Micro Loans

Once it became apparent that the money my investments lost in 2008 most likely will not be returning for quite some time, I began to look at some alternative places to invest. I decided to look into micro loans first. Micro loans are made available from a variety of financial institutions to help poor people start small businesses to help them generate income. Most of these borrowers live in the developing world and lack the kind of credit history, collateral or steady employment that traditional lenders look for. The concept and practice of very small loans began a few hundred years ago, but the modern movement began in the 1970’s in India.

While looking around for some possible micro loan investment opportunities I came across the following sites. Most micro loans have pretty low returns (1% to 3%) so your motive in investing with them would be more of an attempt to help the poor improve their socioeconomic situation rather than to make a great return on your investment. Some encourage donations only, with the promise that they will continue to reloan your donation to others once it is repaid.

Kiva.org: “Kiva’s mission is to connect people through lending for the sake of alleviating poverty.” You can browse profiles of people needing loans and choose specifically who you want to loan to. They encourage loans of $25 and up as well as donations.

Opportunity International: “is a non-profit organization dedicated to helping the working poor.” They also “offer savings, microinsurance, business training and many more services to 1.1 million working poor in 28 developing nations.” As far as I can tell this group only accepts donations.

United Prosperity: “We are a grassroots, non-profit organization with a simple mission: End Poverty.” It appears they are still working on getting up and running because the entrepreneur section of their beta website is empty. They are currently accepting donations.

Calvert Foundation: For over 10 years they have “been working to make community investment a safe and logical option for all investors seeking to make a positive social impact.” They stress the concept that people are able to invest more to help the poor than they could just by giving. One option with Calvert is to invest in a note and choose terms that range from 1 to 10 years, an interest rate from 0% to 3% and deciding on the “social returns” desired such as housing or credit. They also accept donations.

Micro Place: Their mission “is to help alleviate global poverty by enabling everyday people to make investments in the world’s working poor.” Like Kiva they start with a very low minimum investment. And like Calvert they let you choose the term and interest rate.

Microcredit Summit Campaign: Started in 1997, their themes include “reaching the poorest, empowering women, building financially self-sufficient intuitions and ensuring a positive, measurable impact on the lives of clients and their families.” They are supported by individuals, corporations, banks and foundations, among others. They accept donations.

I will be looking further into Kiva, Calvert and Micro Place this year as possible investment vehicles.