I’ve recently got involved with a small Bristol based charity Deki, it deals with Microfinance and the idea it is based upon is fascinating.
Microfinance is the process of lending a little money to someone who is considered ‘unbankable’ (not viable to traditional bank loans). The idea is that if you inject money into an entrepreneur’s small, successful, business that business will thrive. When the business thrives, the entrepreneur can repay the loan and make more profit. They can then apply for another loan and the cycle continues until they have grown the business and no longer need the small cash injections. As businesses grow, the owners can feed their children and send them to school, they can also employ locals in their community who in turn, can feed their children and send them to school. As a business employs more people and they gain a steady income and more spending power, the local economy benefits as increasing numbers of people can afford to buy more non-essential items and this benefits other business-owners. As time goes on, well fed and educated children grow up to enter into promising careers and can afford to support their own children and the cycle of success goes on. Deki estimates that every loan they provide helps at least 6 other people in the entrepreneur’s community.
What interests me is that this form of lending is sustainable. Throwing money at the problem of poverty is just not working, people get ‘charity fatigue’ and are just not willing to keep on giving hand-outs. Microfinance, on the other hand, means that you get back the money lent. It isn’t a donation its a loan. You can decide to simply take your money back at any time, but also you can choose to invest in someone else! Every month you get your repayment and can choose to loan to a different entrepreneur, if we consider that each loan helps 6 other people, that means you are helping at least 72 people out of poverty every year with only one injection of money! It’s recycling on a platform we haven’t really seen before.
The point of Microfinance is that it is a hand-up, not a handout. It is not just handing over money and expecting great results, it’s enabling people to help themselves rise out of poverty in a way that looks to the future, while also helping in the present. It is not a perfect idea, there is no such thing and there are many, many other charities who’s work is desperately needed (and is definitely positive). But I really think that this is the future of charity. It promotes a cycle of success reliably and sustainably and it has proven to work!
Deki’s website can be found here for more information, and to begin lending click here. All photos come from Deki and were taken by the incredible Adam Dickens, his website can be found here– what he does is really inspirational and I’m definitely going to write about him in the future.