Accelerating Microfinance

  • Overseas
  • 2001

The arrival of microfinance—offering small loans to poor people so they can start businesses that help support their families—is one of the most important developments in overseas philanthropy over the past generation or two. (See 1976 entry.) As the wildly successful results of the first microloan experiments became clear, certain donors decided to make sure this new tool was understood, valued, and spread to as many poor communities overseas as possible.

The Seattle-based nonprofit Unitus—created by four successful and generous businessmen with roots in the Church of Jesus Christ of Latter-day Saints—was a leader. When Unitus launched their project to accelerate the spread of microfinance in 2001, the sector was dominated by very small and not especially efficient operations that were growing only slowly. By bringing new capital, management systems, and leaders into the field, Unitus strove to bring new microbanking options to hundreds of thousands of poor householders. In particular, Unitus aimed to turn microfinance into an attractive and self-supporting business so that for-profit firms would flood the field and greatly expand the number of loans made.

The initiative was successful in all of this. It set up partnerships with 22 organizations in underserved countries like Indonesia, Brazil, Mexico, Kenya, and India. These partners, as a group, grew in size by more than 100 percent per year for many years, eventually serving 12 million families. In 2010, Unitus announced that with microfinance having matured and become a professionally run, market-oriented business in many countries, it was ending its ten-year acceleration effort.