Micro lending
Micro lending is a form of a peer-to-peer economy. It consists of lenders giving a relatively small amount of money (50-500), and the borrowers paying the credit back with interest in most cases. These loans are issued by individuals (or aggregated across a number of individuals who each contribute a portion of the total amount) rather than credit unions due to the perception of risk by banks. Often, microloans are given to people in Third World countries to help them start small businesses. Because the credit of these borrowers may be quite low and the risk of default high, microloans command above market interest rates making them enticing for some investors. As a result, lenders may earn a better return than through traditional savings or CDs.
Kiva
Kiva is the most acclaimed microlending site, and the site that I lended on.
From kiva website ”We do this by crowdfunding loans and unlocking capital for the underserved, improving the quality and cost of financial services, and addressing the underlying barriers to financial access around the world. Through Kiva's work, students can pay for tuition, women can start businesses, farmers are able to invest in equipment and families can afford needed emergency care.” -- By lending as little as $25 on Kiva, you can be part of the solution and make a real difference in someone’s life. 100% of every dollar you lend on Kiva goes to funding loans.
Kiva started as a pioneer in crowdfunding in 2005, and is constantly innovating to meet people’s diverse lending needs.
When a Kiva loan enables someone to grow a business and create opportunity for themselves, it creates opportunities for others as well. That ripple effect can shape the future for a family or an entire community. Kiva loans have a historical repayment rate of about 97% (this number fluctuates slightly so check Kiva's homepage for the current rate). Kiva does not guarantee repayment for any loans crowdfunded on the Kiva website.
Micro lending is a form of a peer-to-peer economy. It consists of lenders giving a relatively small amount of money (50-500), and the borrowers paying the credit back with interest in most cases. These loans are issued by individuals (or aggregated across a number of individuals who each contribute a portion of the total amount) rather than credit unions due to the perception of risk by banks. Often, microloans are given to people in Third World countries to help them start small businesses. Because the credit of these borrowers may be quite low and the risk of default high, microloans command above market interest rates making them enticing for some investors. As a result, lenders may earn a better return than through traditional savings or CDs.
Kiva
Kiva is the most acclaimed microlending site, and the site that I lended on.
From kiva website ”We do this by crowdfunding loans and unlocking capital for the underserved, improving the quality and cost of financial services, and addressing the underlying barriers to financial access around the world. Through Kiva's work, students can pay for tuition, women can start businesses, farmers are able to invest in equipment and families can afford needed emergency care.” -- By lending as little as $25 on Kiva, you can be part of the solution and make a real difference in someone’s life. 100% of every dollar you lend on Kiva goes to funding loans.
Kiva started as a pioneer in crowdfunding in 2005, and is constantly innovating to meet people’s diverse lending needs.
When a Kiva loan enables someone to grow a business and create opportunity for themselves, it creates opportunities for others as well. That ripple effect can shape the future for a family or an entire community. Kiva loans have a historical repayment rate of about 97% (this number fluctuates slightly so check Kiva's homepage for the current rate). Kiva does not guarantee repayment for any loans crowdfunded on the Kiva website.
How it can effectively fight poverty
A small boost in micro lending to the developing world could lift more than 10.5 million people out of extreme poverty. Currently, 836 million people – or 12% of the world’s population – experience extreme poverty. So how does micro lending help? By lending money or contributing to a fund to lend money can help some people out of extreme poverty. This won't solve poverty by itself, but by lending money and giving a hand we can make a difference.
A small boost in micro lending to the developing world could lift more than 10.5 million people out of extreme poverty. Currently, 836 million people – or 12% of the world’s population – experience extreme poverty. So how does micro lending help? By lending money or contributing to a fund to lend money can help some people out of extreme poverty. This won't solve poverty by itself, but by lending money and giving a hand we can make a difference.
Poverty Worldwide
What this entire project is about is finding ways we can fight poverty. As you can see by the graph above, we have been doing a good job of slowing it down, going from 80% extreme poverty in 1820, and down to around 22% now. The question is: how do we continue this growth and keep people out of poverty? The question is a difficult one and not in the slightest straight forward.
One professor I emailed (Douglas Allen of SFU) said:
There is only one way to fight poverty. You must allow people to hold property rights over assets. This means that people must be owners in the sense that they can i) exclude others from the asset, ii) reap the rewards from their asset, and iii) resell or trade the asset.
