Pragmatic Proposals

Domestic microfinance

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.

Getting Involved

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.