What would you do if you wanted to transform your hobbies into a business but had no chance of getting credit? Until 2007, if you were among many poor Hispanic wives and mothers in San Diego County, you would dream in vain. But that year, the Foundation for Women reexamined its mission. The local nonprofit had begun raising money a decade earlier to help impoverished women in Liberia. By 2007, 250,000 San Diego women were living at or below the poverty line. For founder and CEO Deborah Lindholm, then COO Judy Bee, and others on staff, their plight became a call to action: If we provide microloans in Africa, there’s no reason why we can’t do it here.

A member of the Rotary Club of La Jolla Sunrise, Lindholm knew from experience that a small loan can precipitate significant change. Early in her career in microcredit, she saw the effect of a $4 loan on a woman in India. With that small amount, the borrower bought a comb, a mirror, and scissors and put her husband to work as a barber. The couple paid back the loan with interest, received larger ones, and used their profits to send their children to school.

Thousands of Rotarians have similar stories to tell. For years they’ve participated in microloan programs that serve underprivileged people in the developing world, including parts of Africa and Central America. But today, as the prolonged economic downturn jeopardizes the financial underpinnings of families closer to home, some U.S. clubs have turned their attention from international to local service.

Financial planner Dee Doe, president of the La Jolla Sunrise club, shares office space near downtown San Diego with the Foundation for Women (FFW). She also chairs the District 5340 Mobilizing Rotary for Microcredit effort, which has raised money for microcredit “banks” on four continents. “As complex as these can be to set up, they’re easy compared with our own federal banking rules and regulations,” Doe says. “But FFW has flourished, partly with Rotarian support, and it now operates throughout San Diego County.” Using Grameen Bank in Bangladesh as a model, the foundation requires borrowers to create or join a peer group, present their business idea to fellow members, and accept feedback.

Nancy Chavez knows all about the process and the power of microlending. As a young girl who loved to help her mother make pastries and confections from scratch, she dreamed of starting a bakery of her own. But she became pregnant when she was a teenager, and today, at 29, she has three children. With little money and practical experience, she has clung to her fantasy of opening a cake business. When a friend who’d heard about FFW urged her to attend a microloan meeting in Vista, about 40 miles north of San Diego, Chavez at first refused. “I was embarrassed,” she recalls. “I didn’t know where to find permits, or if I could even get one. I didn’t know the equipment I needed, or what to call it.” But FFW Program Manager Nora Batley-Nido eased her anxieties and helped her overcome practical obstacles. “I couldn’t have my kids running around at the library while I did Internet research, so Nora put me in touch with another foundation that helped me get a home computer,” Chavez says. “I came up with a name, Bake My Days, since I planned to do cakes for special occasions.”

Batley-Nido also encouraged her to study the competition, which led Chavez to come up with fruit-based cakes not offered by bakeries in her neighborhood. Chavez also applied for and received a $250 FFW microloan, which she used to buy baking pans and business cards, and to enroll in a class on creating elegant wedding cakes.

Chavez paid back her first loan in weekly $16 installments by selling cakes to friends, and qualified for a second, $500 loan to obtain her food vendor’s license. That progression typifies the foundation’s microfinance process, and is capped at a $2,000 loan. Each amount needs to be paid in full before the next, larger loan is made. Through their donations, Rotary clubs and others provide loan money and working capital for FFW, which has been a direct service provider domestically since 2007, when it began to administer its own funds.

As delicious and artful as Chavez’s cakes may be – intricate piping and decorative details have become her trademark – she understands that the storefront she envisions won’t stay open for long unless she develops a cogent business plan and strategically prices her products. This need for financial literacy is common among microloan borrowers, and means that mentoring from experienced entrepreneurs is vital. No one is more aware of the importance of skilled tutors than the Foundation for Women’s newly appointed COO, Joe McCloskey.