The asset can be someone’s own human capital, land, physical capital, whatever. It would appear from history that ownership over one’s self and ownership over land are the most important.
Ownership is never perfect, and is always complicated, but a certain threshold of private property seems essential to economic growth.
Consider the two pictures that I have attached. They are of the *same* intersection, forty years apart. Look at those pictures, they are unbelievable. They come from the city of Shenzhen, China. Forty years ago it was a poor fishing village, now it is the wealthiest city in the world.
What this entire project is about is finding ways we can fight poverty. As you can see by the graph above, we have been doing a good job of slowing it down, going from 80% extreme poverty in 1820, and down to around 22% now. The question is: how do we continue this growth and keep people out of poverty? The question is a difficult one and not in the slightest straight forward.
One professor I emailed (Douglas Allen of SFU) said:
There is only one way to fight poverty. You must allow people to hold property rights over assets. This means that people must be owners in the sense that they can i) exclude others from the asset, ii) reap the rewards from their asset, and iii) resell or trade the asset.
The asset can be someone’s own human capital, land, physical capital, whatever. It would appear from history that ownership over one’s self and ownership over land are the most important.
Ownership is never perfect, and is always complicated, but a certain threshold of private property seems essential to economic growth.
Consider the two pictures that I have attached. They are of the *same* intersection, forty years apart. Look at those pictures, they are unbelievable. They come from the city of Shenzhen, China. Forty years ago it was a poor fishing village, now it is the wealthiest city in the world.
Other professors' ideas:
Alexander Karaivanov - Economics Professor at Simon Fraser University writes...
On your last question - personally I think the best poverty cure is economic growth/development - if a country gets richer on average, the number of poor is reduced. This is what the data show, not an opinion. Yes, income inequality may be rising too in many places but still that's a much slower process
Kent Hickman - Retired Professor at Gonzaga says...
I can say that where I teach in Finland, they have much less poverty and virtually no homelessness compared to the United States. They believe in a “social guarantee” and are willing to pay high taxes to strive toward everyone in the country having access to a first-rate education and is not homeless. You might like to familiarize yourself with a bit of a philosophical discussion of society and politics and economics that is captured in these two videos:
The first is a quick primer on John Rawls
https://www.youtube.com/watch?v=5-JQ17X6VNg
The second is a TED talk by Daniel Areily that is related to Rawls work.
https://www.youtube.com/watch?v=2tCcoSRZqVY
You can read more of my interviews by going to the 'interviews' page.
What more can we do to help with poverty worldwide?
2) Concern Worldwide US: This non-governmental organization has been working towards the elimination of extreme poverty since its founding in 1968. Work, including emergency response and long-term development, is mostly focused on countries ranked in the bottom 40 according to the UN Human Development Report.
3) International Rescue Committee: This enormous organization directed over $350 million to those in need in 2011. They provide emergency aid in 42 countries, aiming to permanently improve life for victims of violence and oppression.
4) SIGN Fracture Care International: This non-profit works to provide orthopedic treatment to trauma victims in the developing world by training and equipping local surgeons. Proper treatment minimizes the financial burden placed on trauma victims and their families, giving them hope and fiscal security.
5) InterAction: This is a coalition of U.S. based NGOs that are aiming to eliminate poverty on an international scale. The partnerships allow each individual organization to multiply its impact by providing important connections, insight, and capital.
6) International Child Care: The Christian health development organization is working to alleviate many of the causes of poverty in Haiti and the Dominican Republic. By providing vital medical care for children and their families, ICC allows them to lead happier, healthier lives in less danger of falling into poverty.
7) Fistula Foundation: This organization funds the treatment of obstetric fistulas in the developing world. Obstetric fistulas occur when labor is obstructed during childbirth. They leave women incontinent, which can ruin her life. Her husband, family, and community often abandon her because of her smell. This injury is common when women give birth at home without access to trained medical help, and can be fixed with $450 surgery.
8) VillageReach: Since 2000, this organization has worked to improve the developing world’s access to healthcare by partnering with businesses, governments, nonprofits, and other organizations. They aim to strengthen local infrastructure in underserved rural areas, and facilitate the delivery of medical supplies. This effort specifically helps fight rural poverty by allowing remote communities to lead better, more fruitful lives.
9) Action Against Hunger (ACF-USA): This organization’s efforts are primarily aimed at ending global hunger. Their work saves lives by fighting malnutrition, especially in times of crisis or conflict. Programs are integrated with local and national systems to ensure long-term solutions that tackle the underlying causes of malnutrition.
