Tuesday, July 10, 2007

Microloans - A Helping Hand for the World's Working Poor

The last time you had twenty-five dollars in your wallet what did you spend it on? A new blouse? A couple of movie tickets? Dinner at your favorite restaurant? Most of us lay down the bills and never give it another thought. Twenty-five dollars is a drop in the bucket.

What if the twenty-five you spent on a book at Borders could change a person's life? That twenty-five was all it would take to buy supplies that would help a mother in Tajikistan open a fruit stand. With that twenty-five she'd have the means she needed to run a successful business and have a regular income for her family.

I think because we live in such an affluent country where the cost of living is so high, we forget that the majority of our fellow man survives on less than two-hundred dollars a year. Our pocket change can truly be the difference between success and failure to the working poor in developing countries.

So how do you get your money to where it can do the most good? I recently discovered Kiva.org and the idea of microfinance. Kiva becomes the middle man by introcducing you to small business owners in other countries who cannot get loans from the traditional banking system. Usually this occurs because the amount they need is too small to be of any concern to a lending institution. Without established credit or collateral, reliable, industrious people fall through the cracks and have to give up their dreams of bettering the situations of their families.

Kiva.org give you a way with to connect with a man in Cambodia who needs $500.00 to buy more pigs and expand his farm. This will help him provide for his wife and four children. He also makes about six dollars a day from washing cars and motorbikes, which is enough to pay for his children to go to school.

With Kiva.org you pledge to loan him twenty-five dollars and so do other kind souls around the world. When his goal of $500.00 is reached a microfinance company in his country will loan him the accumulated amount.

You might be wondering if this is actually a loan how do you get your money back? You loan your money through Pay-Pal and when the business owner repays the loan in full, the money is redistributed to you and the other investors and deposited back into your Pay-Pal account.

There is slight risk involved but amazingly enough over 90% of the interest-free loans are repaid in full. And if for some reason the money is not repaid you really have not lost much in your attempt to help move another toward a better life. You've lost the price of a night at the movies or a cheap pair of shoes.

It's easy to establish a Kiva account. After you've made a loan to one of the business owners listed you can follow their progress on the journal section of the site. Some Kiva.org contributors have gone so far as to visit the people they've helped and see their good will in action.

If you'd like to get involved in changing the world one person at a time go to http://www.kiva.org/.


Anonymous said...

Have you personally done this yourself yet? Just curious. Sounds like a GREAT idea.


Lisa McGlaun said...

No, Tina, but I plan to. Actually I thought it would be a great gift idea. You can buy gift certificates that other people can use at Kiva.org.

I also thought it might be fun for my children to invest and then watch the progress of the person they helped.