I had a question from a friend and former co-worker about how her family in the Philippines might get involved in microcredit. Here’s my response:
Background information on Microfinance in the Philippines
You can learn more about the overall situation in the Philippines from country level reports from either:
MIX Market’s Country report for the Philippines (with country level stats, and a listing of known microfinance institutions with their number of borrowers and loans outstanding). The Microfinance Information Exchange (MIX Market) is my go-to source for industry level stats. It’s self-reported data from the MFI’s, but has the broadest coverage I’m aware of.
Opportunity International’s Philippines presence has a strong presence in the Philippines, they started working there in 1981, and now have nearly 3/4 of a million borrowers in their network (about 1/4 of all the borrowers, according to the MIX report).
Funding Loans in the Philippines
Different organizations let you have a direct connection with “your” borrower (in most cases, the borrowers have already received loans, and you are funding them retroactively, allowing the MFI to free its capital to make another loan…), they differ in what you get back. All provide the satisfaction of knowing you helped another person in need.
Nothing Back (a 100% tax-deductible donation)
Opportunity International lets you fund loans to individuals in the Philippines (and elsewhere) through their “Fund a Loan” program. ($10 minimum)
Josefina Yabut, an Opportunity International borrower who sells school supplies
Principal Back, but no interest
Kiva.org lets you choose individuals who will get your money, and you receive repayments from them (through Kiva) as the loan is re-paid. (There is risk of losing your principal if the borrowers default.) You can cash out (get a check back from Kiva) or re-cycle your money into another loan. Right now (December 8, 2012), they’re “fully funded” with no loans that need funding on their site. (Congratulations!)
Principal Back, plus interest (1-2% typically)
Microplace also offers the ability to choose your borrower, but here, you receive a portion of the interest paid as well as the return of your principal (again, assuming no default). Microplace has a different set of offerings based on which state you live in (not all of the investments have been approved for all of the states), and you can choose by country, so their current listing for the Philippines (link might not work for you… Apply Geographic Filter for Southeast Asia, and then Philippines) is an OikoCredit loan for 1 year offering 1% interest. This loan appears to cover many different countries, it’s not clear if your money would definitely be going to the Philippines.
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