Micro-Grants, in Person-to-Person fashion: DonorsChoose.org

DonorsChoose.org facilitates privately-funded Micro-grants benefit students in the classroom. The non-profit was founded in 2000 by teachers in the South Bronx as a way to help support their classrooms.

The platform allows donors to choose the classroom and project that they would like to fund. From literacy and music programs, all the way down to “we need more pencils.” Donors can contribute any amount they want to support these classroom projects.


Prospective donors can sort by the urgency, geographic location, academic subject or even the poverty level of the school program they would like to support.

DonorsChoose has received a four-star rating from Charity Navigator, and 86% of their income directly supports programs. Also, their nearly $16,000,000 budget is entirely supported without government support—driven only by donors.


If a program is not fully funded by the date the funding is needed, the money is returned to the donor, who can reinvest it in another project.

Jessica Ward is a freelance writer and blogger in Seattle. She also blogs at http://www.pennywisefamily.blogspot.com/.

Microfinance: By Children, For Children

My only travels in the developing world thus far are limited to the month I spent in Ethiopia last year. I marveled at the ingenuity of the children—many of whom fended for themselves. When I visited orphanages, I carried with me more than 5,000 “twisting balloons” to make balloon hats and animals for the kids. The rough terrain, rowdy behavior and stray voltage common there was hard on the balloons, and they popped almost instantly.

What surprised me was that the children collected up every last scrap of broken balloon and put them to use. Some made jewelry, some built sling-shots, others took the ends and made hair elastics from them for braids. A balloon micro currency erupted in each building that I visited over the two weeks that my balloon supply held out.

Another thing that I’ve learned from families who have since visited is that the balloon currency still exists in some of the buildings—months later! Children have stashed and preserved balloons (some still intact and un-inflated) for another day.

My mind came back to this scenario when I saw a story today on the Children’s Development Bank (CDB). CDB is a bank run by and for children in India, Afghanistan, Bangladesh and Nepal.

CDB serves the street children of these countries. These kids use their entrepreneurial skills as workers for hire. Because street children are so vulnerable to theft, they rarely amass enough money to make an entrepreneurial move in building their business or education. Instead, they spend what they need to meet their day-to-day needs and spend the rest of their money on small luxuries (Pepsi and chewing gum were the favorites among the street children in Ethiopia).

CDB is solving this problem by providing interest-bearing deposit accounts to children as well as low interest microloans. The novelty of this plan is that the entire business is operated by children. A board of children determine who will receive loans—and they evaluate the credibility and creditworthiness of the child who wants the loan, as well as their intentions. The children on the advisory board also determine membership, eligibility and the size of the loan available as well as interest paid on savings for members of the bank.

Children are encouraged (and do) invest in the bank their daily earnings. They also take loans to improve their education or business services. They can borrow for items such as inventory (many children in Ethiopia had toilet-paper sales businesses) or shoe-shine supplies or any number of other tools to provide their services.

While the process is facilitated by adults with knowledge of finance, recordkeeping and banking, children are the decision-makers.

You can read more about the Children’s Development Bank by visiting their Web site at http://www.childrensdevelopmentbank.org/new.htm.

IMAGE CREDIT: CDB Web Site www.childrensdevelopmentbank.org

Jessica Ward is a freelance writer, blogger and mother of two children. She blogs at www.pennywisefamily.blogspot.com.

Information solutions for the microcredit industry

Microcredit is supposed to describe loans offered with no collateral to support income-generating businesses aimed at lifting the poor out of poverty. Yet today there are many organizations that call themselves “microcredit” programs that offer loans to people who are not poor, that require collateral, and that are used primarily for consumption rather than income generation. There are even “microcredit” programs that are generating enormous profits for investors by charging interest rates as high as 100 percent or even higher!

Under the circumstances, we really don’t know what we are talking about when we talk about microcredit. I think it is time we classify microcredit programs according to clear, consistent categories. - Muhammad Yunus in Creating a World Without Poverty

Last month Muhammad Yunus spoke at George Washington University. He talked about creating social businesses and microcredit. His speech was well timed - It just so happens I'm currently a graduate student at GW and am working with a small team to build a Microfinance Resource System for lenders.

With over 3,000 microcredit organizations, investors face a bewildering variety of options. A lender may want to focus his efforts on a specific country, concentrate on female borrowers, or loan to only the most destitute. He may want his contribution to be tax-deductible or may require his capital be repaid over time with interest while avoiding usurious organizations who exploit borrowers under a ruse of generosity. We hope to solve these problems and the challenges raised by Dr. Yunus in his book.

We recently submitted this project to Dell's Social Innovation Competition. Voting ends today at 5PM CST. We were ranked as high as #4 out of 500+ projects but have slipped due to a flurry of last minute voting. We need to get back in the top 25 to advance to the next round. Please read our 250-word project description, register (takes 1 minute), and vote now.

