Is Microfinancing A Sustainable Way To Donate?

Non-profit organizations such as Kiva, The Bill And Melinda Gates Foundation and WaterCredit are providing microfinance to thousands of businesses and communities who cannot get access to finance.

The role that these non-profits play is critically important.

I have begun to understand the central role that microfinance lenders are now beginning to play in developing the global economy through recent conversations with Rebekah Austin of Pop17.

But, my question is:

Is Microfinance A Sustainable Way To Donate?

Can we continue to donate and still make a difference through microfinance?

In some sense, I believe we are now becoming a globally connected community.

We all rely on others future prosperity in order to make ours more sustainable.

For instance without the cotton from India, Brazil or China we wouldn’t be able to produce items such as apparel, home furnishings and medical supplies.

These are important items which we use every day without a second thought to the source.

Yet since independence in 1947, 37% of India’s population remain below the poverty line. (Source: EconomyWatch.com)

Is microfinance the answer to getting these people out of poverty or is it the responsibility of the government to develop their trade policies?

Personally, I believe that microfinance plays the role of supporter.

They support the rural communities to build a higher level of income, they support rural entrepreneurs to build successful business.

They don’t enable.

No matter whether you are in a developed or developing nation, finance never enables your business to succeed.

However, the developing world definetly needs help and support to bring their business practices and ideas to life.

This is the most important role I believe that the Kiva’s and WaterCredit’s of the world play.

They support growth, stability and help foster a new sense of belief amongst people that they can do this.

The role you play at the other end of the transaction is donating your money to the project you believe deserves the finance.

However, like all things I believe it is important to diversify.

If you are donating now, think about how you can spread your money across many different causes.

I don’t believe that the rush over microfinance is going away anytime soon, but I certainly believe you shouldn’t forget the other wonderful non-profits who are supporting communities.

I have already highlighted a few this month, including:

• Imagine1Day
• Good2Give

As I mentioned at the beginning of this post, Rebekah Austin (contributor at Pop17) has been a wonderful resource for me to learn from.

I would encourage you to send her a tweet and ask her a question about microfinance. Her Twitter name is @BekahBearr.