“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”
- Chinese Proverb
Each time someone comes with that donation card or tin, i’m very likely to smile and say, “No thanks.” I suppose I’m not so much of a donations person.
Why? I feel that donations result in the beneficiaries being too dependent on goodwill. And while I know there are cases where donations may be the only way for some organisations to survive because the community they serve are totally disabled, I think most can probably find a sustainable model that creates some sort of value in exchange for money. Take www.doing.gd for instance, they try to create a sustainable model whereby people inflicted with leprosy and amputees can make sandals which are then sold. This means that the lepers can earn a living and the people who part with their money do so much less because they ‘pity’ but because there’s an actual product they want to buy. Relying on goodwill is very dangerous because it could be withdrawn at any given moment leaving the beneficiaries stranded.
So for me, I choose to make a difference through microloans or microcredit(specifically Kiva). As defined by wikipedia, “Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship” I think it’s a much better way of helping them because you lend them money to start little businesses which then generate employment for their villages and towns. It could mean that some people no longer have to work in hazardous jobs in unsafe mining operations or jobless folks don’t have to resort to begging or committing crime. And because it’s a micro-loan, the money that’s lent is usually returned(as with all loans there is a risk) and we can then re-loan it to someone else. In comparison to donations, this becomes a more sustainable way to help people out of poverty by giving them the necessary resources to be independent(and not be dependent on goodwill). Better yet, the efforts would be totally their own – their own people helping themselves which potentially gives them the confidence to tackle bigger issues in their lives and communities.
Also, statistically, microloans also have a much lower default rate as compared to traditional loans with many describing it as low as 1%. It’s interesting because there’s actually social pressure at work here. Several institutions have followed the Grameen Bank model have used the instrument of joint liability to achieve this – loans are issued to individual borrowers but a whole group of people(the village or some self-formed group) are held liable. Because of that, borrowers have a greater sense of responsibility because they must not burden their neighbours. I suppose in that sense, it’s an extension of the guarantor system most of us are accustomed to. Just imagine if your whole neighbourhood is held liable, you’d probably pay up on time so that you don’t have your neighbours getting all pissed at you.
So in the end, I feel that microloans provide so much more social mileage so long as the organisation managing the loans have proper procedures.
What do you think? Are you taking part in some form of micro-lending? If not, why?
( I have taken part in Kiva for most of this year and currently have 8 loans under my account, 5 of which have been fully repaid. You can view my page here. If you would like to start taking part in Kiva, you can also join my Lending Team where we can track our collective effort)
