Scott Burkett and I have been blogging back and forth about the importance of giving back, the power of small groups and the need for philanthropy. His most recent post, Philanthropic Entrepreneurship: Up Close talks about an entrepreneur in Atlanta, Tom Flaim, and his brother who started a not-for-profit company, First Wate Systems, to provide a variety of solar-powered water purification systems for the developing world and domestic emergency management. I am a firm believer of letting a thousand flowers bloom. I think that the ills of our society are best addressed by small groups targetting very specific issues (clearly with public policy support). This means any and all of us doing whatever little we can. Scott has a great Margaret Meade quote: "Never doubt that a small group of thoughtful, committed citizens can
change the world. Indeed, it is the only thing that ever has."
I live in Winnetka, an affluent suburb of Chicago. Diversity entails having brown and blonde haired children and poverty consists of kids not getting the latest PSP game. Like all parents, I love my kids and seek to give them every advantage possible. This plays out in suburb and city after city in the US. Unwittingly, despite our best intentions, we are infecting our kids with affluenza. Wikipedia defines this as:
"The American middle class [and wealthy] is often criticized for never being
satisfied. People are constantly wanting new things and are never
satisfied with what they have. Affluenza ties into the criticisms that
there is a superabundance of popular culture and such."
Schwab’s website has an article that goes as far as to say: "Part of the problem is that many parents are oblivious to the messages
they unwittingly send their kids: that desires are simply there to be
gratified; that status and luxury are birthrights."
Is there an antidote? It grows more challenging each day to impress on our kids (and ourselves) about the effects of affluenza. We each deal with it in our own way. My wife and I are trying to get our kids exposed to other communities and to social causes early on, but it is not easy.
However, the global poverty numbers are staggering. While there are various estimates, one puts the number of people living on $2/day or less at 2.6 billion. That is roughly 9 times the population of the US. Other statistics:
- Number of children in the world
- 2.2 billion
- Number in poverty
- 1 billion (every second child)
- Shelter, safe water and health
- For the 1.9 billion children from the developing world, there are:
-
- 640 million without adequate shelter (1 in 3)
- 400 million with no access to safe water (1 in 5)
- 270 million with no access to health services (1 in 7)
- Children out of education worldwide
- 121 million
- Survival for children Worldwide,
-
- 10.6 million died in 2003 before they reached the age of 5 (same as children population in France, Germany, Greece and Italy)
- 1.4 million die each year from lack of access to safe drinking water and adequate sanitation
- Health of children Worldwide,
-
- 2.2 million children die each year because they are not immunized
- 15 million children orphaned due to HIV/AIDS (similar to the total children population in Germany or United Kingdom)
Makes one think and wonder…
Microfinance, in my opinion at least, is a great way to break people out of poverty. I think it works so well because it allows the people to lift themselves out of poverty. It follows the “teach a man to fish” saying to a “t.”
Sometimes we fall into the trap of thinking that people are poor because they are lazy or they just don’t have the knowledge to make a living. Microfinance has shown us over the past 25 years or so that this is just not true. The poor are perhaps the most creative resourceful people in the world. What usually holds them down below the poverty line is being barred from credit.
When Muhammad Yunus founded the first microfinance organization back in the late 70s/early 80s, the Grameen Bank, he did so completely by accident. As he was walking through the village of Jobra in Bangladesh he noticed that a woman was making fine stools but still living below poverty. He then found out that the moneylender would lend the woman money for raw materials on the codition that she had to sell the stools back to him thus creating market inefficiencies (since the oneylender could set the price of the stools very low). When he asked the woman how much she needed to buy her own raw materials she said she needed $27. Then, Yunus gave her a $27 dollar loan right out of his own pocket and the rest is history.
He (and I) couldn’t believe that all that was keeping this woman below the poverty line was $27.
The other interesting thing about microfinance is that the borrowers are paying interest on their loans. It is not a grant. I believe that this fact gives the borrowers great pride since they are not being treated as a charity case. Their repayment rate is also surprising. The Grameen bank reports an overall loan repayment rate of over 98%!
