Peer-to-Peer Microfinance: A Sustainable Solution to Poverty

Peer-to-peer microfinance lending solutions drive ongoing investments, a “pay it forward” approach and a fiscal incentive.

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Helping ALL people become philanthropists

Last evening I attended the Philanthropist.org cocktail party and fund raising event. As an adviser to the organization, it was great to see such an incredible turnout from a broad array of industries, socio-economic backgrounds, functions and other diverse interests. Everyone in attendance was excited about the solutions Philanthropist.org is developing, including the microfinancing, peer-to-peer lending platform.

Microfinance

Microfinancing targeted at poverty and developing regions is not a handout, but a hand up. By providing small loans to entrepreneurs in need of seed funding, the lender offers a way for individuals struggling with poverty to build their own business and create self-sustaining employment. Greater still, these new small businesses are likely to provide employment for others in the region and generate greater cash flow for the local economy. Microfinancing teaches the recipients to fish.

The loan recipients commit to repaying the loan, with interest. This provides a model that benefits both the lender and the recipient:

1.       Recipient: The loan recipient is expected to develop their business in a manner that provides sufficient income to repay their loan, with interest. In so doing, the entrepreneur is proud of their commitment and opportunity to make the loan provider money while building their own business.

2.       Lender: By receiving interest, the provider obtains a benefit beyond the momentary “feel good” reward. More important, the interest increases the likelihood that lenders will continue to “give”, regardless of economic conditions. In fact, as an income model, microfinancing may even increase during tougher economic conditions.

Peer-to-Peer

The model that Philanthropist.org delivers is one which empowers individuals to connect with individuals, which is known as peer-to-peer lending or person-to-person. In so doing, providers can personally choose the recipients they want to support, directly. The control is in their hands. Regular updates may also be provided. With social media driving businesses in new ways, the peer-to-peer model provides that high-touch environment that consumers and lenders crave.

Personal, Scalable, Sustainable

By delivering such personal connections, peer-to-peer lending solutions drive ongoing investments and a “pay it forward” approach with a fiscal incentive. This model is scalable because for every person seeking a loan there is a one-to-one or many-to-one lender connection. The platform and tools are automated and online – accessible virtually anywhere. Through this semi-for-profit model, the model is sustainable. By combing the personal characteristics of peer-to-peer lending, with the scalability of a microfinancing platform, you have a sustainable solution to much of the world’s poverty. It won’t happen overnight, of course, but the model has a strong potential to thrive in the coming years.

More About Philanthropist.org

Philanthropist.org is a marketplace that connects entrepreneurs to social investors. Their mission is “to help ALL people become philanthropists.” Although still in its early stages, the workerteers (part worker, part volunteer) have already begun their field studies, executed the first micro-loan and plan a return trip to the Dominican Republic in 2011. If you are interested in learning more about the company, supporting their mission or just want to know more about micro-financing and peer-to-peer lending, here are some options:

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Ben Lichtenwalner

Ben Lichtenwalner is the founder and principal of Modern Servant Leader and Radiant Forest, LLC. He has studied and promoted servant leadership awareness and adoption for over 20 years. He is the author of 2 leadership books and has 2 decades of corporate management and leadership experience. His corporate experience spans CIO, VP, Director, and many management roles at Fortune 500, INC 500, and Nonprofits. Ben’s education includes a B.S. in Management Science & Information Systems from Penn State University and an MBA from Lehigh University. Ben's Full Profile Here: About Ben Lichtenwalner

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