By Bruce DeBoskey Tribune News Service
WWR Article Summary (tl;dr) This article takes a look at several U.S. Nonprofit microfinance organizations which help low-income entrepreneurs start businesses. From training to business coaching to loans, many of these groups are giving a HAND UP to those in need.
Tribune News Service
In international microfinance, small loans are made to help people in developing countries lift themselves out of poverty.
This concept is equally applicable here in the U.S. where nonprofit microfinance organizations help low-income people start businesses, create jobs, alleviate poverty and improve their opportunities.
Traditional financial institutions were created and are principally designed to help people who already have money or credit histories. However, in 2014, nearly one in seven people in the U.S. lived below the federal poverty level of $23,834 in income for a family of four. For these 47 million Americans, many working at minimum-wage jobs, traditional banking and lending programs are rarely available. Despite their dreams, hopes and plans for improving their circumstances, lower-income individuals have few places to turn for financial training, loans and ongoing support.
Serving this segment is where nonprofit microfinance organizations can play a key role by offering training, business coaching, loans, credit and other banking services. With this support, aspiring low-income entrepreneurs can launch their own businesses. Such entrepreneurship allows them to increase their incomes, provide jobs for others and lift themselves out of poverty.
Research shows that domestic microfinance can make a tremendous impact by supporting people who want to work hard and grow a business. Recipients of such loans help not only themselves but also their families, employees, neighborhoods and communities.
NONPROFIT MICROFINANCE ORGANIZATIONS There are many nonprofit organizations across the U.S. engaging in various aspects of domestic microfinance. Some of them are described here.
-Grameen America is a national nonprofit micro lender. It is focused on helping women who live in poverty build small businesses as a means of creating better lives for their families. Grameen America has disbursed more than 220,000 loans to more than 75,000 women, creating nearly 80,000 jobs in communities across the United States.
-Accion USA is a national network of micro lenders helping small businesses obtain the training and financing they need to succeed. Members of Accion's U.S. network have collectively made more than 57,000 loans, totaling nearly $500 million.
-Rocky Mountain MicroFinance Institute provides in-depth learning, lending and coaching to support community entrepreneurs who build businesses to advance along the pathway to self-sufficiency and self-worth. "Business ownership is risky, especially for someone with limited to no financial means or experience," said executive director Rob Smith. "RMMFI's investment goes beyond lending and activates the potential of its clients through education, capital and community engagement."
-Project Enterprise supports entrepreneurs in under-resourced neighborhoods across New York City, with loans, training and access to business networks.
-Chicago Neighborhood Initiative's Micro Finance Group focuses on low-to-moderate-income neighborhoods throughout Chicago and the surrounding suburbs.
-Rise Financial Pathways provides micro loans, peer lending and small business loans along with business training, asset development programs, and banking programs to entrepreneurs in Los Angeles. Since 1992, it has provided training, asset development programs and banking programs to nearly 100,000 people.
-Capital Good Fund in Rhode Island offers small loans, one-on-one financial coaching and free tax preparation to create pathways out of poverty.
Many other nonprofit organizations across the country qualify as Community Development Financial Institutions, or CDFIs. The CDFI Fund, a program of the U.S. Treasury Department, fosters the creation and expansion of the capacity of community-based financial institutions that specialize in providing affordable credit, capital and financial services.
Nonprofit micro lenders are able to provide training and financing to deserving entrepreneurs because of the generosity of donors who understand that such loans and education will generate jobs and potentially have a vital social impact on neighborhoods and communities. In addition to grants, microfinance is also a great opportunity for foundations and other donors to explore the use of Program-Related Investments.
Philanthropists who wish to help people here in the U.S. with a hand up have a great partner in the nonprofit microfinance community. Working locally or nationally, donors can help individuals, support families, alleviate poverty, improve communities and create jobs with one action. ___ ABOUT THE WRITER Bruce DeBoskey is a philanthropic strategist working with The DeBoskey Group (www.deboskeygroup.com) to help businesses, families and foundations design and implement thoughtful philanthropic strategies and actionable plans.