LDS Cooperative "one heart and one mind...with no poor among us"

Introduction to Microfinance

Microfinance is defined as:

The provision of small loans (microcredit) to poor people to help them engage in productive activities or grow very small businesses. The term may also include a broader range of services, including credit, savings, and insurance.

In 2006 Muhammad Yunus, the founder of the Grameen bank was awarded the Nobel Peace Prize. The Grameen bank in Bangladesh gives microfinancing to the poor to help to lift them out of poverty. The press release stated:

"The Norwegian Nobel Committee has decided to award the Nobel Peace Prize for 2006, divided into two equal parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development from below. Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights."

With Web 2.0 there are now peer2peer (P2P) microcredit organizations that will allow regular internet users to help to lift people out of poverty in easy and personal ways. They allow the lender to get regular updates from the person they are investing in along with pictures. If peer2peer microcredit becomes as big as ebay or amazon, and all the indicators show that it will be, then we could see the elimination of poverty by 2017.

There are 3 main types of P2P Online Microcredit Organizations:

1) Kiva.org - this is the first and largest P2P Microcredit Organization with over $27,000,000 in loans and 40,577 lenders. It has a repayment rate of 99.7% and is a non-profit organization. Because it is a non-profit organization it does not allow interest to be made on loans. Nonetheless, it is the largest P2P Microfinancing Organization on the web with field partners in almost every continent and it is by far the most intimate of all P2P Microfinancing organizations on the web where you really feel you are helping individuals.

2) MicroPlace.com -a wholly-owned subsidiary of eBay, was launched on October 2007. This website also caters to the micro-borrower with a little difference from Kiva.org. The big difference between MicroPlace and Kiva...is that loans will be securitized (and therefore potentially trade-able), and lenders will earn interest. Unlike Kiva, lenders on MicroPlace invest in microcredit by purchasing securities. Funds generated by these sales are then invested in microcredit institutions around the world. MFIs, in turn, solicit clients, make loans and collect payments - they do their normal day-to-day business. Once client payments are in, the institutional investors receive their loan (plus interest) who can then pay back their investors - people who purchased those original securities.

3) MyC4.com - a Denmark P2P Banking and Microfinance Web based Organization that stands for "my care for". It's mission is to eradicate poverty through the power of business in support of the United Nations 2015 Millennium Development Goals and Global Compact. The lender receives higher interest on their loans making it more of an investment scheme for people that want a return on their money. It is quite new with 3000+ members and growing fast.

At LDS Cooperative our goal is to have every Latter Day Saint involved in Microcredit and in eradicating poverty.

We encourage those Latter Day Saints who are involved in empowering the developing world through microcredit to post about their experiences on our forum to help encourage other members of the church to do the same.