More on Micro-Lending

To build upon what I discussed in my last post about micro-lending, I thought I'd include a new study that takes a closer look at the effects it has in helping people out of poverty. The results conclude that it may not be helping as much previously thought.

Given my background in journalism, I do like to play devil's advocate and present both sides of any story. In their working paper, U.S. economists, David Roodman, of the Center for Global Development, and Jonathan Morduch, of New York University, take a look at the studies conducted in Bangladesh about the impact of microcredit in households and conclude that although it does not do harm, there is a lack of evidence that it improves the lives of the poor.

Here's more information from Newsweek where you can also view the working paper by Roodman and Morduch.

In light of their findings I feel that this may be a testament that micro-lending is indeed a good method that just needs some tweaking and revising.

Micro Lending in Developing Countries

During my short time at a public relations agency that focused on nonprofit and mission-based organizations, I became aware of the term "micro-lending" and its effectiveness in developing countries. So, when I saw this article in the New York Times today, it caught my eye immediately. I'm not sure why I have never thought to write about this before, but it's never too late to do so.

Essentially micro-lending is the extension of very small loans meant for those in poverty to help cultivate business and entrepreneurship. This by no means is anything new and it has been the subject of many media outlets discussing the pros and cons of such a practice.

However, the article in the New York Times pointed out that while these loans can greatly help people, it is important to teach them business education. The combination of the loans and the knowledge is a more practical way to increase the amount of success people experience in stabilizing themselves financially and contributing to the rest of society.

While the story presented a couple of success stories, the major criticisms of micro-lending is that it can leave the small guy to be taken advantage of by big banks and it that there is no way to ensure that these loans are actually being used in the manners for which they were intended.

These are valid concerns and it's encouraging to see that organizations are working to improve the system. Kiva.org, a micro-lending organization operated through the Internet, reassures lenders that these loans really are making a difference:

We are constantly working to make the system more transparent to show how money flows throughout the entire cycle, and what effect it has on the people and institutions lending it, borrowing it, and managing it along the way. To do this, we are using the power of the internet to facilitate one-to-one connections that were previously prohibitively expensive. Child sponsorship has always been a high overhead business. Kiva creates a similar interpersonal connection at much lower costs due to the instant, inexpensive nature of internet delivery. The individuals featured on our website are real people who need a loan and are waiting for socially-minded individuals like you to lend them money.

Other organizations such as WomensTrust, which is dedicated to helping the women of Pokuase, Ghana through micro enterprise, education and healthcare, also make sure to detail the process for lenders states on its Web site:

We employ a group-lending model that was introduced by the Grameen Bank in the 1980s. Potential clients form their own groups of four or five women and come to the WomensTrust office for an initial screening. In order to track impact, our staff records information about their businesses, their incomes, their families, their education, and their homes.

Once the group is accepted, each woman receives a beginning loan of $40 U.S. Each group member must repay her individual loan before the whole group is eligible for its next loan. We charge 15 percent interest for each four-month loan period. That rate is well within Ghanaian banking guidelines and is set purposely high to compensate microfinance institutions for the risk they are willing to assume making uncollateralized loans to the poor and very poor. It also discourages loan clients from gaming the money— i.e., loaning it out at higher rates to others.

Each of our loan clients is issued an individual ledger book with the date and details of her loan and weekly repayments. Once a group has successfully repaid their loan in full, they are eligible for the next loan of $60 or $80 and can progress up the scale to a maximum amount of $190.

There will always be kinks in any type of system which is why I think micro-lending can have more pros than cons. It needs to have checks and balances and people who are sincere and genuine in these efforts to help people.

On the other hand, for lenders, there is the issue of return on investment (ROI), leaving some to question if this type of philanthropy may focus too much on profit. This is perhaps a bit of an oxy-moron since the whole point of investing in something is to gain something back.

If a particular project isn't advancing, I'd be questioning why as an investor. Getting a better understanding of what the challenges are and what needs to be fixed is a more feasible solution than having investors pull out their support. This, ideally, is left to the organization but it is important to keep the lender as informed as possible. I figure if someone is already investing in a project aimed to help those in need, then it is most likely not all about ROI (maybe I'm being too optimistic but I'd like to think that this is how it goes) and he or she would be willing to stick it out--especially if steps are being taken to improve the small business.

These are clearly my observances as I can't claim to know the detailed process of exactly how the relationship between the lenders and organizations work. I understand it would take a lot of manpower, time and money from these organizations to maintain that level of transparency, but again, the process can evolve as time goes on.

Micro-lending can offer some promising endeavors. It's just a matter of whether we can perfect the system. For now, we know that it is doing good in many cases and I think that's justification enough to move forward.

The Constant Battle for Women in Darfur

A while ago, I ran across this article in the Boston Globe discussing the recent study by Cambridge-based Physicians for Human Rights and the Harvard Humanitarian Initiative (HHI) which examines the long-term impact of rape and other sexual violence experienced by Darfuri women refugees. I've been meaning to bring some attention to it and while I'm a little late in doing so, I still see the importance of it.

The interesting focus of this study is not the numbers of how many have been raped or abused, (although it is no secret that the numbers are high in Darfur) but rather the effect it is having on the women who continue to live in fear every day. Eighty-eight women who fled to Chad from Darfur in order to escape the attacks on their villages, were interviewed for this study and were physically examined. While some were raped in Darfur, others were raped in Chad where they are seeking refuge.

Not only do these women have to deal with the repercussions that come with being a rape victim but they are also constantly dealing with the looming threat of sexual abuse even after. There is no relief and, as the study has found, that can have dire effects for these women both emotionally and physically.



To view the report and see the work that Physicians for Human Rights is doing for Darfuri women, click here.

