Feature February-March 2003
Mike Murray -- Philanthropy is a Verb

"Serendipity" is a word that crops up frequently when you talk to Mike Murray about how he happened to become a philanthropist. Yet the 47-year-old former computer executive tempers this thought with the idea that he made a critical choice to retire young and commit his time to humanitarian causes.

For instance, take his extensive support for microcredit programs, which provide small loans to individual entrepreneurs in developing countries, through Unitus (www.unitus.com), an organization he co-founded in 2000. His involvement began quite by chance, he says, when another employee at Microsoft, where he was vice president of human resources, sent him an email to ask if he would meet with Muhammad Yunus, who was visiting Redmond, Washington, from Bangladesh. It was 1997. Prof. Yunus is the founder of Grameen Bank, probably the best-known microfinance institution (MFI) in the world, and one of the pioneers in the microcredit movement, which focuses on giving small loans to very poor people to help them develop businesses and become financially self-sufficient. "I used to get 100 to 200 emails a day," Mr. Murray says, "and I couldn't respond to them all." But for some serendipitous reason, he decided to respond to this one -- and it ended up being life-changing.

"Yunus was electrifying," says Mr. Murray, who knew nothing about microfinance until that meeting. He learned how Grameen Bank used market-based methods to provide loans to the "poorest of the poor" -- mostly women -- in rural Bangladesh to help them "work their way out of poverty." With loans as small as $100, these women could leverage their skills and materials, grow their businesses, and take control of their lives.

  Microcredit Worldwide -- Some Figures
Typical annual interest from moneylenders in developing countries300%-3000%
Average microcredit loan size$100
Percentage of the world's poor who are female70
Estimated global demand for microfinance300 million people
Estimated number with access to microfinance services30 million people
Estimated number of microfinance institutions internationally3,000
Estimated number of MFIs serving over 100,000 borrowers30
Microfinance borrowers served by those 30 large MFIs68%
Average Unitus investment package$3 million
Average industry investment/grant size$100,000
Unitus MFI partnership duration5 to 7 years
Repayment rate from Unitus MFI partners' clients100%
Various sources via Unitus

Through his own research, Mr. Murray became acquainted with a Boston-based nonprofit organization called Acción International, which works with microcredit institutions in developing countries. In 1998, he met with Acción's executive director Michael Chu and traveled to Bolivia with a delegation organized by Acción to view first-hand how micro-lending works. The trip was co-hosted by Bolivia's Banco Solidario, or BancoSol ("Solidarity Bank"), which makes micro-loans to thousands of artisans and small vendors in Bolivia. Now Mr. Murray sits on Acción's board.

But what propelled Mr. Murray, who lives in Redmond, in his current direction began much earlier. Mr. Murray grew up in Klamath Falls, Oregon. His father and grandfather owned a creamery and from a young age he helped out in all aspects of the business, learning early on to appreciate the virtues and rewards of hard work. He has always been a staunch believer in a market-driven economy bolstered by a democratic system of government, and bases much of his philanthropic philosophy on the theme of self-help and initiative rather than hand-outs.

Yet he also learned about charity: his father and grandfather made it a habit to visit ill employees and bring gifts to poor rural farmers. A religious underpinning pervades Mr. Murray's philosophy, and he has always "tithed" ten percent of his gross income to his church. The Murrays place great value in the worth of an individual -- wherever that individual may live. And Mr. Murray's personal motto is "Look up, lift up."

At Stanford University he majored in engineering, creating his own specialty in product design, industrial engineering and business. In his first job, with a timber company, one of his responsibilities as "Better Methods Coordinator" was giving courses to first-line supervisors, many of whom had not graduated from high school, exploring problem-solving strategies that would make production more efficient, safer and profitable. It was daunting, he says, to be a 23-year-old working with much older employees to solve problems, but the process strengthened the men's confidence and morale as well as corporate productivity and profits.

After a couple of years, Mr. Murray returned to Stanford for an MBA, and then ventured into the nascent personal computer industry, landing a position as Apple Computer's marketing head for a product called the Macintosh. He reported directly to co-founder Steve Jobs, who, like Mr. Murray, was in his 20s. "Steve insisted on creative, non-traditional thinking," says Mr. Murray. "We knew we were revolutionizing the way technology would be used by millions -- the Mac was the 'computer for the rest of us.' We sometimes referred to this as the democratization of technology. And we were truly passionate about this mission."

It was at Microsoft, which Mr. Murray joined in 1989, that he learned about persevering for the long term, working at a problem from every possible angle until a solution could be found. During his tenure he reported directly to Bill Gates and Steven Ballmer, and came to appreciate their focus on the long view, not quarterly results, and on knowing one's field more thoroughly than anyone around you -- spending as much time as needed to master it. "If you didn't know more about what you were doing than your boss, you were in trouble," he says. "Microsoft thinks longer, harder and deeper about problems than any company I know of."

By the time Mr. Murray left Microsoft ten years later, he and his wife were in a position to do almost whatever they wanted. With the benefit of Microsoft stock and stock options, they could have opted not to work. But they chose another path by creating the Crystal Springs Foundation (www.csf.org) and plans to pursue a life dedicated to humanitarian causes.

