My wife told me that I write like Francis Schaeffer. Then she explained that she meant that I write long, hard to decipher, run-on sentences. Drat.
“When you reap the harvest of your land, you shall not wholly reap the corners of your field, nor shall you gather the gleanings of your harvest. And you shall not glean your vineyard, nor shall you gather every grape of your vineyard; you shall leave them for the poor and the stranger: I am the LORD your God.” ~Leviticus 19:9-10 (NKJV)
Maybe you could call those the founding verses of microfinance, I don’t know. As everyone and their kitten has now pointed out, the genius of this command was that it mandated aid for the poor, but also required the poor to work for it – it promoted industry, not laziness. And perhaps that’s also the genius of microfinance – it is help for the working poor, who use it to create and expand their businesses. Furthermore, while traditional “here, have some stuff” aid sometimes has the effect of stifling local businesses who have trouble competing with the more-efficient first world manufacturers of “stuff”, microfinance does just the opposite.
I think everyone has heard of Kiva, but here are three lesser-known microfinance sites.
We use Microplace personally, and thus know it best of all. It’s actually operated by PayPal.
Probably the biggest advantage Microplace has is that it’s a registered brokerage, meaning they can offer you interest on the microfinance loans you fund. (Interest that microfinance companies often collect anyways, even if they don’t share it with you, by the way.) You get a 1099 form at the end of the year just like you would with a bank, listing the interest you have received. And for many of the investments, the interest rate offered is better than what you’d find at a bank – as if helping the poor wasn’t incentive enough! (Rates for microfinance loans at Microplace have fallen, but currently range from about 0.5%-3.5%.) Your investments are not FDIC insured, of course, but because they are through large companies that make many, many loans, odds are extremely high that you will have your money returned.
Note that I just learned today that there are “secret”, higher-yielding investments available if you invest at least $1001. Please don’t think that this means that we are either especially rich or especially generous – actually, we’re just consistent. We’d been investing $50/month for a long time now, and today 20 of those investments matured simultaneously. I went to reinvest those funds, and was thus notified about the higher-yielding investments.
Probably the biggest downside to Microplace is that you make loans to a microfinance company, not to individuals directly. So you don’t get to see, or choose, exactly how your money will help someone. This also makes it look like there are fewer investments to choose from, since each single investment could really be turned into loans for many, many people.
2. World Vision Micro
World Vision used to have loans available on Microplace via the Calvert Foundation, but does no longer. So I went looking to see if I could find them through World Vision directly.
World Vision is a Christian organization, which is why I liked funding their investments through Microplace. Unlike with Microplace, you can fund loans to specific individuals, and you will receive updates on how their business is progressing. Money you donate is also tax-deductible, but…
… that’s because you’re really making a donation. You get to pick which individual’s loan you fund initially, but as soon as that loan matures, World Vision finds another loan to use “your” money for. You don’t get the money back, in other words. It’s a donation.
3. FINCA Lend a Hand
If you want to make a (repayed-to-you) loan with FINCA (Foundation for International Community Assistance), you can do so via Microplace. If you want to make a loan to a specific person via FINCA, you’ll have to do it via FINCA Lend a Hand. FINCA operates similarly to World Vision – you’re really making a donation, which will cycle back into their system after the specific loan you fund matures. According to Wikipedia they are “the innovator of the village banking methodology in microcredit and… widely regarded as one of the pioneers of modern day microfinance.”
Let me know in the comments if there are any great websites I’ve missed.