Thursday, December 13, 2012

Simple Christmas idea #13 -- Make a micro-loan gift

Sharing our abundance...

I've already moodled this idea before, but it's worth repeating: if we really want to "live simply so others may simply live," it's always a good thing to share our abundance with those less fortunate. One of my favourite ways to do this is through a micro-loan organization. The idea of giving small loans with very low interest to entrepreneurs in the developing world is catching on more and more, and it's easy for us to join in!

The thing is that people who are poor don't exactly have any collateral to offer in exchange for a bank loan. Providing proof of steady employment and a verifiable credit history are pretty much impossible for a woman with a family in a small village in Africa, so how can she be expected to apply for traditional credit to start her own business? Just the interest rates alone may sink her. And interest rates applied to the developing world by our developed world are a huge part of the reason that our brothers and sisters in developing countries are so far behind us in their standard of living.

There are those who question charging interest at all... but after years and years of sending donations to people in the developing world, we are realizing that free money creates an unhealthy imbalance between donor and recipient. Giving a loan at an interest rate that is easily repaid, however, allows for both sides to feel good about their efforts. Muhammad Yunus, founder of the Grameen Bank in India, understood that people feel better when they repay a loan rather than receive charity. He received a Nobel Peace Prize in 2006 for his pioneering efforts in microfinance, and the award brought his work into the limelight -- after he'd been at it for 30 years! He began in 1976, lending small amounts of his own money at low interest to help rural people start their own businesses. 35 years later, there are many organizations that do the same. Punch microloans into your favourite browser, and see how many hits come up!

My own experience has been through www.kiva.org. In 2009, a friend gave my daughters each $25 for Christmas to invest through Kiva. Since then, they've recouped their money twice, and will soon be able to reinvest again because a Sewing co-operative in Paraguay has almost repaid one loan. A music store owner in Honduras and a food store operator in Liberia are doing alright, too.

What we really like is that we're not sending money away and never hearing whether our donation made a difference. We can see that it did, and that makes us want to continue our microfinance efforts.

If you're interested in giving an entrepreneur in the developing world a low-interest loan, there are many organizations with whom to work. I know that Kiva works well, but if you've given through another organization and can recommend the experience, I'd love to hear about it. Any way that we can share resources with our brothers and sisters in the developing world is a project worth taking on!

1 comment:

  1. I LOVE Kiva, I have three loans with them at the moment. There was another orginization I heard of...you can write letters to the women...I think you sponser them for a period of time...I can't remember the name of it though, darn it.

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