Microfinance and Sustainable Change

By PSU EcoMerge Capstone - 8:22 PM

Throughout many types of aid work there are organizations that provide microfinance (also called microloans) to those in need. These loans are typically what the providers would consider to be small but make all the difference to someone living in poverty. They can be used to help people start small businesses, build infrastructure, and provide access to clean water and other live saving resources. They are most often taken out by women and help empower them to generate income and escape poverty.

Water.org is one organization that utilizes this type of aid in the form of WaterCredit, providing small, affordable loans to families in order to help them build their own permanent sanitary water systems at home. 92% of the loan recipients are women, who are disproportionately affected by lack of access to clean water because of their role in collecting and transporting it, which takes a great deal of time and effort. If they aren't collecting it themselves, the loan payments are often far less than they would already be spending for clean water, which can take the form of high fees to water merchants. Women especially can use the money and time they save to go to work, school, or spend more time with family, which are opportunities they wouldn't otherwise have.

One question that may arise from this method is, why give loans instead of just donating the money without expecting it back? Doesn’t this put even more financial burden on those living in poverty? In many cases, the loans are more sustainable in the long run because the repaid money goes directly back into the funds that can help many more families do the same. WaterCredit has a 99% repayment rate and they are often cheaper than what families were paying for less sustainable water solutions in the first place. It also empowers people to create solutions for themselves in their own communities, giving them a sense of accomplishment making them more invested in the outcome. 

Click here to contribute to these live saving funds. Every little bit helps and will go towards changing the lives of those living without water. 

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