Microfinance Lending Resource System

Update: Thanks LazyMan for helping to promote the project.

Microcredit pioneer: Economic crisis is good

Last week at The George Washington University, microcredit pioneer Dr. Muhammad Yunus spoke about the financial crisis and creating a new normalcy that benefits the poor. I just came across this YouTube clip from the World Economic Forum at Davos. Here Dr. Yusus echoes many of the same ideas.

Yunus calls the current economic crisis "good" and "exciting" because it gives us an opportunity to create a "new normalcy." He says we should redesign the whole financial system so it is inclusive for all people. We should also create new types of business to change the world - social businesses. Through this, he believes, we can create a world without poverty, hunger and disease.

Dr. Muhammad Yunus to speak on microcredit at George Washington University

Dr. Muhammad Yunus, founder of the Grameen Bank and a pioneer of microcredit, will speak at George Washington University in Washington DC on Wednesday. I have a ticket and a bunch of questions I'd love to ask if I get a chance. What would you ask?

Hooks Book Events presents Dr. Muhammad Yunus
2006 Nobel Peace Prize Winner

The winner of the Nobel Peace Prize outlines his vision for a new business model that combines the power of free markets with the quest for a more humane world—and tells the inspiring stories of companies that are doing this work today.

In the last two decades, free markets have swept the globe, bringing with them enormous potential for positive change. But traditional capitalism cannot solve problems like inequality and poverty, because it is hampered by a narrow view of human nature in which people are one-dimensional beings concerned only with profit.

In fact, human beings have many other drives and passions, including the spiritual, the social, and the altruistic. Welcome to the world of social business, where the creative vision of the entrepreneur is applied to today's most serious problems: feeding the poor, housing the homeless, healing the sick, and protecting the planet.

Creating a World Without Poverty tells the stories of some of the earliest examples of social businesses, including Yunus's own Grameen Bank. It reveals the next phase in a hopeful economic and social revolution that is already under way—and in the worldwide effort to eliminate poverty by unleashing the productive energy of every human being.

Muhammad Yunus, a native of Bangladesh, was educated at Dhaka University and was awarded a Fulbright scholarship to study economics at Vanderbilt University. In 1972 he became head of the economics department at Chittagong University. He is the founder and managing director of Grameen Bank, a pioneer of microcredit, an economic movement that has helped lift millions of families around the world out of poverty. Yunus and Grameen Bank are winners of the 2006 Nobel Peace Prize.

Update: Transcipt of speech

Where in the world is microfinance?

This is a summary/analysis of where US microfinance reaches. I'm profiling the organizations included below (in no particular order). I hope you find this as enlightening as I did. If you're aware of other organizations, let me know about them and I'll add them in.

• Opportunity.org - Offers microloans and services to 1.1 million working poor in 28 developing nations.
• Unitus.com - Unitus, an international nonprofit organization, works to reduce global poverty by increasing access to life-changing microfinance services.
• Globalpartnerships.org - Global Partnerships currently works with 21 organizations in Latin America.
• Villagebanking.org - FINCA International provides financial services to the world's lowest-income entrepreneurs in 21 countries so they can create jobs, build assets and improve their standard of living.
• Microplace.com - Owned by eBay since 2006, MicroPlace's mission is to help alleviate global poverty by enabling everyday people to make investments in the world's working poor.
• Endpoverty.org - Since 1985, Enterprise has equipped over 200,000 families all over the developing world to support themselves through their own entrepreneurial efforts.
• WholePlanet Foundation – A division of Whole Foods, provides microloans to microenterprises in ten countries. Unlike Kiva and others, it does not appear that lenders are able to choose the program or individual they would like to contribute to. Total authorized grants to partners as of October 2008 are nearly Eight Million Dollars US.
• KIVA.org – Kiva’s slogan is “loans that change lives” and is one of the leaders in the microlending community. The Kiva Web site allows loan funders to choose individual borrowers to fund, and Kiva estimates that by 2010 they will have facilitated $100 Million in microloans.
• WOKAI – Wokai, meaning “I go” in Chinese is an Oakland, CA startup and has provided just 43 loans in china, but is poised for growth—and has obtained substantial media in areas where its chapter membership is growing such as Seattle and San Francisco. Wokai reaches out to the Chinese-American community for help funding loans that recycle three times (to three different entrepreneurs) and is afterwards used for long-term lending by the lending partner in China.
• ACCION – Accion International is a long-term and global player in the microfinance world. They are active in 24 countries and the USA, and according to their Web site they have made $17.4 Billion in microloans. Their historical repayment rate is a stunning 97%.