Bikes for the World was recently (July 31, 2011) featured in the Washington Post where reporter Susan Svrluga followed a shipment of bikes from the hands of local donors to new owners in Costa Rica.  You can read the article and view the slide show here.  The article prompted an outpouring of bicycles and inquiries into how the Bikes for the World program works.  Director, Keith Oberg gives insight below on one important issue: 

Frequently asked questions:

Do you sell bikes to individual recipients?  (Following the publication of an article on Bikes for the World (Washington Post, July 31, 2011), several readers noted that recipients in Costa Rica were charged for their bikes ( “The bikes were being sold for $20 to $40, with loans of about 1.5 percent interest.”), and inquired why.  This faqsheet attempts to explain as clearly and briefly as possible why some bikes are sold. )

The mission of Bikes for the World is to put old bikes to productive use.  We do this through donating large numbers of appropriate bicycles to carefully selected and qualified non-profit partner agencies in developing countries. 

A major objective is to strengthen these organizational partners to enable them to fulfill their respective missions—whether employment, health care delivery, or education--and serve more and more people in their communities. 

We do not sell these bikes to our institutional partners.  Rather, we donate all contents.  However, this does NOT mean that bikes are ultimately given to individual recipients.   Sometimes they are gifted, particularly in the case of students such as in our projects in El Salvador, the Philippines, and (forthcoming) Swaziland—which were not the subject of the Washington Post article--but more often—in the cases of our partners in Costa Rica, Panama, Ghana, and Uganda--they are sold at modest prices.  The reasons are several, both practical and philosophical. 

Our objective is not to weaken our partner programs through unilaterally imposing requirements which may not reflect local realities and costs.  Instead, we work in PARTNERSHIP with them to jointly determine how best to build a sustainable, large-scale operation that effectively benefits more and more people.

A key element of this approach is that our local partners determine the terms on which the bikes are distributed to individuals.  These terms reflect their respective missions and approaches, and range from sale at modest prices and often on credit, to outright gifting. 

The practical reason is that there are significant costs in transporting, reconditioning, and delivering the bicycles to individual recipients.  Someone has to pay these expenses.  Placing this financial burden on the partner agency drains the local organization of scarce resources, keeping the program small, benefiting fewer people, and making the local agency dependent on external resources and thereby jeopardizing the project’s long-term sustainability.

Asking Bikes for the World to assume this burden presents similar issues.  Our strength is in collecting and donating high-quality, appropriate material aid.  Assuming the full financial burden of shipping, reconditioning, taxation, etc. would compel us to reduce our shipments, reduce the purchase of critical and complementary spare parts and tools, and divert scarce resources to fundraising.  Instead of having donated 54,000 bicycles and hundreds of thousands of dollars of spare parts and accessories, used and new, over the last six years--and benefiting hundreds of thousands of individuals--we most likely would have shipped less than half of that number, with correspondingly fewer benefited individuals, families, communities, and partner agencies.

1. People who receive free bikes generally do not use them as productively as individuals who pay something for them.
2. When bicycles are offered for free, the tendency is for individuals who don’t need a bike to use political and other leverage to access a bike, and many subsequently sell the bike for a windfall profit (as opposed to those who pay for a bike, use it, and benefit in proportion to their own personal, productive use of the bike).
3. We want an established, well-disciplined institutional partner, and not the individual, to capture and “windfall” profit from the receipt of a bicycle donated by Bikes for the World (and the original donors in the United States), and put this “surplus value” to broader community use.    

Let’s take the specific case of FINCA Costa Rica, a micro-credit and investment programs helping people become economically more productive.  Consistent with its mission, FINCA Costa Rica requires recipients to pay something for services and assume responsibility (and build skills) for eventual independence and sustainability.  Why did these individuals not receive these bikes totally free??  Well, not only would this be inconsistent with FINCA’s mission to support productive small businesses in poor communities, it would ignore the following expenses and subsidized services to the community:

·         International transport of the bicycle (paid by FINCA)
·         Transport of the bicycle to communities lacking access to efficient markets (paid by FINCA)
·         Reconditioning of the bicycle (including in some cases purchase of spare parts) (paid by the FINCA-sponsored community groups)
·         Credit-financing of the purchase to individuals having no other credit opportunities, at the bargain rate of 1.5% annual interest (compare this to consumer interest rates in the United States!) (provided by the sponsoring community group)
·         Provision of a high-quality bicycle – these are often above department-store quality.
·         Finally, any surplus from the sale is retained by the community group – in this most recent case cited by the Washingotn Post, the Bribri Indian community—for lending to other micro-businesses.  

In exchange for our donation, the receiving groups pay the direct commercial shipping costs, which in this case come to just under $4,000 including US trucking, freight forwarder's fee, ocean freight, and express-mailing of documents.  Because the groups are paying for the shipping, they can tell us what to ship, and we have the incentive to improve the quality of appropriateness of the contents--which in this case is to maximize the number of smaller adolescent (24" wheel) mountain bikes, 20" BMX bikes, and 26" mountain and one-speed cruiser bikes...and lots of spare parts. 

FINCA Costa Rica has worked for more than 25 years in economically marginal communities promoting, training, and supporting member-managed "community banks" -- comprising 10, 20, or more low-income individuals who pool their money and lend among themselves as needed to expand their "micro-businesses."  Savings mobilization and capital for business expansion, combined with training, are key factors in self-help programs building economic independence. 

In this case, the introduction of bicycles has a two-fold impact.  Each community group receives an injection of capital in the form of an allotment of used bicycles; the group takes charge of reconditioning these bicycles, covering the costs of repair; and then the group sells these bicycles locally, to members and to the general public, for affordable transport.  The group nets out the costs, repaying FINCA for the bicycles, and retaining the "profit" for investment in its members businesses.  The bicycles are used by recipients to get to work, or accomplish work, whatever that may be--marketing produce, delivering services, etc.

The actual numbers are quite modest. As an example, in the case of this highest price cited--a $40 sale--one would deduct approximately $15 for repair labor and parts costs--some of which would remain locally--then deduct another $10 or $15 payment to FINCA to cover its handling expenses and the costs of shipping.  All costs are covered.  As a result, the program can reach thousands of people, the activity is sustainable, and the bikes go for productive purposes, to people who will take care of them because they are "invested" and motivated in the successful use of them. 

In a future faqsheet, I will discuss the cases of “cycle-to-school” projects, where partners in El Salvador and the Philippines donate bikes to students using them to attend and stay in school.  In these cases, Bikes for the World and third parties fully subsidize the costs of collecting, shipping and reconditioning the bikes.  To qualify for receiving a bike, individual students must meet certain criteria including, among other things, minimum distance to school, academic achievement, and other indicators of risk of dropping-out.  Although students get the bikes at no cost, they must "earn" them through these different measures, both before and subsequent to receiving the bikes.     

--Keith Oberg, Director ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )