Microfinance FAQs
What is Microfinance? Microfinance is the provision of financial services—small loans, savings, insurance—and business training to very low-income individuals, particularly women, to help them start and grow income-generating businesses. It is an effective strategy in the fight against poverty and critical in providing economic opportunity to those in need. Unfortunately, banks view these entrepreneurs as too risky for investment. That’s where MicroDreams, and you, can help.
What is a Microfinance Institution (MFI)? A microfinance institution is a group that provides a range of basic financial services that are tailored especially to the needs of poor people—especially those living in 3rd world countries. For example, an MFI can provide its clients access to basic savings accounts that have no minimum balance requirements or that have no recurring monthly fees. In this way, an MFI provides the range of financial services that otherwise are completely unavailable to poor families living in 3rd world countries. These financial services can help poor families get a rung on the economic ladder and work their way up and permanently out of poverty.
What is a Microloan? A microloan is a very small loan. It's typically given to a person living in a 3rd world country. The loan size might be as small as $200 or perhaps as large as about $4,000. It's not a gift, it's not a handout, it's not a grant. It is meant to be repaid. Microloans typically require 0 collateral and no need for proof of employment. This makes capital accessible for those who would normally not qualify. Microloans typically help very poor people living in a third world environment start and grow some sort of income generating business, improve their homes, or educate their children . In a nutshell, a microloan is all about providing meaningful economic opportunity so that people living in 3rd world countries can have hopes and dreams and follow them for a better tomorrow.
What is the Impact of Microfinance on Global Poverty? The short answer to that is microfinance has had an extraordinarily positive impact on global poverty. In fact, dire global poverty has been dramatically reduced and is far less acute than in the mid 1980s prior to the development of microfinance.
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Microfinance institutions address poverty by directly empowering poor women to start and grow small income generating businesses. She is then fully equipped to address the material poverty needs of her family. She can save money for the proverbial rainy day, invest in the house and nutritious food to create a healthy environment for her children. And, she can ensure that there are funds for education for all of her children, breaking the cycle of poverty for the next generation.
Why is MicroDreams the best charitable organization?
1. We are highly effective. MicroDreams provides a solution to poverty and not a band-aid. That is because we are not a handout organization but a hand up organization.
2. We are highly efficient. We lend money to women microentrepreneurs. Ultimately, they will pay us back. And, when the women repay their loans, we are able to then give that money to another woman to help her with her business, or with her basic housing improvements, or with her children's education. The money is revolved over and over again.
3. We work in markets where there is a lot of need. In the South Pacific, there is very little meaningful economic opportunity—especially for poor, rural women. MicroDreams is addressing an unmet need.
What makes our microfinance methodology so impactful?
1. We work only with women who aspire to be microentreprenueurs. We provide zero consumer credit unlike other microfinance institutions.
2. Our services are all extraordinarily convenient and accessible to our clients. Each and every week we provide meetings in nearly 2,000 different villages across the South Pacific. These are the meetings where our clients receive their full bundle of services.
3. Our clients do receive a full bundle of services. That bundle includes: small business training, financial literacy education, a savings account, basic death benefits, and their completely unsecured microenterprise development loan to help them build their microenterprise.
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4. We help scale the impact with two more products once the business is up and going. Those are the housing improvement financing and the childhood education financing.
What is the Impact of My Donation?
All donations, no matter the size, are welcome. Your donations get pooled with others to make a real impact. For example:
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$100 Covers the education of four children for one year
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$400 Finances one new business and changes the life of a family
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$1,500 Pays for the expansion of a small workshop
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$7,500 Helps to economically transform a small village
Who Do You Help?
MicroDreams partners with the South Pacific Business Development (SPBD) microfinance network operating in Samoa, Tonga, Fiji, Vanuatu, and the Solomon Islands.
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What is MicroDreams Relationship with SPBD?
We are a non profit and sister organization to SPBD. Your donations help fund dreams for women in the South Pacific. In the graphic below, you can see how MicroDreams accelerates SPBD’s ability to make an impact.
Do You Work with Family Offices, Corporations, and Other Large Donors?
Absolutely, please fill out the contact form and Polly will reach out to you.
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How Can I Get Involved?
Aside from donating, there are many ways to get involved with MicroDreams. The easiest is to follow and like / share our posts on social media. Additionally, you sign up for our newsletter, host a birthday fundraiser on Facebook, or register for our events.