The recently retired corporate president at Jif-Pak says he discovered the foundation in 2011 when searching for nonprofits as a potential donor. “I sat in a few borrower meetings and said to myself, ‘This isn’t going to work. Something’s wrong with the model.’ We were fully prepared to give a small loan, $250, to women who had a bad idea to bring to market. As a relatively successful businessman, I have a 1 in 100 chance of success. They’ve got a 1 in 1,000 chance.”

To improve the strategy, McCloskey met with Lindholm over four months. Together, they arrived at two fundamental areas that had not been adequately addressed: business education and support. “By the middle of 2012, we had finally zeroed in on the source of the problem,” McCloskey says. “The foundation was trying to apply the concepts of microcredit used in emerging countries to the United States without retooling them. That was the fundamental mistake. The differing cultures and so many other things don’t translate one-to-one.”

Beginning this year, FFW will launch a nine-week microbusiness immersion training course, he says. “Those very small businesses – sellers at art shows, flea markets – compose a large subculture we’re targeting. I’ve written a step-by-step manual for teaching the basics, like ‘Don’t cram your products into a garbage bag, so that when you go to sell them they’re all flattened out. Go buy some plastic tubs.’ The course will include ways to calculate how much you’re paying yourself. That’s the first question I’ve been asking the women I’ve met: ‘What did it cost you to make that?’ There’s often a blank stare on their face; they haven’t a clue. But they will. You just have to give them direction.”

FFW Communications Director Jeanne Rawdin agrees that McCloskey’s emphasis on structure, statistical evidence, and consistency will pay large dividends. For borrower Yolanda Tabarez, a few strategic business tips from the foundation have tripled her hourly net income. She was crocheting hats and scarves using inexpensive acrylic yarn and selling them for $15 each. Sandra Martinez, FFW program manager for San Ysidro, showed her that she could sell them for $48 to $55 each if she used better materials like wool, for the same two and a half hours of labor per article. “I didn’t know anything about business,” Tabarez says. “The foundation provided me with the wool yarn and the racks and hang tags. The hats are selling all over. I plan soon to take Dürrez Crochet, my company, online. I’m so excited.” To expand her product line, she plans to hire and train women from her peer group.

Successes like this underscore the importance of the foundation’s transition to teaching financial literacy in conjunction with making loans, notes Julie Rice, former FFW director of operations. “We all go into things that we think are a great idea,” she says. “Some of us have the support readily available through education or family. But when you don’t, budgeting and all the rest are things you need help with. Just because we’re building microbusinesses doesn’t mean it’s going to take a microamount of time for them to succeed.”

She, McCloskey, and others see Rotary clubs playing an increasingly crucial role. “As we look to enhance the domestic model with more training and business support, a core need will be for mentors,” Rice says. “The firsthand experience and know-how Rotarians can share with women who are trying to get a business off the ground is a critical component in their efforts to become successful and self-sufficient.”

In the next few years, opportunities for Rotarians to become involved in microfinance throughout the United States and Canada will increase. “Targeting women in need and new immigrants in your own town is innovative,” says Gordon Crann, president and chair of the Rotarian Action Group for Microcredit. The group offers “assistance to districts, and puts clubs in touch with well-run microfinanciers,” he explains. “We provide advice on grant applications for clubs sponsoring local nonprofit microfinance organizations. These nonprofits are often aligned with one of the nation’s two major players, Grameen and Accion. The clubs recognize that handouts rob recipients of their dignity and offer short-term relief at best, while microfinance – in the form of microloans, microsavings, and microinsurance – offer a less demeaning and more productive alternative.

“This is another form of service that affects your own community,” he adds. To a degree, Crann echoes the sentiments of former U.S. House Speaker Tip O’Neill, who famously reminded us that all politics is local. He, of course, meant that to be successful, politicians need to become keenly aware of the foremost issues among their constituents. Today, when home is where the hardship is, that reminder resonates among Rotarians with the motivation to aid others, and the skills and experience to change lives down the street. And if history is a reliable barometer, where there’s an opportunity to help, there’s a club that can take up the challenge.