Nila Kartika Wati
On a Tuesday evening in a modest kitchen in Los Angeles, twelve women gather around a table, signaling the start of a ritual that serves as a cornerstone of survival for many immigrant communities. In the center of the table sits a sealed envelope containing the week’s collective contributions. There is no bank manager present, no digital ledger, and no legal contract. Tonight, the pot belongs to one woman who will use the funds to cover a looming rent deficit. Next week, the cycle continues, moving the lump sum to another member. This arrangement, known as a tanda, is a primary example of a rotating savings and credit association (ROSCA), a centuries-old financial model that remains a vital, if often invisible, component of the American urban economy.
While mainstream policy reports frequently overlook these informal gatherings, they represent a sophisticated response to systemic exclusion. In neighborhoods where traditional banking services are either inaccessible or viewed with distrust, these circles provide the liquidity necessary to absorb economic shocks. These networks are overwhelmingly sustained by women, who leverage social trust to create a safety net that public institutions have failed to provide.
The Mechanics of the Tanda and the Global ROSCA Tradition
The mechanics of a tanda, or a cundina as it is known in some regions, are deceptively simple yet sociologically complex. Each member of the group contributes a fixed amount of money at regular intervals—weekly, bi-weekly, or monthly. At each meeting, one member receives the full "pot" of collected funds. This continues until every member has had their turn, effectively providing a zero-interest loan to those who receive the pot early and a disciplined savings vehicle for those who receive it later.
Anthropologists and economists note that the ROSCA is a global phenomenon, not limited to Latin American cultures. In West Africa and the Caribbean, they are often referred to as "susu" or "partner" schemes. In East Africa, they are known as "chamas," while in the Philippines, the practice is called "paluwagan." In India, "chit funds" operate on similar principles. Despite the different names, the underlying logic remains consistent: when formal capital is unavailable, social capital becomes the primary currency.
Carlos Vélez-Ibañez, an anthropologist at Arizona State University who has studied these groups for decades, characterizes them as networks built on mutual obligation. Unlike the individualistic nature of the American financial system, which relies on credit scores and collateral, the tanda relies on "social collateral." A participant’s ability to borrow is rooted in their reputation within the community. In these circles, a damaged reputation is considered a far greater loss than the money itself, as it results in total exclusion from the community’s primary support structure.
A Chronology of Crisis and the Resilience of Informal Networks
The importance of these informal networks became acutely visible during the COVID-19 pandemic, a period that disproportionately affected immigrant women in the labor market.
March 2020 – The Initial Shutdown: As the United States entered lockdown, the "essential" nature of immigrant labor was highlighted. Women in these communities were heavily concentrated in sectors that could not transition to remote work: domestic service, elder care, street vending, and hospitality.
May 2020 – The Peak of Unemployment: According to data from the Migration Policy Institute, unemployment among immigrant women surged to 18.5 percent in May 2020. This was significantly higher than the 13.5 percent rate recorded for U.S.-born women during the same period. Furthermore, many of these workers, particularly those who were undocumented, were ineligible for federal stimulus checks or traditional unemployment insurance.
Late 2020 – The Sustenance of Mutual Aid: As federal aid proved insufficient or inaccessible, informal lending circles and mutual aid groups filled the gap. Organizers like Ojiugo Uzoma in Brooklyn reported that these circles continued throughout the pandemic, often pivoting to address immediate needs such as food security and medical expenses alongside traditional cash rotations.
April 2021 – Policy Recognition in New York: The resilience of these networks eventually forced a legislative response. In New York, a sustained campaign led by immigrant women organizers culminated in a hunger strike and massive protests. On April 6, 2021, the New York State Legislature approved a $2.1 billion "Excluded Workers Fund." The Fiscal Policy Institute estimated that this fund provided critical relief to approximately 290,000 workers who had been left out of federal pandemic assistance.
Data-Driven Insights into the Economic Disparity
The reliance on informal economies is a direct consequence of the "unbanked" or "underbanked" status of many immigrant households. Data from the Federal Reserve suggests that nearly 13 percent of Hispanic households in the U.S. lack a traditional bank account, compared to just 2.1 percent of white households.
For many immigrant women, the barriers to formal banking are multifaceted. A lack of a Social Security number, language barriers, and a lack of familiarity with the U.S. credit system often make traditional banks a "hazard" rather than a resource. Furthermore, the fees associated with low-balance accounts can be prohibitive. In this context, the tanda is not merely a cultural preference but a rational economic choice. It offers a way to accumulate capital for large purchases—such as a commercial stove for a food business or a security deposit on an apartment—without the predatory interest rates often found in the fringe banking sector (e.g., payday lenders).
The Gendered Burden of the Care Economy
The reason the work of maintaining these networks falls largely to women is rooted in the structure of the "care economy." Migrant women are overrepresented in both paid and unpaid care work. Sociologist Maud Perrier of the University of Bristol has noted that during the pandemic, migrant nannies and domestic workers were the primary organizers of their own safety nets.
Groups like the Matahari Women Workers’ Center in Boston and the National Domestic Workers Alliance (NDWA) in the United States became hubs for organizing. These organizations essentially scaled the "tanda" model, moving from small kitchen-table circles to larger institutionalized mutual aid funds. The skills required to manage a household or coordinate care for a neighborhood—logistics, empathy, and strict adherence to schedules—are the same skills required to manage an informal lending circle.
Risks and the Limitations of Informal Finance
While the tanda is an inspiring model of solidarity, it is not without significant risk. Journalistic and academic analysis suggests three primary areas of concern:
- Legal Vulnerability: Because these circles have no legal standing, there is no recourse if a member defaults or disappears with the pot. While social pressure usually prevents cheating, extreme economic desperation can sometimes break even the strongest social ties.
- Lack of Credit Building: One of the most significant drawbacks of the informal economy is that it does not help participants build a formal credit history. Without a FICO score, these women remain locked out of low-interest mortgages and business loans, regardless of how reliably they have paid into their tandas for years.
- Exclusionary Nature: Trust-based networks are, by definition, exclusive. A newcomer to a neighborhood or an immigrant with few social connections may find it impossible to join an established circle, leaving the most vulnerable individuals without any safety net at all.
From Informal Circles to Formal Policy
The success of these informal networks offers a blueprint for more inclusive financial policies. Some non-profit organizations, such as the Mission Asset Fund in San Francisco, have begun to "formalize" the tanda. By acting as a neutral third party that reports payments to credit bureaus, these organizations help participants build credit while maintaining the social bond of the lending circle. This model demonstrates that it is possible to bridge the gap between the kitchen table and the corporate bank vault.
The broader implication for policymakers is that the "safety net" is not just something the state provides; it is something that communities build for themselves. In cities like New York and Los Angeles, the economy relies on the stability of the immigrant workforce. When public policy ignores the informal systems that provide this stability, it risks the collapse of the very sectors—care, food, and service—that keep urban centers functioning.
Conclusion: Recognizing the Invisible Labor
As the night winds down in the Los Angeles kitchen, the women finish their coffee and prepare for the work week ahead. The envelope has been handed over, and the next round of contributions has been scheduled. This scene is repeated in thousands of homes across the country every week.
These women are not merely participants in a "cultural tradition"; they are informal bankers, social workers, and community stabilizers. Their work in the space between the state and the market is what prevents thousands of families from falling into homelessness or extreme poverty. Respecting this informal safety net requires more than just admiration; it requires a commitment from formal institutions to create pathways that recognize "social collateral" and ensure that those who carry the heaviest economic burdens are no longer forced to do so in total invisibility.