All in all, microfinance is an interesting way to defeat poverty and one that aligns itself very well with the philosophies of entrepreneurs and VCs. Bottom line: it works.
If anyone would like more information they can head to the following sites:
1. http://www.ventureweek.com/blog/category/microfinance/
2. http://www.ventureweek.com/podcast/2006/03/01/ventureweek-special-edition-microfinance/
3. http://www.unitus.com (basically a VC to microfinance organizations)
4. http://www.grameen-info.org/
5. http://www.gfusa.org
6. http://www.cgap.org
Enjoy! 🙂
Microfinance, in my opinion at least, is a great way to break people out of poverty. I think it works so well because it allows the people to lift themselves out of poverty. It follows the “teach a man to fish” saying to a “t.”
Sometimes we fall into the trap of thinking that people are poor because they are lazy or they just don’t have the knowledge to make a living. Microfinance has shown us over the past 25 years or so that this is just not true. The poor are perhaps the most creative resourceful people in the world. What usually holds them down below the poverty line is being barred from credit.
When Muhammad Yunus founded the first microfinance organization back in the late 70s/early 80s, the Grameen Bank, he did so completely by accident. As he was walking through the village of Jobra in Bangladesh he noticed that a woman was making fine stools but still living below poverty. He then found out that the moneylender would lend the woman money for raw materials on the codition that she had to sell the stools back to him thus creating market inefficiencies (since the oneylender could set the price of the stools very low). When he asked the woman how much she needed to buy her own raw materials she said she needed $27. Then, Yunus gave her a $27 dollar loan right out of his own pocket and the rest is history.
He (and I) couldn’t believe that all that was keeping this woman below the poverty line was $27.
The other interesting thing about microfinance is that the borrowers are paying interest on their loans. It is not a grant. I believe that this fact gives the borrowers great pride since they are not being treated as a charity case. Their repayment rate is also surprising. The Grameen bank reports an overall loan repayment rate of over 98%!
All in all, microfinance is an interesting way to defeat poverty and one that aligns itself very well with the philosophies of entrepreneurs and VCs. Bottom line: it works.
If anyone would like more information they can head to the following sites:
1. http://www.ventureweek.com/blog/category/microfinance/
2. http://www.ventureweek.com/podcast/2006/03/01/ventureweek-special-edition-microfinance/
3. http://www.unitus.com (basically a VC to microfinance organizations)
4. http://www.grameen-info.org/
5. http://www.gfusa.org
6. http://www.cgap.org
Enjoy! 🙂
I should also point out that Grameen now offers housing loans, scholarships for children of borrowers, a pension fund for borrowers, etc. and the bank itself is 94% owned by its borrowers.
If you haven’t read “Banker to the Poor” I highly recommend it. It was written by Muhammad Yunus who can explain microfinance and the story of Grameen better than I ever could.
I should also point out that Grameen now offers housing loans, scholarships for children of borrowers, a pension fund for borrowers, etc. and the bank itself is 94% owned by its borrowers.
If you haven’t read “Banker to the Poor” I highly recommend it. It was written by Muhammad Yunus who can explain microfinance and the story of Grameen better than I ever could.
Another great microfinance organization is Kiva (www.kiva.org). You make the very small loans and get your principal returned. The loans go to entrepreneurs in impoverished areas.
Another great microfinance organization is Kiva (www.kiva.org). You make the very small loans and get your principal returned. The loans go to entrepreneurs in impoverished areas.
Microfinance is an amazingly interesting area in development. As you point out, the impact, if done properly, is significant (especially with women). Let a thousand flowers bloom.
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Dexter Tony Stephan Brad Griffin
Microfinance is an amazingly interesting area in development. As you point out, the impact, if done properly, is significant (especially with women). Let a thousand flowers bloom.
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Dexter Tony Stephan Brad Griffin Comments are closed.