Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, or a verifiable credit history. It is designed to support entrepreneurship and alleviate poverty. Many recipients are illiterate, and therefore unable to complete paperwork required to get conventional loans. As of 2009 an estimated 74 million people held microloans that totaled US$38 billion. Grameen Bank reports that repayment success rates are between 95 and 98 percent.
Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient. ID Ghana is an example of a microfinance institution.
Accion is an international nonprofit. Founded as a community development initiative serving the poor in Venezuela, Accion is known as a pioneer in the fields of microfinance and fintech impact investing.
A social enterprise is an organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being. This may include maximizing social impact alongside profits for co-owners.
Social venture capital is a form of investment funding that is usually funded by a group of social venture capitalists or an impact investor to provide seed-funding investment, usually in a for-profit social enterprise, in return to achieve an outsized gain in financial return while delivering social impact to the world. There are various organizations, such as Venture Philanthropy (VP) companies and nonprofit organizations, that deploy a simple venture capital strategy model to fund nonprofit events, social enterprises, or activities that deliver a high social impact or a strong social causes for their existence. There are also regionally focused organizations that target a specific region of the world, to help build and support the local community in a social cause.
A micro-enterprise is generally defined as a small business employing nine people or fewer, and having a balance sheet or turnover less than a certain amount. The terms microenterprise and microbusiness have the same meaning, though traditionally when referring to a small business financed by microcredit the term microenterprise is often used. Similarly, when referring to a small, usually legal business that is not financed by microcredit, the term microbusiness is often used. Internationally, most microenterprises are family businesses employing one or two persons. Most microenterprise owners are primarily interested in earning a living to support themselves and their families. They only grow the business when something in their lives changes and they need to generate a larger income. According to information found on the Census.gov website, microenterprises make up 95% of the 28 million US companies tracked by the census.
Opportunity International is a 501(c)(3) nonprofit organization chartered in the United States of America. Through a network of 47 program and support partners, Opportunity International provides small business loans, savings, insurance and training to more than 14 million people in the developing world. It has clients in more than 20 countries and works with fundraising partners in the United States, Australia, Canada, Germany, Switzerland, Singapore, Hong Kong and the United Kingdom. Opportunity International has 501(c)(3) status as a tax-exempt charitable organization in the United States of America under the US Internal Revenue Code.
Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.
Kiva is a 501(c)(3) non-profit organization headquartered in San Francisco, California, that claims to allow people to lend money via the Internet to low-income entrepreneurs and students in 80 countries. Kiva's mission is "to expand financial access to help underserved communities thrive." They have been accused of deceptive business practices, misleading donors into believing their funds would be used for specific individuals and misrepresenting other aspects of their operations.
Legatum Limited, also known as Legatum, is a private investment firm, headquartered in Dubai, United Arab Emirates. Legatum is a partnership that uses its own funds to invest globally. The firm also invests in activities to promote entrepreneurship and free enterprise as well as anti-slavery, health and education initiatives.
The Grameen family of organizations has grown beyond Grameen Bank into a multi-faceted group of both commercial and non-profit ventures. It was first established by Muhammad Yunus, the Nobel Peace Prize-winning founder of Grameen Bank. Most of the organizations in the Grameen group have central offices at the Grameen Bank Complex in Mirpur, Dhaka, Bangladesh. The Grameen Bank started to diversify in the late 1980s when it began attending to unutilized or underutilized fishing ponds, as well as irrigation pumps like deep tubewells. In 1989, these diversified interests started growing into separate organizations, as the fisheries project became Grameen Fisheries Foundation and the irrigation project became Grameen Krishi Foundation.
Bharat Financial Inclusion LimitedBFIL is a banking & finance company (NBFC), licensed by the Reserve Bank of India. It was founded in 1997 by Vikram Akula, who serve as its executive chair until working. The company's mission is to provide financial services to the poor under the premise that providing financial service to poor borrowers helps to alleviate poverty. In 2011, the company operated across 11 Indian state.
IDFC Bharat Ltd is a microfinance bank, operating in the Tamil Nadu area of South India. Since 1993, it has provided small loans to women without access to formal credit and who typically have daily incomes of less than INR 80 (US$2) per day.
Financial inclusion is defined as the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. Financial inclusion efforts typically target those who are unbanked and underbanked, and directs sustainable financial services to them. Financial inclusion is understood to go beyond merely opening a bank account. It is possible for banked individuals to be excluded from financial services. Having more inclusive financial systems has been linked to stronger and more sustainable economic growth and development and thus achieving financial inclusion has become a priority for many countries across the globe.
The MicroConsignment Model (MCM) establishes profitable income generating opportunities for primarily women that to date are selling products such as wood-burning stoves, reading glasses, water filters, seeds and gardening techniques and energy efficient lightbulbs to villagers. Through the MCM local individuals with entrepreneurial qualities can start their own business through “sweat equity” and realize profits from inception. Although it rarely works in practice, the model allows for collaboration with local strategic partner organizations to adapt local solutions and train and support local entrepreneurs who serve rural communities within designated territories. What drives the model is an interdisciplinary, intuitive and non-linear approach whereby all stakeholders add value. The model utilizes a rotating capital mechanism with low start-up costs that are continually reinvested. In essence, the MCM strives to intervene at all levels by creating an “ecosystem” whereby problems are diagnosed and products are encountered/designed which are then inserted into the distribution model via the locally trained and supported entrepreneurs.
Warner P. Woodworth is a global social entrepreneur and professor emeritus in the Department of Management in the Marriott School of Business at Brigham Young University (BYU). He is a leading advocate of development of microcredit and has been involved in researching as well as developing such programs.
Unitus Seed Fund (now Unitus Ventures) is a venture fund based in Bangalore and Seattle that supports early-stage tech startups with India scale and global potential. It funds early-stage Indian technology startups, primarily in the healthcare, education and financial sectors. As an impact investment fund, its focus is on startups that serve low and middle-income consumers.
Gray Matters Capital is an impact investing foundation founded by Bob Pattillo. Its mission is to achieve "An education leading to a purpose filled life for 100 Million Women by 2036." GMC is based in Atlanta, Georgia with global offices in Nairobi, Kenya and Bangalore, India. The scale and the use of business practices with social enterprises makes it one of the leaders in impact investing.
Social entrepreneurship in South Asia involves business activities that have a social benefit, often for people at the bottom of the pyramid. It is an emerging area of entrepreneurship that is supported by both the public sector and the private sector.
CIIE.CO is an Indian startup accelerator and incubator that supports early-stage startups located at IIM Ahmedabad in Ahmedabad, India. It was founded in 2002 to promote innovation and entrepreneurship in India. It is a Center of excellence set up at Indian Institute of Management Ahmedabad with support from the Government of India's Department of Science and Technology and the Government of Gujarat.