Would You Spend $25 to Fund the Business Dream of Someone You’d Never Met?
Jonathan over at Smart Wealthy Rich wrote a post recently that received a great deal of positive feedback, questions, and pushback. His post, Dont Buy Me A Beer, Use That Money For Something Else instead talked about the benefits of donating to organizations like Kiva that offer a hand UP to budding entrepreneurs throughout the world through microloans that are funded by the public in $25 increments.
Some background on microloans aka, microcredit from Wikipedia:
Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty who are not considered bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit.
While most readers were supportive of Jonathans post, some offered questions, concerns and criticism about the idea of lending money to poor people in countries other than their own.
These are valid points that Id like to address further based on my own experience with donating to Kiva.
Question: Would it really help poor?
You can certainly donate money to someone with great intentions who had no idea how to use it. However, the entrepreneurs listed on Kiva have already proven successful in starting a business and now need money to grow their business. Each person has been through a review process.
Kiva works with field partners like MIFEX, a savings and loan corporation that offers special services and business growth educational programs for the poor.
Question: What if theyre ignorant of these loans?
I’m assuming this means, ‘what if they don’t know how to spend this money wisely?’ Each person Kiva profiles knows exactly how they will spend their money in order to grow their business.
For example, one person that I sponsored, Lidys Fajardo from Ecuador, needed the $600 loan to purchase new supplies for the salon that pays for the education of her 5 children.
Lidys runs a hair salon where she styles and cuts hair. She has been in this line of work for over 15 years. After working in the beauty salon of a family member, Lidy’s decided to start her own operation with $50 of capital. She opens her salon at 9 in the morning and works until about 8 p.m. She needs the loan in order to buy better equipment for her operation. She needs new scissors, a blow dryer and a hair iron.
Lidys is a 34 year old mother of 5 children. All of her kids are in school thanks to the income she generates from her own salon. She hopes to continue to improve her services and attract a larger amount of clients.
Question: How long before they repay?
If you were to take out a loan that would greatly improve your business, how long do you assume the terms of the repayment would be? Most ‘small’ loans in the US are paid back over 3-5 years. However, I’m seeing a much faster rate of payback with Kiva.
I donated $25 to Lidys back in December and now 7 months later she has repaid 75% of her $600 loan.
Another entrepreneur that I donated $25 to in December named Akouvi Adry has repaid 50% of the $800 loan she needed to strengthen her clothing trade and will allow her to add to her shoes and bags for ladies inventory.
Question: I think the idea of sponsoring a budding entrepreneur is a great idea. But, what about sponsoring one near home?
Good point. I suppose that this depends on where you consider home and where you draw the line between us and them. Where is close to home? Is it your neighborhood, your state, your country, or your world? There are lots of ways to support companies closer to home by choosing to spend your money at small businesses in your neighborhood or buying products online from smaller companies instead of Amazon.
Kiva allows you to help entrepreneurs in impoverished countries that you would have no access to otherwise.
Would you spend $25 to fund the business dream of someone in another country that you’d never met and probably never will? Why or why not?
Christine,
I know that we are on staff together and we did not discuss this post prior to it going live. Just like many of our readers, I just read it for the first time.
I like the “US” and “THEM” point. I’m proud to be an American; however, that pride can sometimes lead to arrogance. It’s true that there are people in the US needed help as well. Sadly to say, $25 will not go very far in the US unless multiplied many times over.
As for supporting US businesses, like you stated buy from the small guy instead of Amazon. How about shopping somewhere besides MEGA CENTER USA (you know where) and giving that business to the little guy?
I have a great idea about helping someone in the US. The $25 may not go far, but what about becoming a mentor for a budding entrepreneur. Ah, that’s an idea.
Based on what you said about KIVA, I wouldn’t have a problem sending $25. I would be much more skeptical of a random e-mail asking for help.
I enjoyed your post and hope my comments spark additional comments.
David
Great point about mentoring David – That is an excellent way to give a budding entrepreneur something of limitless value for the cost of only your time.
I didn’t see anything here about what my ROI would be…Haha…J/K…Kinda. I think this is a great example of compassionate capitalism. I would much rather purchase a product or service from some one that is having a fundraiser than just give money away. This seems to be a great way to be a blessing at the same time teaching discipline and character to someone that is looking to better their situation. I like the concept! I definitely agree with the mentorship concept! That is what has gotten me to where I am today. Great mentorship from people that are in life where I want to be, that have had the grace of allowing me their time and mind.
I love the idea of helping the global market. David, your point that $25 does not go far in the US is exactly why I would want to help someone in an emerging marketplace. I do not have a lot of money to donate right now. I can find $25 though. It would be a lot more rewarding to watch the progress of someone like Lidys with my small donation rather than feel as if I made no impact here.
wow, What can I say? Thank you so much Christine for posting about it (and thanx for the link too, appreciate it!).
I like the part where you wrote “Is it your neighborhood, your state, your country, or your world?” – we’re all living on the same planet, so honestly to me, giving $25 to a fellow Montrealer (I’m in Montreal, Canada), or giving $25 to someone in Cambodia, it’s pretty much the same, at least to me – same amount of money out of my pocket to help someone. For as long as it helps someone I’m happy. I much rather spend time with Montreal entrepreneurs help them develop their business, than giving them $25. On the other hand the same $25 will help tremendously if you give it to someone living in Viet Nam, Nigeria or Cambodia.
i already donate money to the World Wildlife Foundation (www.wwf.ca) and others, and spend a lot of time helping entrepreneurs here. Makes me feel good to help people in other countries, in the end we’re all living on the same Earth.
Thanx again Christine!
I feel exactly as you do Jonathan – that in the end, we’re all living on the same earth. There are so many amazing people out there with the same fire that we have but with far fewer resources. It is rewarding on a very deep level to help anyone in any way that will truly make a difference.