I first heard of this type of organization while watching a documentary on PBS. I instantly became interested in this type of organization, because unlike other charities or organizations, “Micro Finance” companies helps people help themselves.
How It Works
MicroPlace is a organization that provides small loans – usually less than $200 – to the working poor across the world. The recipients then take this money and invest in a small business to help bring themselves out of poverty.
As with any investment there are returns and of course risks. By making an investment of $20 or more, you’re entitled to a return – up to 3% – on any profits or financing charges applied to the recipients. However, on the opposite side, if the loan goes into default and is not paid back, you will loose your money.
To explain the risks, here’s a small exerpt from their site:
All investments carry some risk.
Historically, 97% of poor people have actually paid back their loans through good and bad economic cycles. This means that the institutions that lend to them can generally pay you back too. And, MicroPlace thoroughly vets these institutions to make sure they meet certain business and regulatory requirements. To date, none of our institutions have ever defaulted on their payments to investors. See microfinance loan safety for more information.
Research, Research, Research
Like all other investment opportunities, it’s good to research your investments before you put down any money. Luckily, MicroPlace provides you with detailed descriptions of the different opportunities available before you make your investment.
The site allows you to search for different investments and provides you with tools to narrow you search; Social Orientation, return on investment, and geographic regions.
Teach a Person to Fish…
Like I said above, I love this type of organization because it encourages people to help themselves. Like the Chinese Proverb says:
Give a man a fish and you feed him for a day.
Teach a man to fish and you feed him for a Lifetime.
That’s not to say that charities are bad… not in the slightest. They are needed in this world. I do however believe that this very creative approach and a more feasable, long term solution to poverty.
Now, you might not retire young by only investing $20, but you will be helping people get out of poverty, all why putting a little extra cash in your own pocket.
Give it a Try… what have you got to loose?