A Critical Look at Microfinance

Journalist and author, Mara Kardas-Nelson, reads from her book, We Are Not Able to Live In The Sky, in which she takes a critical look at the promises and perils of microfinance as a means of pulling people out of poverty in the developing world. Women have been jailed, according to Kardas-Nelson, for their inability to pay back relatively small amounts of money. Contributing to this problem are the substantially higher than average interest rates charged by most microlending institutions.

CharityWatch CEO, Laurie Styron, also weighs in, saying “I’ve worked in the nonprofit sector for almost 25 years, and I understand the impulse. People can be a little overly moralistic sometimes in their giving decisions. We’re all looking for that perfect victim, that person who is in good circumstances who never made a mistake and we want to help them because they’ve ‘earned’ it; they ‘deserve’ it.”

“But sometimes the people who need our help the most aren’t in perfect circumstances and they haven’t made perfect choices every time. And, part of being generous…is to kind of open your heart while also being smart about how you give… We like the idea of microlending because we think this isn’t a handout, or we’re helping people to become self-sustaining. But as Mara was saying, it’s a little bit more complex than that. Sometimes there [are] charities [that] exist to address systemic problems and try to fix them, but in the meantime, the rest of us as individuals who have smaller amounts to give, sometimes the best use of our money is to alleviate suffering where we find it. And, you know, I hope people try to do that…”