Microfinance/Other Public Interest Organization
Resource List
Nearly half the world’s population survives on less than $2 per person a day. Of these, many have less than $1 per day. The organizations below are committed to helping improve this deplorable situation. All were either presenters or had tables at the 2009 Pacific Northwest Microfinance Conference. Selected materials from the conference are available at www.spu.edu/depts/sbe/se/microfinance/sessions.
What is microfinance? Many poor people in underdeveloped countries do not have access to the financial services that most of us have—at least until recently—taken for granted. Business loans are one of these missing services. We all know now what happens to business when credit dries up! But in most developing countries, non-predatory credit has never been available to ordinary people. For example, in Mexico, even “legitimate” banks and lenders impose annual interest rates on poor borrowers that typically range from 50% to 120% a year, and less scrupulous lenders may charge much more. (http://www.businessweek.com/magazine/content/07_52/b4064038915009.htm)
Microloans are small loans, typically anywhere from $100-$2500 or so. With such a microloan, a woman who sells tamales out of her home in Mexico can buy a cart to expand her territory. Or an Afghan farmer can buy more seed. Microloans are not charity, but place the borrower on a more equal footing with the lender.
Interest charged by microfinance institutions (MFI’s) is around 25%, considerably less than from local commercial lenders. Such interest rates are necessary because of the huge costs MFI’s run meeting with and checking up on borrowers of relatively small amounts who live in far flung remote areas. In Muslim areas, where interest is not allowed, fees are charged instead.
Kiva (http://www.kiva.org/) is the first of the online person-to person microfinance organizations. Based in San Francisco, Kiva was founded by a couple, Matt and Jessica Flannery. Matt grew up in Gig Harbor and still has family here.
Kiva has loaned more than $70 million in just a few years, with a minuscule default rate of 1.8%. Kiva does not charge interest itself, so lenders will not receive a financial return on their principal. Kiva does, however, partner with local MFI’s to give those MFI’s an online outlet to the lender world.
For as little as $25, you can participate with others from around the world to make microloans to specific needy small businessowners in other parts of the world. You can select the borrower. Based on historical data, you have a roughly 98% chance of being repaid. At that point, you can make another loan or get a refund of your money. If you make more than one loan at a time, you can use the combined repayments from the loans to make additional loans if you so choose.
If you prefer, you can make a charitable donation to Kiva for its administrative expenses.
One fun way to participate in Kiva is to join a lending team. Just as you would if you didn’t belong to the lending team, you select the loans you want to make, the money remains yours, and is not commingled with other team members, but the loan counts toward the team total.
Join the 65th Street Change Gang Kiva Lending team at http://www.kiva.org/community/viewTeam?team_id=4189. It’s open to anyone, not only members of the Change Gang. For more information and tips on how to participate, contact me at pokano@rmlaw.com. I will be happy to answer any questions you might have or even come to your house to guide you through the online process. If you are leery of using your credit card online, contact me—we can work something out.
RESULTS (www.results.org or www.resultsseattle.org) has been characterized by more than one person as the most important nonprofit you’ve never heard of. With chapters in the United States (including Seattle) and other countries, this 20+ year-old organization is devoted to ending hunger and poverty around the world. Dr. Muhammad Yunus, the 2006 Nobel Peace Prize winner, is on its board.
RESULTS is currently campaigning globally for education, economic opportunity, global health, and IMF/foreign aid reform. It has both a lobbying wing and a 501(c)(3) public education wing. Sen. Patty Murray (D-Wash.) has said, “If members of RESULTS aren’t talking about it, we won’t hear about it.”
The organization is promoting microfinance as a part of its economic opportunity and foreign aid agenda. Dr. Yunus has said of RESULTS that “no other organization has been as critical a partner in seeing to it that microcredit is used as a tool to eradicate poverty and empower women.”
One of my former colleagues, Bob Dickerson, is an active member. If you would like to get in touch with Bob, contact him at (206) 285-0375 or resultsbob@yahoo.com and let him know you heard about RESULTS from me. Local meetings are held at the Wallingford United Methodist Church, 2115 N 42nd Street (at Bagley) in Seattle. Their next meetings are on 5/13, 6/17, 7/15, 8/12, 9/16, 10/14, 11/18, and 12/9, from 7 pm to 9 pm. They also have monthly national conference calls with speakers of note. Local members may participate in these calls. Volunteers or donations are welcome.
Agros International (www.agros.org) is a unique Seattle-based nonprofit that focuses on promoting land ownership by the rural poor in Chiapas, Mexico, and Central America. The organization buys up land and sells it to poor farmers, who would otherwise never have a chance to own their own land. So far, Agros has assisted 38 different villages. Agros’ approach is holistic: in addition to making land purchases available, the organization also provides assistance in community building, health care, education, adult literacy, spiritual growth, housing, community structures, irrigation, and sustainable economic growth. You can donate, buy items such as livestock or irrigation pipe, or volunteer.
The organization was founded by Skip Li, a local attorney. I knew Skip when he was Dan Evans’ general counsel in the Office of the Governor.
Esperanza (www.esperanza.org) is also a Seattle-based organization, devoted to community-based sustainable development for the elimination of poverty in the Dominican Republic. Founded by former Seattle Mariners’ catcher, Dave Valle, the organization provides financial services through microloans, literacy courses, vocational training, and health care services.
Esperanza is a Kiva field partner. You can make microloans to Esperanza clients at www.kiva.org, or you can donate directly to Esperanza.
Acholi Beads (http://acholibeads.com/) This is a for-profit organization dedicated to assisting the Acholi women of Uganda form a cooperative for the manufacture and sale of Acholi beadwork, made from tightly wound strips of recycled paper. The Acholis are refugees from the longest-running war in Africa. You can see and buy the beadwork online. If you would like to see a sample upclose, I have a bracelet I can show you.
Grameen Foundation (www.grameenfoundation.org) This nonprofit assists microfinance organizations in promoting and growing microfinance. Its technology division is based in Seattle. The technology division established the Village Phone Initiative, creating thousands of cellphone microbusinesses that provide vital communication sources for remote African villages and needed income for the phone operators. The foundation has also developed open source software for MFIs, provided capital for MFIs, produced a series of white papers and manuals on microfinance, and created a Progress out of Poverty Index to track poverty reduction among borrowers. The Seattle Technology center can use volunteers to, among other things, translate their open source software into other languages, collect product requirements, perform market research, and assist with graphic & web design.. Contact (206) 325-6690. You can also donate.
Unitus (http://www.unitus.com) also assists microfinance organizations by providing business, leadership, technical, and technological assistance. Unitus takes donations.
Wokai (http://www.wokai.org/index.php) is a brand new MFI that focuses on making microloans in China. It appears to be more along the Kiva model than the Visionfund or Hope International model.
Oikocredit (http://www.oikocredit.org/site/en/) began in Europe and has a U.S. branch. Unlike Kiva, in which your loan does not earn you interest, Oikocredit sells shares, allowing you to invest with the opportunity to make a small return in microfinance. Currently returns are capped at about 2%.
VisionFund (www.visionfundinternational.org) is the microfinance arm of World Vision. Unlike Kiva, you cannot select the borrower and you won’t get your money back. The money will go to funding microloans to unspecified groups or individuals and repayments will go toward future microloans.
Hope International (http://www.hopeinternational.org) is a Christian-based microfinance organization. It appears to operate similarly to Visionfund International.
Global Washington (http://www.globalwa.org) is a membership association that promotes and supports the global development sector in Washington State. Its members include nonprofits, foundations, businesses, governments, and academic institutions.
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