Benjamin 1784

We are innovating a new way forward in microfinance which we call Donation Lending™. We give small donations that we call loans without interest or fees and we ask borrowers to do the same...to pay it forward. We believe donation lending is a lifeline that can help low income entrepreneurs around the world.

Our work is important because a third of workers in low- and middle-income countries are self-employed, compared to less than a tenth in high-income countries . In the poorest countries (classified as low-income by the World Bank) half of workers are self employed. Like any business, they need capital to grow, but they are often marginalized and underserved by financial institutions because their capital requirements are too small and other various reasons. When capital is available it comes at a steep, unbearable cost and severe consequences. 

We are tackling two problems - the high cost of microfinancing and the absence of microfinancing. 

Muhammad Yunus, awarded the Nobel Peace Prize for his pioneering work in microfinance, believes current microfinance industry is usurious and perpetuates poverty (not including loan sharks, the average rate lenders charge is approximately 29%).

The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year. Informal (unregistered businesses) MSMEs have credit gap of $2.9 trillion.

As a nonprofit and values driven organization, our goal is to make a positive impact in peoples lives, not to bury them in debt. Consequently, our solution to the problems plaguing the microfinance industry and low income entrepreneurs around the world is affordable, nonprofit financing.

We are innovating a new way forward in microfinance which we call Donation Lending™. We give small donations that we call loans without interest or fees and we ask borrowers to do the same...to pay it forward.

Our donation lending model has four major components - entrepreneurs, donors, platforms, and partners. Each component has it's own segments. The primary technology platform we rely on to send and collect borrower funds is PayPal (available in 202 countries). The platforms we use or will use for crowdfunding are Indiegogo, Patreon, PayPal, and social media. Our partners and volunteers are a critical part of our solution. They act as loan officers that identify people with needs, conduct due diligence, and provide technical training to help borrowers receive and send funds.

For clarity, please see the illustration below which also explains what we are doing and have yet to do.

We are innovating a new way forward in microfinance which we call Donation Lending™. We give small donations that we call loans without interest or fees and we ask borrowers to do the same...to pay it forward. We believe donation lending is a lifeline for entrepreneurs or self-employed workers in low and middle income countries which the International Finance Corporation (IFC) estimates to be more than 65 million. 

Our target population is underserved and disserviced by financial institutions because they are poor. They are underserved because they have an unmet financing need of $5.2 trillion every year. They are disserviced because when financing is offered, the terms are usurious and perpetuate poverty. 

We began working in microfinance in 2013 as a lending team on Kiva where we learned first hand that small business need credit just like large businesses do. We also became informed of the excessive interest and fees that poor people are burdened with. We also learn from economists, experts, and case studies sponsored by Oxford University and MIT. The field work, observations, and conclusions of MIT professors Abhijit Banerjee and Esther Duflo, have been particularly helpful in our work. They demonstrate that low income entrepreneurs are reliable borrowers who can be trusted with debt and can benefit from financing.

The challenge we are addressing is the lack of affordable financing to allow people and small businesses in low income countries to thrive in the digital economy. Our solution, nonprofit microfinancing which we call donation lending, is a lifeline to the people and small businesses we serve. With donation lending, not only do entrepreneurs receive affordable financing, they also become part of the solution as donors who support others like themselves.

We have helped 284 entrepreneurs (79% female) in 35 countries since 2013 with Kiva. However, we classify our stage of development as prototype because our donation lending model is new, different than Kiva, and because we registered as 501(c)3 in 2020. 

Our prototype model is being rolled out with volunteers now. We have a training program to help our volunteers to function like loan officers. Our volunteers meet borrowers, teach financial and digital literacy, perform due diligence, recommend which borrowers to fund, and manage relationships post funding. We have started lending in Thailand and we are onboarding volunteers in Ethiopia and Colombia. It's easy for us to find talent and there is no shortage of highly qualified and experienced professionals who want to help us.

We are innovating a new way forward in microfinance which we call Donation Lending™. We give small donations that we call loans without interest or fees and we ask borrowers to do the same...to pay it forward. 

We believe donation lending is a catalytic innovation that will change the microfinance market and the lives of low income entrepreneurs around the world. We think that we will positively influence other microfinance lenders do to something similar.