The Nobel Foundation vaulted microlending into national and international prominence by awarding Mohammad Yunus the 2006 Peace Prize. Arguably the most fashionable approach today to poverty-reduction, microlending is mainly practiced outside the United States, although a few organizations have ported the microlending model to the United States.
The rationale behind microlending is that poverty is, in part, a result of poorly developed markets for credit. With better access to capital, the poor can establish small businesses, invest in education or training, and otherwise participate in income and wealth-creating opportunities.
Can Microfinance Work in the United States?
Why hasn't microfinance taken off in the United States? To be sure, some 20 million families without bank accounts use high-cost "fringe banker" alternatives (e.g., check cashing services), but low-cost microfinancing is less common. This may be explained in part by higher operating and marketing costs in the United States.
If you wish to lend your support to a U.S.-based version of microfinancing, contact and support the microfinance providers that have received excellent ratings at CharityNavigator. As of this writing, a few well-known microfinance organizations, such as Lenders for Community Development and ShoreBank, do not yet appear in the CharityNavigator list.