Give a man a fish and you feed him for a day. Give a man the money to buy a fishing pole and you jumpstart a small business. The man eventually pays you back for the pole and you put that money into jumpstarting other small businesses. This is the idea behind microfinancing.
“Microfinancing is not a charity,” said Pancho Poshtov ’13, treasurer of the Social Entrepreneurs of Grinnell (SEG). “We’re helping people achieve something themselves.”
SEG is a campus group that has given 111 microloans to over 25 countries all over the world. SEG is linked to a greater organization called KIVA—whose mission is to alleviate poverty through lending—which had loaned over $100 million as of November 2009.
SEG itself has loaned about $16,000 that it collected in the form of donations from either Grinnell College or the greater Grinnell community. This money has gone toward investments such as cows, farm equipment and weaving material to help individuals in Third World countries fund small businesses.
Now imagine if, in addition to funding cows and yarn in distant Third World countries, the money you donated went toward fixing up a broken car that enabled someone in our town of Grinnell to drive to work when they had no other means of transportation. At least that’s anthropology professor Doug Caulkins’ analogy.
“What good is having a job when you can’t get to it?” he said, laughing playfully.
SEG’s newest efforts lie in financing microloans for locals in need. While Caulkins could not give specific examples in order to maintain people’s privacy, these locals are people who need a relatively small, but substantial amount of money to get themselves out of dire and desperate situations. The problem is, the $1000 that a woman might need to get herself out of an abusive relationship is often too small a loan for a bank to lend out. Alternative options, such as payday loans, are often attached to high interest rates that keep the borrower trapped in poverty.
The SEG is different from other lenders because the organization does not charge interest. To make sure that these individuals are qualified and indeed in need of help, they have to go through Mid-Iowa Community Action, Inc.—a non-profit organization that services low-income families—to obtain a loan from SEG. After they’ve qualified, the client and a student representative from SEG reach a loan agreement that they go over together in a meeting.
Caulkins, who has acted as the community representative in these meetings, described the pivotal moment the student gets out the check.
“There’s something that everyone benefits from. The student that’s writing the check has the sense that they’re doing something concrete to change the world. As a community member, I feel a sense of real pride for the student—they’re doing something useful and important for the community. And as for the client, you see a sense of relief come across their face. ‘I’ve got this. I can get out of this situation that I’m in.’ You’ve done something wonderful when you’ve helped that person get their life back.”
SEG sends money abroad to Third World countries, but it also works within the town of Grinnell.
“Here in the community, we have an ability to have a personal connection,” Caulkins said. “I say both are important. We want to simultaneously be working abroad and working in the community. Because our target is global—which means both international and local.”
SEG meets on Sundays at 1 p.m. in the Voicebox (located 3rd floor of JRC) and welcomes donations—contributions are tax deductible.
