Microfinance United States: What is It?

Microfinance United States: What is It?

Maybe it was in a finance class in college. Or maybe it was on the evening news. Wherever it was, you’ve probably heard the term “microfinance” before, but you might not know exactly what it means. With the recent explosion of microfinance in the United States and abroad, you’ll be hearing more and more about this revolutionary approach to philanthropy in the coming months and years.

So, just what is microfinance?

To put it as simply as possible, microfinance is the practice of giving very small loans to poor citizens with the goal of helping them start their own businesses so they can pull themselves and their families out of poverty. In other words, microfinance isn’t a hand out; it’s a hand up that allows the poor, mostly women, to achieve sustained financial success.

Microfinance United States is based on the age-old concept of “Give someone a fish, feed them for a day. Teach them to fish, feed them for a lifetime.” That’s why microfinance is about more than just loans. In addition to providing the underprivileged with small loans, microfinance agents also educate loan recipients on how to create and run a profitable business and how to manage and grow their money. This allows the money raised for microfinance to create a much longer, more sustained impact than a simple charitable donation could ever yield.

It’s important to note that microfinance in the United States and abroad is a loan system. These small loans are paid back with interest, and you might be surprised to learn that the poor are actually excellent credit risks. When properly educated, the recipients of these loans are financially prudent. In fact, the microfinance industry has given loans to over 100 million poor people, with a payback rate of 97%!
The goals of the microfinance industry are simple:

* To eliminate extreme poverty throughout the world
* To empower the working poor to lift themselves out of poverty
* To promote gender equality

Examples of Microfinance United States

Although the concept of microfinance dates back to 1973 in Brazil, it’s only been over the past few years that microfinance has really started to popularize in the United States. Several non-profit organizations are dedicated to the cause of empowering the working poor.

One recent example of this is the revolutionary Lingerie Miami program, created by Renata Black. This event brought out top fashion designers and A-list celebrities for the purpose of raising money for microfinance in the United States and several other countries. The fashion show was so successful at raising funds to empower women that it’s being spread to New York in 2010. Future plans call for these philanthropic lingerie fashion shows to be held in major cities throughout the world.

All funds raised at these fashion shows are sent directly to microfinance institutions throughout the world. These funds are then carefully distributed in small loans to the working poor, mostly women, with the goal of helping them start their own small businesses.

Are you interested in taking part in the microfinance United States revolution? Visit http://www.lingeriemiami.org today to learn how you can help.

Renata Black is Director of 7Bar Foundation. Learn more about Microfinance United States by visiting www.lingeriemiami.org today.