Posted by Sue Landsman on Mar.08, 2010

©iStockphoto.com - Patryk Galka

We all want to make a difference, and to encourage our children to help others who are less fortunate. These days, though, it’s hard to feel like we can. Often we’re overwhelmed by the magnitude of destruction caused by earthquakes, or we worry that charity is only a short-term help. And as far as kids go, many places won’t let them volunteer because of insurance reasons. A concept called microlending, however, lets you make a direct difference in someone’s life, for a small amount of money - small enough that your kids can even do it themselves with saved-up allowance money.

Microlending is the private lending of small loans to poor people with valid business ideas. Often these people do not have the personal worth to be served by a bank or apply for credit. Bypassing the banking system and lending them money directly allows poor people with entrepreneurial drive or unused skills to make a step out of poverty. The loans can be for as low as $20, and can go towards things ranging from the buying of livestock to purchasing raw materials for crafts and manufacturing.

Sites such as Kiva use the internet to help lenders match their money with individuals needing loans. They also help people put their money together to make group loans to individuals. Aside from helping connect generous lenders with motivated, hard-working people around the world, microlending organizations help create a world-wide community. According to Kiva.org, “By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.”

Many of the beneficiaries of the loans are women in poor countries, who for the most part pay back their loans and invest most of their profits into their children’s education. Here are a few examples from Ghana, from the Kiva site: Gladys trades in plantain and is using her loan to buy in bulk; Elizabeth is divorced with six children (all in school), and is using her loan to buy jewels in bulk to trade in neighboring communities; Mary designs and sews dresses when she is not training her apprentices and is using her loan to buy fabrics and other accessories in bulk.

For parents, microlending is a great way to teach their kids the value of money as well as a little bit of geography. For the price of an iTunes album, a child can help someone homeless open up a restaurant, buy livestock to feed themselves and their community. A picture book called “One Hen - How One Small Loan Made a Big Difference” by Katie Smith Milway describes how a boy named Kojo turns the loan for one hen into a thriving business. It’s a colorful book that will appeal to younger children while teaching older ones about economics and the power of investing in others.

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Posted under GDM News & Politics, Living.