Microfinance Commentary 2Q 2011 | Helping the Poor: Just Charity?

Throughout the Christian Bible and most world religions, caring for the poor is a central theme and more importantly, a command. In the Bible, we are instructed over 2000 times to care for the poor… that is more references toward any one area in life than anything else in the sacred text. So should we give to the poor? Yes. But is there more we can do?

I say the answer is a resounding YES… and so do a growing number of other people around the world. Christians and Muslims, Americans and Europeans, Republicans and Democrats, Conservatives and Liberals. Giving to the poor makes us feel like we are doing something good… and for those of Faith, helping the poor fulfills our marching orders. But what if we actually want to roll back poverty instead of just alleviating its symptoms, like taking some aspirin in the face of a raging cancer? Let’s see what some pioneers in philanthropy and the microfinance movement have to say.

"When we want to help the poor, we usually offer them charity. Most often we use charity to avoid recognizing the problem and finding the solution for it. Charity becomes a way to shrug off our responsibility. But charity is no solution to poverty. Charity only perpetuates poverty by taking the initiative away from the poor. Charity allows us to go ahead with our own lives without worrying about the lives of the poor. Charity appeases our consciences."
-Muhammad Yunus “Banker to the Poor: Micro lending and the Battle Against World Poverty”

Giving a “hand-up” rather than a “hand-out” has become part of the philanthropic lexicon… and thank goodness for that! “If you give a man a fish, he will eat for a day. If you teach a man to fish, he will eat for the rest of his life” is an ancient Chinese proverb that is beginning to sink in with more and more people. Perhaps most importantly, with investors.

“A new study estimates the potential market for investments that seek financial as well as social or environmental returns at $120 Billion. The good news for charities is that most study participants who said they would put money into such investments said they would draw the funds from their investment portfolios rather than the money they set aside for philanthropy.”
-The Chronicle for Philanthropy October 4, 2010

We in the developed world are at a crossroads in philanthropy and investing. Should we keep investing our money in the old stocks, bonds and mutual funds routine? After all, we can use the dividends or income derived from these investments to give to charity, right? Or is it time to turn this traditional investment model on its head by investing our money in poverty alleviation and other socially conscious causes, in some cases realizing greater investment returns on these endeavors than the aforementioned traditional stocks, bonds and mutual funds?

Enter the developing world miracle that has been microfinance for the last 35 years. But now the old tried and true “sustainable” non-profit model of microfinance is evolving too. Now an entire industry has been born, an industry that is committed to growing larger by the day to reach more and more of the poor to help them escape poverty by helping them help themselves. Microfinance banks around the globe are seeking more borrowers, competing with each other for clients and driving interest rates down. All the while increasing the number of life-changing financial products for the poor. Some call this “philanthro-capitalism.” I just call it just good business sense. Let’s help the poor with a new industry that will grow and grow and grow, not just be “sustainable.”

"So if you want to put your money in microfinance just to feel good, by all means direct it to the non-profit organization that most pulls your heartstrings. But if your objective is to roll back poverty and change the world, don't believe those that have been telling you that returns on your investment are the icing on the cake. It is the cake itself."
-Michael Chu- Professor, Harvard Business School and former CEO of the microfinance organization ACCION

Let’s get to WORK!

Mark Robeson
President
Global Microfinance Partners, LLC
Tel +1 704 332-9390
skype | mark.robeson
www.globalmicrofinancepartners.com
“Connecting Capital Markets with Village Markets”