10) Life In Abundance: This interdenominational Christian organization aspires to empower the local Church to end poverty in Africa’s developing areas. Their programs aim to create holistic community improvement by focusing on health, financial security, education, and social participation. By encouraging and enabling local Church leadership, long-term transformation is achieved and African families rise out of poverty.
11) Oxfam
Oxfam is a confederation of 20 independent charitable organizations focusing on the alleviation of global poverty, founded in 1942 and led by Oxfam International. It is a major nonprofit group with an extensive collection of operations. Winnie Byanyima has been the executive director of Oxfam International since 2013
Alexander Karaivanov - Economics Professor at Simon Fraser University writes...
On your last question - personally I think the best poverty cure is economic growth/development - if a country gets richer on average, the number of poor is reduced. This is what the data show, not an opinion. Yes, income inequality may be rising too in many places but still that's a much slower process
Kent Hickman - Retired Professor at Gonzaga says...
I can say that where I teach in Finland, they have much less poverty and virtually no homelessness compared to the United States. They believe in a “social guarantee” and are willing to pay high taxes to strive toward everyone in the country having access to a first-rate education and is not homeless. You might like to familiarize yourself with a bit of a philosophical discussion of society and politics and economics that is captured in these two videos:
The first is a quick primer on John Rawls
https://www.youtube.com/watch?v=5-JQ17X6VNg
The second is a TED talk by Daniel Areily that is related to Rawls work.
https://www.youtube.com/watch?v=2tCcoSRZqVY
You can read more of my interviews by going to the 'interviews' page.
What more can we do to help with poverty worldwide?
- create more jobs
- donate to foundations like unicef...
2) Concern Worldwide US: This non-governmental organization has been working towards the elimination of extreme poverty since its founding in 1968. Work, including emergency response and long-term development, is mostly focused on countries ranked in the bottom 40 according to the UN Human Development Report.
3) International Rescue Committee: This enormous organization directed over $350 million to those in need in 2011. They provide emergency aid in 42 countries, aiming to permanently improve life for victims of violence and oppression.
4) SIGN Fracture Care International: This non-profit works to provide orthopedic treatment to trauma victims in the developing world by training and equipping local surgeons. Proper treatment minimizes the financial burden placed on trauma victims and their families, giving them hope and fiscal security.
5) InterAction: This is a coalition of U.S. based NGOs that are aiming to eliminate poverty on an international scale. The partnerships allow each individual organization to multiply its impact by providing important connections, insight, and capital.
6) International Child Care: The Christian health development organization is working to alleviate many of the causes of poverty in Haiti and the Dominican Republic. By providing vital medical care for children and their families, ICC allows them to lead happier, healthier lives in less danger of falling into poverty.
7) Fistula Foundation: This organization funds the treatment of obstetric fistulas in the developing world. Obstetric fistulas occur when labor is obstructed during childbirth. They leave women incontinent, which can ruin her life. Her husband, family, and community often abandon her because of her smell. This injury is common when women give birth at home without access to trained medical help, and can be fixed with $450 surgery.
8) VillageReach: Since 2000, this organization has worked to improve the developing world’s access to healthcare by partnering with businesses, governments, nonprofits, and other organizations. They aim to strengthen local infrastructure in underserved rural areas, and facilitate the delivery of medical supplies. This effort specifically helps fight rural poverty by allowing remote communities to lead better, more fruitful lives.
9) Action Against Hunger (ACF-USA): This organization’s efforts are primarily aimed at ending global hunger. Their work saves lives by fighting malnutrition, especially in times of crisis or conflict. Programs are integrated with local and national systems to ensure long-term solutions that tackle the underlying causes of malnutrition.
10) Life In Abundance: This interdenominational Christian organization aspires to empower the local Church to end poverty in Africa’s developing areas. Their programs aim to create holistic community improvement by focusing on health, financial security, education, and social participation. By encouraging and enabling local Church leadership, long-term transformation is achieved and African families rise out of poverty.
11) Oxfam
Oxfam is a confederation of 20 independent charitable organizations focusing on the alleviation of global poverty, founded in 1942 and led by Oxfam International. It is a major nonprofit group with an extensive collection of operations. Winnie Byanyima has been the executive director of Oxfam International since 2013
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