The ‘why’ behind Rang De’s membership plansWhy a membership plan in the first place, and why the new change in plans.
What’s the difference between RangDe.org and RangDe.in? If you know us from the past, I am sure you have either asked us this question or pondered about it.
“Everything is just the same!” has been our spontaneous response.
While we have been saying this all along, being in the thick of it all, I have now begun to realise that almost everything has changed about Rang De, except for the fact that our community of borrowers continue to pay the same interest rates as before. This is the sole reason for Rang De’s existence and you can be assured that the entire Rang De team is committed to driving this mission, no matter what. But, what is important for you to know is what it takes to remain committed to our mission of ensuring Rang De borrowers are not burdened with high-interest loans.
As a team, we are constantly changing and evolving every day. I realised, however, that it’s not enough for our team to be aligned with this mission. As fellow travellers on this journey, it is very important for you to know and appreciate what has changed and the importance of being on board with these changes. Among several other changes, here is a quick rundown of the important ones that have led to us charging a membership fee for Social Investors to invest across India:
Source of funding: Unlike in RangDe.org, we are no longer grant funded. We are funded by equity investments – all of which have come from our Social Investors – people just like you who are first-time investors and have entrusted us with the mission of reaching out to underserved communities. We would like to make sure that their belief, faith, and trust in us does not go in vain. We want to make sure that we use their money to power the team that in turn ensures that we are living our mission on a daily basis.
Curation of borrowers: We continue to work with credible Impact Partners who are doing stellar work on the ground and are committed to delivering credit responsibly. The focus when we build partnerships is not on ‘how many loans’ but on the impact narrative. The change that we will be able to bring about in the communities. Thus there are no targets for loans but the goal is to build responsible lending and borrowing practices in the community. This curation comes at a cost.
Our revenue model: In the past, our only source of revenue was the 2% interest share that we used to get from the borrowers. Besides this revenue, we were funded by grants. When we had to transition, we realised that if we continued with the same revenue model – the only way we could sustain ourselves was to either increase the rate of interest or give more loans. Both of these strategies would be counterproductive to the communities, and our mission. Once we realised that the interest share from the borrowers as our revenue model would not be healthy either for the community or Rang De, we had to think of alternatives.
We went back to our Social Investors and after deep conversations about the role Rang De played in their lives, we saw a pattern in their thinking. Our Social Investors were happy to pay a fee to help Rang De curate borrowers responsibly and to ensure we do not burden our borrowers with high-interest loans. Thus our membership plans came into being.
Seeker or Believer – You Choose!
Since we had never charged our Social Investors a fee, we took some time to design this and we have iterated a couple of times since then.
Members (Believers) would pay Rs.999 per year and in return enjoy higher returns and a host of social experiences.
Non-members (Seekers) would not pay anything but would get lower returns and limited experiences.
Result: More than 25% of our Social Investors became Believers. In the long run, this % had to be a lot higher to sustain Rang De.
Version 2 (Current):
Since the membership fee is being charged to cover the cost of curation of our borrowers, we have now linked it to the number of locations that a Social Investor can invest in. In this second version:
Members (Believers) pay Rs.999 per year and can invest in communities all across India.
Non-members (Seekers) do not pay anything but can invest in one state only. They get the same returns and access to the same social experiences as a member.
Thus, the rationale behind the membership fee co-relates to our cost of curation. If you would like to invest in a diverse community of borrowers, you would need to pay a membership fee to enable us to curate this diverse community for you.
We completely understand and acknowledge that for someone who earlier had the freedom to invest across geographies, this may sound restrictive. But this change, and accepting it is extremely important to enable us to continue our mission of expanding access to credit to more and more communities and helping them experience the power of social investing and responsible borrowing.