Investment To End Poverty: Microedit or Microfinance

brettjohn:

I know this has been around for several years already but I thought it would be interesting for those who didn’t know about this type of contribution that not only helps to put an end to poverty but also sees a return on your investment. This is something that has held my interest since its inception.

Here’s how it works;

Without donating a penny, you can help end poverty in a very real way. Investing in microcredit or microfinance is not a donation or charity. Like other investments, the money is always yours. You even earn a small amount of interest. Yet for every $1,000 you invest, you can end poverty for several entire families in the developing world every year. That is why the United Nations declared 2005 to be the International Year of Microcredit and why the founders of the microcredit movement were awarded the Nobel Peace Prize in 2006. Major media articles have sung the praises of microcredit, also known as microfinance and microlending:

New York Times: Tiny Loans Make a Big Difference in Lives of Poor
USA Today/Associated Press: Microcredit pioneers win Nobel Peace Prize
Wall Street Journal: A new way to do well by doing good
BusinessWeek: Microfinance funds lift poor entrepreneurs—and benefit investors
The Economist: Microcredit in India, High finance benefits the poor
For a powerfully inspiring talk by the Nobel-prize-winning founder of the first microcredit institution

Example: Working 10 to 12 hours six days a week, 36-year-old Supratno drives a pedicab (bicycle taxi with three wheels) in the suburbs of Jakarta, Indonesia. As over 50% of his daily income goes to pay rental fees to the large syndicate which monopolizes pedicab rentals in Jakarta, he barely ekes out a living for his family of four. His daily income averages about US $4 per day, which is only enough to put rice and vegetables on the table for his family twice a day. He cannot afford to pay the small fees for administration and mandatory school uniforms to send his children to public school.

Taking out a microcredit loan of $200 from money you invested, Supratno buys his own pedicab for the first time in his life. As all income now goes directly to him, his daily income is more than doubled. Within a year, he pays back the $200 loan and can now afford to send his children to school and give them three good meals every day. You pulled this family out of poverty!

The microcredit process is actually a little more involved than described above. Business plans are required to be submitted to a volunteer cooperative and loans are made in increments, but you get the picture. Your loan of $1,000 for one year can literally pull several entire families out of poverty for good in the developing world. The interest you receive on your microcredit investment is low—generally up to four percent—but you have the satisfaction of knowing that for every $1,000 invested, you have helped several families every year to pull out of poverty and live a much better life! I’d say that’s a pretty good return on your investment.

For a table of respected of microedit organisations go HERE
I hear that the Calvert Foundation is quite a good one to look in to. They also give you the choice of which region you would like to invest.
For those outside the USA, see Oikocredit
For those who can’t afford the typical $1,000 minimum investment then try Kiva. They have a $25 minimum.

Although the returns on investments are relavtively small, they are all secure investments. If you are looking to invest money for your retirement this is something to look in to as you will make a gain on your investments and you will also be helping countless families get out of poverty for good.

Now I’m not expecting you all to invest, I thought that raising awareness to this as an option to just blind donations is something to think about. Knowing that the money will be going to good use.