"I struggled for a while to define where exactly I would place my energy. This was undefined territory, and the effort, by its very nature, was completely personal," says Mr. Murray. But he already had two key parameters: First, he wanted to be very hands-on with projects rather than fund them based on information from "middlemen" seeking his support; one of the premises of being "retired" so young was that he would be absolutely proactive in his new life. In this regard, he considers his philanthropy to be more aligned to a venture fund than a grantmaking foundation.

Second, because he planned to be so involved, Mr. Murray wanted to focus on just a handful of projects that he could get to know well. He and his wife chose three areas: children's issues, microfinance development and humanitarian services. His wife's key project is raising funds for Open Arms, an organization that supports orphanages, hospitals and schools in rural India. The groups supported by the Crystal Springs Foundation receive large multi-year grants. Of these projects he says "We are very, very involved in these projects because we need them to succeed." Even with this focused effort, the Murrays eschew personal publicity and prefer that attention be directed to their sponsored projects. "Our philanthropy has nothing to do with drawing attention to us -- it's 100% about the work that we do," Mr. Murray says.

In talking about how the Crystal Springs Foundation evolved, Mr. Murray describes how a college friend directed him to a program called Friends of the Children (www.friendsofthechildren.com), which focuses on helping poor inner-city children by matching them with mentors. A unique feature of Friends, which was launched in Portland, Oregon, in 1993 and has chapters in 12 cities around the US, is that the mentors are full-time employees. They spend five hours every week with each of eight needy children with whom they have been matched. Boys have male mentors; girls work with women. Children chosen for the program are carefully screened to ensure parent buy-in and are guaranteed a mentor for 12 years. The objective is to give them a consistent, caring relationship over time that helps guide them towards non-violent, productive lives. The mentors do change, however, so few children can expect to work with just one mentor over the 12-year period. The Crystal Springs Foundation agreed to fund the start-up of the Seattle chapter for its first three years.

Then came a phone call from a man in Utah who had heard of Mr. Murray, with an invitation to attend a daylong brainstorming session with a group of people "to discuss what we could do about world poverty." This meeting became the basis for Unitus, an anti-poverty investment initiative. The name is a combination of "Unite" and "Us." "Without unity we won't be able to find lasting solutions to complex world issues. At the root of many second- and third-level problems is the crushing force of personal poverty. Unitus offers an innovative approach to the challenge of large-scale poverty alleviation," Mr. Murray explains.

In early 2000, Mohammed Yunus invited a number of Unitus board members to Bangladesh for a behind-the-scenes look of how Grameen had evolved over 25 years. By then, Grameen had reached 40,000 villages. The replication potential was powerful. Seeing microfinance in action -- including learning what worked and what had not -- left Mr. Murray and his Unitus partners convinced that this was the area where they could have the most impact. This led to an in-depth analysis of the structure of the worldwide microfinance "industry", with an intent to identify opportunities for strategic, long-term leverage. "We wanted to learn all that we could so that we could create a 'second generation' model for the expansion of microfinance as a poverty alleviation tool," says Mr. Murray.

What makes Unitus unique microfinance practitioners is its singular focus as a "microfinance accelerator." This is a term coined by the founders to describe a combination of large-scale funding and impactful consulting services that enable existing microfinance institutions to expand their services quickly and efficiently so that more poor people who want to pull themselves out of poverty have resources to do so.

Mr. Murray says he would be delighted to see other organizations adopt the role of microfinance accelerator. There are some 3,000 microfinance institutions around the world; at least ninety percent serve no more than 2,500 clients. "Microfinance is an award-winning concept, but it's failing to meet its potential. Only a handful of MFIs serve over 100,000 clients. We believe that we've created a methodology that will allow some of the most promising smaller MFIs to greatly accelerate their growth in clients."

In seeking which groups to support, Unitus automatically excludes larger ones with a strong track record, such as Grameen and BancoSol, which serve over 100,000 customers. These larger organizations already receive funding from mainstream grantmakers and the formal financial markets. Rather, Unitus identifies smaller MFIs with real growth potential based on strong leadership and management practices, a good location and a solid infrastructure. Unitus identifies high-potential MFIs using a thorough due diligence review of over 60 criteria. Those scoring highest become candidates for funding from Unitus with Unitus having the explicit aim of helping these groups to scale up. Once a partner organization has achieved accelerated growth and financial self-sufficiency, Unitus will move on to other partners.

Since Unitus is just two years old, much of the discussion is still in the future tense. To date Unitus has funded just one project so far, Pro Mujer Mexico (www.promujer.org), with $1.9 million dollars, including $1.5 million for loans and the balance for capacity building. A second partnership has recently been established with an MFI in India, SKS (Swayam Krishi Sangam -- www.sksindia.com), which has the potential to serve 200,000 to 300,000 women in the next five year. SKS was founded by Vikram Akula, an Indian economist who was raised and educated in the US but who relocated to India some years ago to pursue a commitment to economic development in his birth country.

"Philanthropy to me is a verb," says Mr. Murray. "I feel compelled to give. I want to be involved in efforts that help create permanent improvements in people's lives. And I want to be involved in efforts that promote self-reliance. I suppose that the roots of this go all the way back to the creamery. There were no slackers. We all had to work hard in order to make the business go. And twenty years in the computer industry coupled with my more important roles as father, husband and church member have deepened my understanding. If we can pay a small part in improving the quality of life for a few of our brothers and sisters, then a bit of hope is kindled. And when we have hope, we are able to listen, and love."