TO: Future Micro-Finance Project Leaders
FROM: Michael Dutt
SUBJECT: My Experience
SUMMARY: The idea behind using an aid mechanism such as microfinance in order to provide help to individuals in depressed economic situations around the world is to not only provide the necessary funding for individual development, but to create a sustainable aid program that can be continued by the next generation of students. There are also added benefits of bypassing many government agencies that could potentially divert funds, or cherry pick development projects in their countries. By utilizing KIVA, we have the ability to pick our own partners and projects in order to ensure that our funds are well managed, put in the hands of individuals that want to enhance their lives, and produce results that can be passed on to the next generation.
Many of the donations that I have made in the past are simply monetary contributions that are made with the hope that the organization will put the funds to good use, and produce programs that help the needy. In many cases these programs are simply providing services that individuals need in order to raise their standard of living, with no real effort needed by the recipient. This model of aid has worked well for the vast majority of non-profits, and NGO’s that provide these services.
The microfinance or micro loan model of aid has a much different structure to foster a higher standard of living for individuals living in poverty. These programs do provide money, but in the form of loans rather than goods or services. These loans are given to entrepreneurs that can use the money to invest in their own production capacity. They invest in projects ranging from business investment for expansion, agricultural production, or whatever project that will generate income so that the loan can be repaid and passed on to the next project.
One of the best traits of microfinance projects is that the individuals involved are in charge of their own destiny. They are taking on risk, just the same as the donor is taking a risk of not having their loan repaid. The stakes are high for these individuals, and we are giving them the tools they need to help themselves. Simply providing aid in the form of food, or other forms of care can raise the standard of living for an individual for a period of time, but helping these individuals develop their own systems to generate income has the potential to provide a lifetime of benefits.
It is my hope that encouraging an entrepreneurial spirit, and raising the standard of living directly for individuals that have the drive and ambition to pull themselves up by their own bootstraps will have the wide ranging benefit of fostering growth in some of the least developed countries, and helping them transition to a modern economy one business at a time. Want to change the world?