Philanthropy 101 for College Students

If only these courses had existed while I was still in college:

Colleges and universities in Boston are embarking on a new trend that gives students first-hand experience in philanthropy, the Boston Globe reported today. I'm not just talking about whipping out the checkbook and signing away some money to a charity of choice. I'm talking about understanding the full scope of philanthropy from writing up mission statements to researching and evaluating organizations and then allocating the money in a responsible manner.

The Globe reported that Tufts University, Northeastern University (my Alma mater) and Boston University have all started these philanthropy courses and at least 10 New England colleges will start offering them next school year. As my eyes read over Northeastern, I stopped and thought, "Wait, how come I didn't know about this?" Well, that's because the university only started these classes last fall, after I had graduated. Bummer.

But no worries for me. I'm lucky enough to have a stint as a development assistant where I'm getting some first-hand experience on fundraising and philanthropy, albeit it's in the "real world" as a full-time job instead of in my former college lifestyle.

Regardless, I'm a little jealous. I think this is really a great opportunity because students are dealing with real money. There's no Monopoly paper money in these courses. The money itself is being donated to students in a sense. The Globe notes:

Two national foundations interested in promoting the teaching of philanthropy on college campuses began donating money for the courses across the country in recent years. The Sunshine Lady Foundation, established by Doris Buffett, sister of famed investor Warren Buffett, has given colleges $10,000 a year to disburse since 2003. The foundation’s Learning By Giving program will double next year to include 15 colleges across the country, including Tufts and Holy Cross.

The people behind these large grants are going to expect their money to be used wisely, even if it is a learning experience.

While this can open a whole new experience for students, who may or may not have had an interest in nonprofits to begin with, I think some of the real value is teaching them to be responsible with money. Understanding how an organization works and how donations contribute to helping the organization reach its mission is important. It might not seem so pertinent to students now, given they operate on tighter budget, but this won't always be the case. And as they are able to possibly make philanthropic decisions in the future, they'll have a better understanding of it all. It was also pointed out in the article that this could be a great asset for business students who will need to have knowledge of how to spend money in the most effective manner.

Hopefully, this can also serve as a way to get people interested in philanthropy at a young age, even if they won't be flexing those muscles for years to come. It can at least plant the seed for now.

A Few Reflections on the 65th Anniversary of D-Day

Sixty-five years have passed since the Battle of Normandy changed the path of World War II and it is evident that the effects of the war have lingered as generations have passed, especially in terms of the Holocaust.

The Holocaust has become the backdrop for all discussions on genocide and time has shaped how the dark history of that era relates to the present. A few of Michael Kimmelman's "Abroad" columns in the New York Times have offered some insight into how it has remained an underlying influence in European culture.

For Poland, a country where anti-Semitism has persisted, the Holocaust has become ingrained in its identity, despite the now diluted Jewish population that resulted from the impact of the war. While the country has struggled with its own sentiment of victimhood, it appears the view has started to shift to an understanding that while both the Poles and the Jews suffered, it is all part of the same history. Kimmelman writes:

“Of course there are historical reasons why the perception of Poland is the way it is,” said Andrzej Folwarczny, the forum’s president. “On the other hand, Communism taught Poles that Jewish suffering was only one part of the general suffering of the Polish people, and that the first 150,000 or so victims at Auschwitz were Polish political prisoners. So after Communism, when more and more Jews came here and said, ‘Auschwitz is our place of suffering,’ suddenly these two sides, ignorant of each other’s narrative, clashed over victimhood.

“But gradually more Poles have come to realize that their history is not black and white, that we should be proud of Poles who saved Jews but also be clear that other Poles killed Jews, and that something is missing from our culture” — he was now referring to the Jewish population of three million before the war, today barely a few thousand — “for which we have responsibility.”

Kimmelman then discusses a survey in which residents living where the Warsaw Ghetto used to stand noted that Jewish history is crucial to their sense of pride and home. The full article is here.

On the other side of the spectrum, Germany, the offenders, have had to grapple with the devastation they brought and the millions of lives that were murdered under Hitler's iron fist. It has understandably remained a sensitive subject but in some respects, it seems that time has allowed some healing.

Mel Brooks' slapstick comedy, The Producers, recently arrived in Germany, prompting Kimmelman to ask, "Can Germans laugh at Hitler?" And it appears they can. If Israelis can laugh along with the Americans, then why can't they, suggests some Germans who viewed the show. Perhaps laughter is the best medicine. The challenge is maintaining a line between tasteful and offensive and as time removes us further from those lost through such horrific means, the challenge becomes greater.

I often think of another Mel Brooks' comedy, History of the World Part I, a comedy that fast-forwards through some of history's most momentous eras in true Mel Brooks fashion. One scene is a musical rendition of the Spanish Inquisition, a violent and torturous era that started during the 15th century where Spain attempted to unite itself under Catholocism after the Crusades. Thousands were tortured and killed yet in the film, it has been turned into a song and dance. And we all laughed. It was funny. But is that because we are so removed from what happened all of those years ago?

The Spanish Inquisition occured in an entirely different time period with entirely different mindsets but it helps illustrate my point just the same. I don't think there is any right or wrong answer but I do believe that at some point, and in some way, in order to accept the past there needs to be a little bit of comedic relief.

When it comes down to it, the evidence is still there. There are the remaining camps such as Auschwitz and Bergen-Belsen, there are survivor testimonies and there are pictures and film footage that make it hard to forget. And that is good. We can't afford to forget. A little laughter is a healthy way to move on, especially since The Producers makes a complete fool out of Hitler, helping those of us who weren't there to live through it see the complete absurdity of his ideology.

While years continue to pass even after the 65 that have already gone, the sheer magnitude of WWII has left plenty of lessons to learn in the present day.