This is a bit off topic, so probably this is the right forum. I've come across something this week which has just amazed me as being such a good idea. Like me I imagine most of you have given money to various aid charities over the years and it just never seems to end doesn't it? I've always felt that handouts can never be a long term solution (though vital in disasters & famine of course) so have become increasingly uneasy about giving to aid charities.
I came across these people http://www.lendwithcare.org/info/how_it_works from a leaflet I got from the Co operative Society here in the UK - what a brilliant idea it is. Basically they lend what are to us in the UK, europe and the U.S really small sums of money to very very small enterprises in the developing world. You/me underwrite the loan effectively - but we are talking all of £15 ! (thats 17.17 in Monopoly money/Euros - can't work out how th get the euro thingy to show with my keyboard) But like any loan, the people pay it back, so in time you get the money back and can "loan" it again to someone else you choose.
It seems such an elegant solution and so much more constructive than just throwing money into a bottomless pit.
The sort of businesses asking for loans are here : http://www.lendwithcare.org/search/ - it's really worth a look and to see each persons individual story.
I have nothing at all to do with these people, I just think it's the most constructive use of aid I've ever seen - and the fact that your £15 can keep going back again to another project for not a penny more to you is brilliant. Like I said, I have absolutely nothing at all to do with the charity, I just think that to be able to do so much good over and over again for so little is amazing !
Apologies if it's too off topic, it's just I think it is so constructive and a bit of alternative thinking in our own way.
Meus terra erro est frigus
I have heard about this kind of loaning before (some public radio piece) and they told about a lady who wanted to borrow the equivilant of $30 to make and sell tamalies. The end of the story was she ended up paying back her loan and borrowing more money 3 times total, and now has 3 tamalie stands and does a booming buisness.
All from a $30 loan. Just amazing!
If you can't be a shining example, be a terrible warning!
I have studied Development Management, in other words aid and charity type management and what you have to say is well worth thinking about. My main concern with the loans is that the interest charged on some of these loans, 30% is common. I know that is less than the local loan sharks but I still find that is not fair on the poor. The poor end up paying much more than those who are richer, more for water, more for energy etc. and that makes me mad. I think the village savings and loan groups are good as they encourage a habit of saving and loans are made out of that - then again not all poor have even a penny to save so that in itself could be a drawback.
Oxfam as an organisation came out quite well in my studies for the work they do, not perfect but that would be unrealistic in a big organisation. I like the cash for work projects where people are paid a wage for helping out in the camps - that has the impact of helping people retain some dignity through work.
Sorry this is long (just be grateful I didn't write an essay), but my favourite charity for the way it operates is Practical Action. They work with local communities to develop technology that is appropriate to the society to improve on something that they do. For instance they help design local cooking apparatus that people can build themselves or provide work for a local potter or metal worker. It is meant as a collaboration so that the local people are part of the process. Projects are also by nature small scale, not stupid build a hydroelectric dam on a massive scale, but maybe a small scale hydroelectric plant in an appropriate place that people can repair themselves.
I had been wondering about interest too and they explain the interest charges made by Micro Finance Institutions HERE and the context, which is quite interesting.
Most of the loans seem to be paid off within 1 year, so the people must be managing to repay them I think (sub 2% default rate apparently). The % does seem high until I checked on Google Earth to see where the person I "loaned" to lived and there was about 100 mile of what appears to be dirt track to get there to the village, so I guess what they say about on that page about it costing the lenders a lot to go and check the businesses are real and so on compared to what it costs our banks to lend larger amounts in the developed world may bear out. I think the interest must also be included in the amount loaned by the sponsors (i.e you and me) because the way it works is we the sponsors pay the loan off immediately with the money we have loaned and then the person who applied for the loan actually pays back http://www.lendwithcare.org (i.e us, as the money goes back into our lendwithcare account rather than the MFI - who are also more understanding if the business fails or something happens to prevent the person paying it back on time.
As someone who has a small business and actually looking to finance a new venture too (though for a bit more than a few hundred pounds!) at the moment I was thinking that it would be nice to be able to have a bank like lendwithcare which would give you a break if the business did not pick up as quickly as hoped - but of course here is the UK they'd just come and take your house off you, turn your dog into a rug to sell and sell your kids to science or something ! Not a lot of humanity in Western banks! Shame theres not such a scheme for us
Meus terra erro est frigus
It's the same here Glen. We have a bit of cash handy and we lend to those who need it in the area we live in and don't worry too much about timing of returns as we know what its like for folks here. Interest rates here in Latvia start at 15% (not many get loans at this rate) and since I can't get above 4% for my money being sat in a bank I am more than happy to lend at that rate if need be, but we don't always charge interest, depends on who it is and how much it is. Having said that we do kind of get our interest back in a way but in goat meat, honey, cheese, milk, discounts and translation services- so it works out well for us.
I think one of the biggest issues though when lending to those nearby is how lending can affect your relationship, you have to give people dignity in the lending. Sometimes people give just to make themselves feel good and don't really think how the other person feels on the receiving end.
It would be a better world if we could all pay or receive interest by cheese or a joint of lamb or something . Mmm " wonder if I can pay the mortgage this month with some rhubarb¦.? Actually, it would be a great laugh to ring the building society and ask and tape the call to get their reaction !
Meus terra erro est frigus
Only if you let us all here the recording . That does remind me though that bartering systems locally are a good way of lending a helping hand with dignity. In our case we will hopefully be selling a load of hay that we got cut to a farmer who hasn't managed to get enough in due to the timing of the rains but he can have it at cost price to us in return for delivering our few bales that we hopefully will need next year as we are hopefully getting alpacas (notice how many hopefullys there are? I have lived in Latvia far too long to say otherwise). That is a win win situation in my books.
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