I’ve heard of something called “microfinance”, that can help the very poor in developing nations.
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[li]What is it?[/li][li]How does it work?[/li][li]Hi Opal[/li][li]What are reputable outfits I can make a small donation to?[/li][/ol]
Microfinance is the concept that very small loans (such as US$25-$100), which are often aimed at women, can make a major difference in the lives of very poor people in developing nations. People can use this money to start a small business that can dramatically improve their own lives. Microfinance loans from a legitimate lender operating as an aid organization usually have a very low interest rate, and they brag of very high repayment rates. Microfinance is supposed to be about encouraging entrepreneurship and creating sustainable economic development at the very lowest of the grass roots level.
There are a lot of studies that show that it is great. There are also a lot of studies that show it doesn’t help as much as we’d like. I’m not sure anyone knows precisely what effect microfinance has in the macro sense. (I doubt it’s very much.) However, it is clear that it has helped a lot of people on personal levels. That much is irrefutable.
Microfinancing was pioneered by the Grameen Bank in Bangladesh, which is led by Mohammed Yunus, who won the Nobel Peace Prize (NOT the prize for Economics) several years ago for his work. Since then, it has really caught on and is rather trendy in international development at the moment.
The most well-known microfinance deal that you can donate with is Kiva. I don’t know what the terms of their loans are, but I know people who have worked for them (someone a year behind me in grad school spent last summer interning with them in Bolivia, for example) so I know that they’re legitimate. I’ve never donated with them, but it is my understanding that you will probably get your money back, although most people then choose to reinvest it in a new project.
Bosda, search for threads with the word kiva. Microloans are a great idea, good on you to join the club.
You’ll probably get your money back, but you won’t get any interest or material benefit other than the warm feeling of helping someone. I’m just pointing this out because, while Kiva does make it clear on their website, some people might assume that because you’re lending money, you’ll get interest. The banks that are lending the money to the people on Kiva’s website sometimes charge interest, but Kiva doesn’t.
However, every donation to Kiva gets you a tax deduction.