The Grameen Bank & Microcredit
The Grameen Bank is perhaps the most successful Microcredit institution in the world. In the Microcredit industry, success is defined by the number of lives changed and not quarterly profits. Banks like the Grameen Bank make small loans to poor people, often women, in developing nations. Loans are made to people who wouldn't usually qualify for loans from traditional banks, and they're used by the borrowers, typically, for small entrepreneurial projects. Repayment, and proper use of the funds, is encouraged via weekly meetings with other borrowers and bank representatives. These meetings enforce a sense of community, and collective accountability. For example, a borrower who runs a food stand might take out a small loan in order to purchase a cooler, which allows them to store more food for selling, and thus increase profits. Once the first loan is paid off, they have the option of borrowing a slightly larger sum, in order to further expand their small business. These banks, these loans are revolutionizing economic development in the third world. In addition, most of these banks are financially self-sufficient, the small interest they charge on each transaction is enough to cover the cost of making the loans. That means, unlike other sorts of philanthropy, large grants and donations are not required annually to keep microcredit institutions afloat.
The Grameen Bank, founded in 1976 by Muhammad Yunus, is an excellent example. Here are some staggering numbers: The Grameen Bank has lent money to over 6 million people, 97% of which are women, for a total of 7 billion dollars. Their repayment rate has consistently been north of 99%. That, by any banking standard, is an astonishing success. Because of this kind of dollar for dollar efficiency, and clearly demonstratable progress, philanthropists are dumping money into microfinance. It's been described as the best hope, alongside the freeing of markets, for economic development in Africa, Asia, and South America. Good enough for me. We need to find a way to bandwagon on this - Stay tuned.