Posts Tagged ‘microfinance’

Microfinance is…

Thursday, October 8th, 2009

Microfinance is a range of financial services targeted at people “at the bottom of the pyramid” who don’t have access to regular financial products like credit, savings and insurance. When people talk about microfinance, they are often referring to inreasingly popular “microloans.”

Do people pay back microloans?

Wednesday, September 23rd, 2009

Microloans are not simply charitable donations, but actual investments or business arrangements where there is some risk involved. Unlike regular loans though, the people who take out microloans usually can’t offer any typical type of collateral – something like a house or car that the bank could seize if the person defaulted on the loan. What motivates people to pay back microloans is a combination of a desire for a better life and, frequently, a commitment to other people in a lending group. For example, many micro-lenders are a part of a group that commits to paying back the loan. This means that if one person “defaults” the rest of the people in the group are responsible for covering their share. Not only does the borrower make a commitment to the institution lending the money, but also their friends or family. Talk about peer pressure!

Paying back a microloan means more than just fulfilling an obligation – it’s the honor of keeping your word and could mean a successful entrepreneurial venture and more money in the home. That may be why the payback rate is so high for microloans – there is actually a lower default rate for microloans than there is for student loans in the U.S.!  If you think it’s acceptable to take a “chance’ on an American student’s college education, then helping a man or woman provide for a family might be a no-brainer.

What is microfinance?

Tuesday, September 15th, 2009

Microfinance is a way of providing financial services like savings accounts, loans, and insurance to poor people around the world. It is aimed at people who may not qualify for typical financial services because they have limited resources or there are no financial institutions where they live.

By not being able to access financial services that are available to most everyone in more developed countries, these people have little means of improving themselves and their society. The goal of microfinance is to break this cycle of poverty by empowering people who have great ideas, no matter how poor, with the tools and resources to achieve them.

Aren’t health and a clean environment human rights?

Monday, August 10th, 2009

Deciding which causes you want to support – with time or money – can be confusing. If you give to just one cause, you might feel like you’re neglecting something else you care about, and it seems like some of the categories overlap anyway. Aren’t health and a clean environment human rights? It depends on who you ask. Even defining exactly what it means to be or have a human right isn’t simple.

The UN’s Universal Declaration of Human rights and other major documents have listed health and a clean environment as “human rights,” but what might be more relevant for you as a budding philanthropist to realize is that giving to an organization with a specific mission can have a broad impact. Many microfinance and poverty causes aim to help their constituents develop sustainable livelihoods – which has environmental and health implications as well financial ones. Helping to preserve and restore local environments can have major health and economic benefits as well. All of these things make people better able to live happy, meaningful lives, which is the true spirit of human rights.

The point is to find a cause that excites you and in which you will enjoy becoming involved, whether by giving money or time. The impact you make might be far wider-reaching than you think.

A Microloan is…

Monday, June 29th, 2009

A microloan is a relatively small amount of money (usually from $100-$25,000) lent to an individual or entrepreneur to help him or her get a business up and running. Microloans are generally targeted at people who are unattractive to large financial institutions because they don’t have good enough credit or collateral and are therefore considered risky customers.