#Mifimon: Microfinance in Your Backyard

Twitter folks present (in alphabetical order): @AJRenold, @amycarolwolff, @Grameen_DC, @ianscotthaisley, @lethalsheethal, @lend4health, @optinnow, @rarenaud, @robgarciasj, @savetogether

This week’s call to action:

1. Find an article on U.S. microfinance and post it as a response to this blog and on our #Mifimon facebook page.
2. Have a conversation with a friend or colleague about U.S. microfinance and tell us about it here via a response to this blog!

Let’s build on the great conversation last week (Sept. 24) on #mifmon about domestic microfinance. Some of the major points that came up through the conversation is the a) need for other lending options in the U.S. besides “payday” and credit cards b) the crucial need for financial education and training when building a microfinance program and c) considering whether or not U.S. microfinance actually takes away resources from international microfinance. Specifically, is there a need for “banking services for the poor” in one of the wealthiest countries in the world?

OPTIONS WORTH CONSIDERING

In a time when credit card debt is over $2 trillion dollars, and the banking system is in repair, @Grameen_DC suggested that business owners need other options.  Personally, on Tuesday, I had an interesting conversation with an economics professor at the Kelley School of Business, Indiana University,  regarding non-profit social service. While, admittedly, Dr. Hauskrecht is a cynic of all non-profit community and economic development efforts, he explained that the least harmful and most sustainable method of development creates two things 1) access to current trade markets, with consideration of the country’s current economic standards of interest rates or 2) creation of new trade markets, again with the same considerations. He explained that microfinance, when structured well, can do this both internationally and here in the states. It is important to note that the average size of a U.S. microloan is typically much higher than that of a developing economy.  But one could argue that this accurately reflects the United States’ standard of living and thus, current need. Thoughts on this?

COMMITTED TO EDUCATION AND TRAINING

One of the most important, and unfortunately, neglected elements of financial services is financial and business training and education. You can provide resources to clients, but if they do not have an understanding of how to accurately use these resources, it can create even deeper financial instability.

From the Opportunity International website:

Increasing clients’ financial literacy through the training modules and videos helps them to:

• Better understand the wide range of financial services available to them
• Increase their use of savings accounts and insurance products
• Better manage their credit
• Diversify their assets

And, this point was emphasized several times in the #mifimon twitter conversation – that when constructing a microfinance program, it is critical to weave in training and education as a core service offered to clients.

DEFINING “POVERTY”

Going back to the old Merriam Webster definition of poverty, we’re discussing a state of an individual or group that “lacks a usual or a socially acceptable amount of money or material possessions”. And of course, no one would deny that we have poverty in the United States. But because the face of poverty is different in the US and in other developed nations, it has the danger of being considered as less urgent or important. And this is why I’m grateful for organizations committed to serving the working poor in the developed world. In these nations, poverty is no less psychologically devastating, emotionally taxing or emotionally humiliating. However, instead of being characterized by dirt roads, poor infrastructure, and poor sanitation, it comes in the form of your neighbor, exorbitant credit card debt, and a quiet shame of perpetual financial insecurity.  Thanks to organizations like Grameen America, Accion USA, Lend 4 Health, and others, these poor individuals may also have access to a much needed hand up.

NEXT #MIFIMON

Next week – let’s go international! Pick a country, learn about the microfinance market there and tell us about it here as a response to this blog!

Please join us on October 19, from 12pm-2pm on Twitter for our next #Mifimon! We’re always open to topic submissions! Feel free to post your suggestions in the comments section.