Comments on: Microfinance’s “failure” to reach the poorest http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/ Exploring how to get real change for your dollar. Thu, 17 May 2012 08:15:11 +0000 http://wordpress.org/?v=2.0.7 by: Kimberly V http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-151760 Wed, 11 Aug 2010 04:22:38 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-151760 My view of microfinance has become quite simple. A healthy financial services sector that provides appropriate, affordable services to all segments of society is very important to development. As we well know, the private sector alone will not meet this need - nonprofit organizations and governments have important roles to play in innovation for poorer market segments and risky areas like agricultural finance, capacity building, oversight, etc. If you identify with the need to build systems that societies need to function well, then find a good microfinance support organization to donate to (someone really should do a comparative analysis to figure out which ones are "good" from this point of view). If, on the other hand, you want to maximize the impact of your donation on individual lives, or a specific group of people, look elsewhere. My view of microfinance has become quite simple. A healthy financial services sector that provides appropriate, affordable services to all segments of society is very important to development. As we well know, the private sector alone will not meet this need - nonprofit organizations and governments have important roles to play in innovation for poorer market segments and risky areas like agricultural finance, capacity building, oversight, etc. If you identify with the need to build systems that societies need to function well, then find a good microfinance support organization to donate to (someone really should do a comparative analysis to figure out which ones are “good” from this point of view). If, on the other hand, you want to maximize the impact of your donation on individual lives, or a specific group of people, look elsewhere.

]]> by: Allie http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-141567 Tue, 29 Jun 2010 16:17:48 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-141567 I think it's important that we also think about who is receiving these micro-loans, especially of our goal is to alleviate suffering. Most of the time it is women receiving these funds and the focus is on economic gain. This can sometimes lead to improvement in their financial situation, but many times women are still being oppressed and discriminated against. Microloan programs also need to incorporate a social justice program in order to address the issue of gender inequality. I think it’s important that we also think about who is receiving these micro-loans, especially of our goal is to alleviate suffering. Most of the time it is women receiving these funds and the focus is on economic gain. This can sometimes lead to improvement in their financial situation, but many times women are still being oppressed and discriminated against. Microloan programs also need to incorporate a social justice program in order to address the issue of gender inequality.

]]> by: Robert Daoust http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-141257 Sun, 27 Jun 2010 19:12:27 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-141257 "We also believe that the ability for donors to see the actual people benefiting from their generosity provides a great opportunity to build viral awareness for these projects!" This is an appealing idea, Benjamin, and SeeYourImpact looks interesting, in spite of some criticisms from the GiveWell perspective that may come to mind. Perhaps you and I should talk about the question I asked at http://groups.yahoo.com/group/givewell/message/200 : "How can I stop or prevent at least one occurrence of excessive suffering?" If you feel so, you might take part in the GiveWell Yahoo group, or write to me at info@algosphere.org. “We also believe that the ability for donors to see the actual people benefiting from their generosity provides a great opportunity to build viral awareness for these projects!”

This is an appealing idea, Benjamin, and SeeYourImpact looks interesting, in spite of some criticisms from the GiveWell perspective that may come to mind. Perhaps you and I should talk about the question I asked at http://groups.yahoo.com/group/givewell/message/200 : “How can I stop or prevent at least one occurrence of excessive suffering?” If you feel so, you might take part in the GiveWell Yahoo group, or write to me at info@algosphere.org.

]]> by: Benjamin Jenson http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140965 Fri, 25 Jun 2010 22:46:57 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140965 I definitely agree Robert with what you're saying about evidence-based philanthropy, as this is something we've given a lot of thought to at <a href="http://seeyourimpact.org" rel="nofollow">SeeYourImpact</a>. While there's a tremendous need to help the 1.4 billion people in extreme poverty, as Sarah says, micro-loans aren't always the most appropriate solution. While micro-donations may not have that same 'self-starter' appeal of micro-loans, the organizations and projects we support are doing an incredible job of giving those in extreme poverty a hand up. We also believe that the ability for donors to see the actual people benefiting from their generosity provides a great opportunity to build viral awareness for these projects! I definitely agree Robert with what you’re saying about evidence-based philanthropy, as this is something we’ve given a lot of thought to at SeeYourImpact. While there’s a tremendous need to help the 1.4 billion people in extreme poverty, as Sarah says, micro-loans aren’t always the most appropriate solution.

While micro-donations may not have that same ’self-starter’ appeal of micro-loans, the organizations and projects we support are doing an incredible job of giving those in extreme poverty a hand up. We also believe that the ability for donors to see the actual people benefiting from their generosity provides a great opportunity to build viral awareness for these projects!

]]> by: Robert Daoust http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140923 Fri, 25 Jun 2010 17:01:05 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140923 "It’s another debunked myth, and another sign that the funding and the stories have gotten ahead of the facts." It's also another instance of using the concept of excessive suffering (under the guise of expressions like "extreme poverty", "the very poor") for reaching ends that are, as a matter of fact, connected to the alleviation of suffering only by wishful thinking. In order to get rid of that kind of pervasive ambiguity which is so profoundly harmful, I suggest that there should be a whole new philanthropic sector oriented toward the direct, evidence-based, and systematic alleviation of excessive suffering, while the rest of philanthropy would continue to be concerned with the usual causes, like economic development, health, education, justice, etc. “It’s another debunked myth, and another sign that the funding and the stories have gotten ahead of the facts.”

It’s also another instance of using the concept of excessive suffering (under the guise of expressions like “extreme poverty”, “the very poor”) for reaching ends that are, as a matter of fact, connected to the alleviation of suffering only by wishful thinking.

In order to get rid of that kind of pervasive ambiguity which is so profoundly harmful, I suggest that there should be a whole new philanthropic sector oriented toward the direct, evidence-based, and systematic alleviation of excessive suffering, while the rest of philanthropy would continue to be concerned with the usual causes, like economic development, health, education, justice, etc.

]]> by: ComplexMeme http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140792 Thu, 24 Jun 2010 20:52:09 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140792 Loans can be a very efficient means of helping those that already have a reliable (but small) source of income. A loan allows a small business-owner to buy tools or machines or storage space, or to start buying supplies up-front in bulk. Temporary economic breathing room allows for permanent economic improvements. The world's poorest are not best helped by loans because they can't afford to repay loans. It's foolish to use money to buy capital to allow later repayment when you need the money to buy bread. Loans can be a very efficient means of helping those that already have a reliable (but small) source of income. A loan allows a small business-owner to buy tools or machines or storage space, or to start buying supplies up-front in bulk. Temporary economic breathing room allows for permanent economic improvements.

The world’s poorest are not best helped by loans because they can’t afford to repay loans. It’s foolish to use money to buy capital to allow later repayment when you need the money to buy bread.

]]> by: sarah http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140769 Thu, 24 Jun 2010 18:32:32 +0000 http://blog.givewell.org/2010/06/24/microfinances-failure-to-reach-the-poorest/#comment-140769 This is the painful truth about microfinance; and it has been true for the last 30 years. It is not the great panacea to reach the poorest of the poor that aid workers want to believe it is. This is the painful truth about microfinance; and it has been true for the last 30 years. It is not the great panacea to reach the poorest of the poor that aid workers want to believe it is.

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