Microfinance, defined as “a type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services” according to Investopedia, is a vital facet to current global philanthropic efforts. The purpose of microfinance is to sustain low-income individuals and families until they are able to reach a point of economic self-sufficiency. With 1.3 billion people across the world living on less than $1.25 a day, it is curious that microfinance is not a more widespread phenomenon.
By providing microloans until economic sufficiency is reached, microfinance companies are able to not just support individual groups, but are forming savings groups, improving market development, and ultimately, benefitting the community at large. By breaking one family’s cycle of poverty, that family is able to contribute to other families and bolster the community, as they are no longer dependent on government aid.
The organization World Vision makes a dedicated effort to provide microloans to those who need them most across the planet. In their efforts to enable poverty stricken individuals to gain self-sufficiency without becoming a hindrance to the national economy, this fantastic charity has made some very insightful findings. In fact, according to this report located on their website, microloan clients eat more, send their children to school, rely less on healthcare programs, and even raise children with a higher “psychosocial well-being.”
Even more impressive is the fact that 98% of World Vision’s loans are paid back; similar statistics can be found with other microfinance organizations such as Kiva and Opportunity International. Many of these loans go toward women; empowering their community and small business endeavors in countries that may not be as supportive.
In order to promote economic sustainability, World Vision aims to break the poverty cycle in economically inhibited communities. They claim that a child’s parents have the greatest impact on their economic well-being, and as a result, they focus on specific households and provide the fiscal resources necessary to bring a family from their knees to their feet.
At the same time, they do not just provide necessary access to financial resources. Rather, they abide by the age-old idiom: “Give a man a fish, and you feed him for a day. Teach him to fish, and you feed him for a lifetime.” After providing the proper microloans, the organization instructs poverty-stricken families on best practices for starting their own business, how to maintain proper saving habits, and how to improve their farming. Similarly, the organization teaches individuals business operation strategies, gardening tactics, and agricultural practices.
All this said, World Vision is merely one, although one of the most prominent, of the charitable organizations providing microfinance opportunities around the world. I encourage you to do your own research to fully understand the enormous positive implications of widespread microfinance. Supporting or funding microloans is one of the best ways to give back to and make a lasting impact on a community in need. To learn more, please visit World Vision’s homepage.