In international microfinance, small loans are made to help people in developing countries lift themselves out of poverty. This concept also works domestically. In the U.S., nonprofit microfinance organizations help low-income people start businesses, create jobs, alleviate poverty and improve their opportunities.
Traditional financial institutions were created to help people who already have money or credit histories. However, nearly one in seven people in the U.S. lives below the federal poverty level of $23,850 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 nowhere to turn for financial training and support.
Serving this segment is where nonprofit microfinance organizations can play a key role — offering training, business coaching, loans, credit and other banking services. With this support, aspiring low-income entrepreneurs can launch their own businesses. Entrepreneurship allows them to increase their incomes, provide jobs for others and lift themselves out of poverty.
Research shows that domestic microfinance has a tremendous impact by supporting people who want to work hard and grow a business. This business helps not only themselves, but also their employees, neighborhoods and communities.
Nonprofit microfinance organizations in Colorado
Accion New Mexico Arizona Colorado is part of Accion USA, a national network of micro lenders helping small businesses obtain the training and financing they need to succeed. Accion NMAC offers loans that range from $200 to $500,000. In 2013, it loaned more than $10 million to nearly 1,500 small businesses in a three-state region, with an average repayment rate that exceeded 98 percent. To date, Accion NMAC has created or sustained more than 7,000 jobs in 330 communities.
Accion and other nonprofit micro lenders are able to provide financing to deserving entrepreneurs because of the generosity of donors who understand that such loans, although not profitable, will generate jobs and a vital social impact on communities.
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. In just three years, RMMFI has helped launch 83 businesses in Denver — changing lives as well as providing incomes and jobs for new business owners and their employees.
"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."
The Colorado Enterprise Fund is an alternative lending source specializing in loans for small businesses and startups that are unable to receive traditional bank financing. For almost 40 years, in partnership with banks, foundations, government agencies and industry leaders, it has provided more than $35 million in loans to more than 1,600 state businesses to help create or retain more than 9,600 jobs.
Nonprofit microfinance organizations nationwide
Like Accion USA, Grameen America is a national nonprofit micro lender. It is focused on helping women who live in poverty build small businesses to create better lives for their families. Grameen America has supported the efforts of more than 32,000 women in nearly 400 communities across the United States.
Project Enterprise supports entrepreneurs in under-resourced neighborhoods across New York City, with loans, training and access to business networks.
Rise Financial Pathways provides micro loans, peer lending and small business loans 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.
Philanthropists who wish to help people 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 and create jobs with one action.
Bruce DeBoskey, J.D., is a Colorado-based philanthropic strategist working with The DeBoskey Group to help businesses, foundations and families design and implement thoughtful philanthropic strategies and actionable plans. He is a Teaching Fellow with Boston College's Center for Corporate Citizenship. More information at deboskeygroup.com (www.deboskeygroup.com)
Legislative update: proposed law could impact your donations
In late July, the U.S. House of Representatives passed HR 4719, the "America Gives More Act," which will be considered by the U.S. Senate when it reconvenes after the current August recess.
The bill would:
• Permanently extend the IRA Charitable Rollover allowing persons aged 70½ and older to make up to $100,000 in donations to charities from their IRAs.
• Extend the time period for taxpayers until April 15 for charitable donations that would count on their previous year's tax filings.
• Enhance the tax credit for donations of food inventories from corporate donors to nonprofit food pantries.
• Make the tax deduction for donations of charitable conservation easements permanent.
• Reduce the private foundation excise tax to 1 percent.
As with most issues in Congress these days, there is a partisan divide over the changes. If you might be impacted, learn more and speak with your U.S. representative or senator soon.