We have heard much in recent years about microloans, most of which are provided by non-profit organizations. These very small loans are offered at low interest and provide the tools by which entrepreneurs, a majority of whom are women, can begin to build a better, more productive life. Like any good thing, a movement like this can see the potential for corruption and scandal. And scandal has touched the microfinance movement, especially places like India, where for-profit entities have moved in. So, how do we support this movement while being aware that there are wolves in our midst? Martin Marty takes a look at the movement, its potential, and the dangers.
- Martin E. Marty
Sightings has no difficulty focusing on microfinance, which manages to be in the news, for better or worse, more days than not. Nonprofit microfinance is one of the biggest stories of religion-in-action around the world. If it deals mainly with the “poor world,” as it naturally would and should, it also involves people down the block or in religious institutions nearby. Religious leaders are engaged in producing funds for extremely low-interest loans to the poor who have extremely little opportunity to secure bank loans.
Microfinance is a concept and reality that was unfamiliar to most publics in America until a few years ago. It began to become newsworthy and familiar when Muhammad Yunus, who as much as anyone else can be called its founder, won the Nobel Peace Prize. Philanthropedia, which spreads news in this field, likes to quote him: “One day our grandchildren will go to museums to see what poverty was like.” That day is as far off as one can imagine, but its coming is conceivable.
Stage Two in the news has been the linking of words like “corruption” or “scandal” to microfinance as it unfolds in parts of the for-profit world. Martin Assogba, President of the Association Against Racism, Ethnocentrism, and Regionalism in Benin, noted to the news organization IRIN that “where there is a large infusion of money [into situations of great poverty] a ‘mafia’ soon develops around it.” Crooks, often relatives, intervene in the lending process, at the expense of borrowers and the good name of microfinance. The Economist, focusing on crises in India, questions whether microfinance in such circumstances is even a good idea. Non-profits work to keep their vocations pure.
These seasons, call them the times of “Stage Three,” a good deal of sorting is going on, and the nonprofits are winning back their good name. Philanthropedia examined 131 nonprofits and picked a top dozen, including FINCA. I’ll make a case study of the one I know best, Opportunity International. Too many years ago two Martys visited fourteen projects in which we had interests in Guatemala. The vision, experiences, and lessons stay with us. (OI takes supporters on tours, not to luxury resorts but to the bad scenes where good things are happening.) Opportunity International, number five in the Philanthropedia rating, like so many other nonprofits, is Christian-based, but loans to people of all faiths.
Picture this: The annual report lists 1,357,828 active loans, so clients can be entrepreneurs and make a difference. Many of these microfinance agencies have had to start banks in places where banks are out of reach of those who could use them best. Number of savings accounts? There are 562,101 of them alongside 1,016,507 “microinsurance policy holders. OI now fosters Trust groups,” who help assure that weaker members can pay back in worst times. A $136 loan is all that first-time clients need to get started, and 95% of them pay back, soon, so others can get started. Of these clients 84% are women, and 99% of the 11,501 staffers in 20 countries are nationals. Whoever has met some of the borrowers pictures faces and families ever after, not dollar signs and statistics. While the mannequins of state scheme about billions in our world, some of us believe that $136 here and there might make great humane differences that are just as important. Take a look.
Editorial, “Under Water,” The Economist, December 9, 2010.
“Ranked Nonprofits: International Microfinance,” Philanthropedia, 2009.
Opportunity International, “Microfinance-A Working Solution to Global Poverty,” 1 min., 23 sec video on YouTube.
IRIN, “Microfinance Industry Breeds Corruption,” SperoNews, January 8, 2009.
Martin E. Marty's biography, current projects, publications, and contact information can be found at www.illuminos.com.
Sightings comes from the Martin Marty Center at the University of Chicago Divinity School.