed from childhood (thanks to his father, Tad, who is also a social entrepreneur). While working as President of the University of Miami (Florida), a position he held for 20 years, Tad Foote founded the Miami Coalition for a Drug Free Community in the 1990s and built the organization into an international paradigm for intersectoral approaches to combating the drug scourge in U.S. and Latin American cities. Earlier, while working as Dean of the Washington University School of Law, he founded the grade school that Willy attended in St. Louis, MO, specifically to counter “white flight” from areas of deprivation near downtown. Within this context, Willy can be viewed as an individual whose upbringing has provided him with the skills and experiences to identify and address profound social problems.

Willy has always been fascinated by finance, and upon leaving Yale University and a stint as a journalist in South America, he went to work for Lehman Brothers in Latin America. His work exposed him to a world of corporate finance with billion-dollar deals but where financing was not reaching communities that would benefit the most. He quickly realized that the system was broken and started to think about how to fix it.

Willy left Lehman Brothers to take a journalism scholarship with the Institute of Current World Affairs. Operating from his base in Mexico, he observed the daily struggle family farmers waged just to survive and witnessed farmer after farmer encroaching on virgin forest to plant beans and corn for food security. Willy’s experience led him to think more deeply about one of the great paradoxes of our time: In a world with such abundant resources, poor people with no economic alternatives are at odds with the natural resources, and destruction of those resources is happening on a massive scale and at unprecedented rates.

Returning from Mexico, Willy planned to attend Harvard Business School, where his wife had also been accepted. Instead, he decided to pursue his ideas about ways to fight poverty and environmental degradation by undertaking a piece of research focusing on SGB financing for impoverished rural communities. Within three months, Willy had identified the model that Root Capital now uses to help break the cycle of rural poverty, had written a business plan, and had secured investment to launch Root Capital.

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