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SamuelFrequently Asked Questions
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What is microfinance?
What is microcredit?
Why do the poor need micro-loans rather than just going to a bank?
Why does Fōndespwa only invest in women entrepreneurs?
How basically does Fōndespwa work?
For what types of businesses can Fōndespwa's clients receive loans?
What is a group loan?
Do the women entrepreneurs receive assistance other than financial help?
How does microcredit create permanent change?
How is Fōndespwa's microfinance endeavors measured?
Do the women entrepreneurs repay their loan?
When I fund a loan, will I hear about how her business is going?
Where does Fōndespwa serve?
How is Fōndespwa funded?
Do we charge the entrepreneurs an interest rate?
Is my donation tax deductible?
What percent of my loan goes to administration costs?
Is my credit card information safe?
Will I get a receipt?
What is microfinance?
Microfinance is a broad term used to refer to the provision of financial services to the very materially poor. These services may include credit, savings programs (to provide long term security, capital for emergencies and a safe place for deposits) and various insurances to reduce vulnerability. The center piece, however, is the providing of credit, as the materially poor lack collateral, steady employment and savings sufficient to qualify for loan funds from traditional banks. These services, which are severely lacking in Haiti for the materially poor, can make the difference between economic opportunity and crushing poverty.
What is microcredit?
Microcredit or a microloan, one of the major components of microfinance, is the actual provision of capital. It is a small loan, typically $25 to $300, that can make the difference between absolute poverty and a thriving microenterprise generating enough income to feed the family, send the children to school and build decent housing.
Why do the poor need micro-loans rather than just going to a bank?
Because they do not have collateral (own their homes or have substantial savings) banks will not give them loans. In addition, the street money lenders or loan sharks charge them outrageous interest rates never allowing the women to save or reinvest their profits. The financial infrastructure as we know it in developed countries is non existent in the poorer nations so access to money for loans is basically nonexistent.
Why does Fōndespwa only invest in women entrepreneurs?
A staggering 70% of all those living in extreme material poverty are women. In Haiti, these women are often excluded from education, from owning property and from having a voice in politics. Most critically, they carry the primary workload in Haiti. Culturally they are "trained" to serve the male population and so work much longer hours than men. When given the opportunity to begin their own potentially profitable business women are highly motivated to work extremely hard to make their enterprise succeed. Through micro finance fortunately those attitudes and circumstances are changing. As women improve their circumstances, they also improve the environment of their children. Once women have acquired money they invest it in their children and the security of their families rather than in consumables. In addition, they gain respect from their husbands and most importantly they go from hopelessness, often physical abuse and lacking in self confidence to being empowered and standing tall with dignity. They become independent women leaders.
How basically does Fōndespwa work?
1. From the profiles of the women entrepreneurs, you choose someone in whom you are interested in giving to. After you have donated the money through our secure system Fōndespwa will directly pass those funds on to that specific entrepreneur. While most of them will already have received their loan (given their dire circumstances and their pleading for loans, it would be unconscionable to make them wait) they are sill in their 16 week loan cycle. So by your funding this loan, you are allowing her to move up the next step on the ladder out of poverty, where after 16 weeks she will be receiving a larger loan.
2. Over the course of their loan payback period, Fōndespwa provides biweekly educational and training sessions to ensure the entrepreneur succeeds.
3. After the 4 month loan term is completed and repayment made, your gift will then be used to fund the same entrepreneur for her next loan. So your original loan gets paid back and then goes to work to fund another loan. Therefore the gift you have provided is used again, again, again and again. Your gift is compounded, it is recycled... as they say, it is the gift that keeps on giving.
For what types of businesses can Fōndespwa's clients receive loans?
There are a myriad of businesses that the women entrepreneurs have but typical endeavors include sewing, selling produce, clothing, baked goods, basket weaving, food preparation, animal husbandry, and cosmetics.
What is a group loan?
Each group consists of 5-7 women. The groups are self selected as they cross guarantee each other's loan. So if one member does not make the biweekly repayment the others must make up the difference. These loans are made with no physical collateral but rather trust being the collateral. Consequently, Fōndespwa relies on healthy peer pressure and the opportunity every 4 months of acquiring a larger loan as an incentive for repayment.
Do the women entrepreneurs receive assistance other than financial help?
Yes. When the entrepreneurs meet biweekly they receive education/training in the areas of small business development, finance, health and self esteem.
How does microcredit create permanent change?
Microcredit allows the women entrepreneur to work themselves out of poverty. There microenterprises are permanent and sustainable improvements that create independence rather than reliance on outside and uncertain aid. Of greatest criticality, is the sense of future opportunity that is now available and the dignity that comes with their personal achievements.
How is Fōndespwa's microfinance endeavors measured?
What is evaluated and measured is the ladder out of poverty that is occurring in the lives of the women entrepreneurs. What is analysed and measured are improvements in such areas as household income, general quality of the home, type of roof, type of floor, bathroom/outhouse, water in the home, children's health care, education of the children, etc. It is imperative that these plus other areas be closely monitored and measured to validate the viability of microcredit.
Do the women entrepreneurs repay their loan?
The poor are unbelievably responsible with their money so the repayment rate is over 98%. Why? Because they so value this opportunity to better themselves and their family and the opportunity to increase the loan amount down the road as their business grows.
When I fund a loan, will I hear about how her business is going?
Yes. Fōndespwa will be adding monthly updates on select women's profiles in a blog like form. It will be encouraging for you to you see lives transformed.
Where does Fōndespwa serve?
Fōndespwa's operation is by design focused on solely Haiti.
How is Fōndespwa funded?
The sole source of funds for the women entrepreneurs are individuals and for Fōndespwa operations the funding comes from private and family foundations, individuals and churches.
Do we charge the entrepreneurs an interest rate?
Yes. To offset costs (and countering inflation), collecting interest allows us to provide vital business training and educational services. These tools allow these women to work their way out of poverty forever. It is essential for the poor to understand that in other sectors of the economy interest rates are charged and that is the reality of business. Most critically, we provide to the entrepreneurs a substantially high savings interest rate (one the most critical financial offerings for the poor is to provide long term security) and our charging an interest rate assists in this. In any event, our rates are substantially below those of other financial organizations.
Is my donation tax deductible?
Yes. Fōndespwa is a 501(c) 3 non-profit organization. Donations are tax-deductible.
What percent of my loan goes to administration costs?
Zero percent of your loan goes to administration therefore 100% of each loan goes to the entrepreneur you select.
We are supported in our operations by the voluntary donations that are made.
Is my credit card information safe?
Absolutely. Your information is safely encrypted for all credit card processing and no credit card information is stored on our local server.
Will I get a receipt?
Once you have made a donation, we will process your gift from your credit card. After you have completed your transaction, you will receive an email from Fōndespwa confirming your donation.