Crowdfunding: A Cure to the World's Social Problems?

This blog was written by Lendwithcare lender, Jan Tchamani, and originally posted on DuCredit's website. It has been re-posted here with permission.

 

The Chitimba Women's Group, supported by Jan through Lendwithcare

Crowdfunding activity has been on the rise for a few years. With the rise of Kickstarter and other platforms, no sector benefits more fruitfully from crowd funding initiatives than the 3rd sector.

Micro-finance initiatives allow anyone to invest small amounts of money which make a huge difference to entrepreneurs and workers in the third world. Allowing them to provide a sustainable future for their families.

We asked one UK based donor, Jan Tchamani, one of AgeUK’s current internet champions, why she chose to give through crowdfunding and tell us a little about her experience of charitable giving through LendWithCare.

"It’s really important to me to do charitable giving, even though my means are quite limited. And, let’s face it, everyone has limits. Also, because I’ve been learning about sustainable development over the past few years, it’s also important to me to give in a way that’s responsible and environmentally-friendly.

Ever since I was at school, I’ve been fundraising. I think my first foray was running a sponsored music  day when I was a pupil at Stourbridge High School in the 1970s, raising funds for the Sunshine Children’s Home. I played the piano, as a soloist and accompanist, from 9am to 5pm, friends sang and played instruments, and I still remember what fun we had, and what a buzz it gave us when we handed over the money we had collected to the school secretary to send off.

When I was in my 30s, I was able to go overseas and do two years of development work in the Lobi tribal area of Burkina Faso, W Africa. I was teaching in a school for community leaders: mostly French language, since that was the language of administration, and the students had to be able to write letters and deal with officials. Other development workers were teaching well-digging or composting, treating ailments, organising conferences to bring local communities together, or getting the local languages written down in order to preserve them. Everyone was doing something useful. The Lobi are very dependent on subsistence farming, and therefore on the climate, so I saw at firsthand how important it is for charities who get involved in developing countries to be aware of the right way and the wrong way to intervene. I’m satisfied that Lendwithcare know what that right way is: small amounts lent, rather than given, and to people who have a solid business development plan.

I’m no longer able to travel abroad and help, but doing my bit is still very important to me. Although my means are modest, I’m still so much better off than some of the entrepreneurs the organisation is helping. I tend to go for individuals, and I tend to favour farmers who are trying to cultivate more efficiently, and get to a point where they can employ people and have enough produce to spare to sell it at local markets so, for example, they can afford to improve the house they live in, install a simple irrigation system, or pay for their children’s education.

I’ve been with Lendwithcare – run by CARE International UK – for about a year. I think I saw an ad for them on Facebook, and followed up. Lendwithcare.org offers a way of giving online that provides microfinance for entrepreneurs in developing countries. The entrepreneurs concerned have to have a strategic development plan, and the amount they want to borrow is calculated exactly, to the nearest pound.

Lendwithcare gives you plenty of information about the individual entrepreneur on which to base your choice, including a photograph. You can start with a loan as small as £15, and you can see how near their borrowing target the person has got. You get a notification email when they’re 100% funded. There’s also a repayment schedule. Nobody I’ve lent to has ever failed to pay back the scheduled monthly amount, and they often pay back faster, which goes to show how effective the borrowing is in improving their situation.

I get monthly emails from Lendwithcare – they’re great at communicating, but they don’t bombard me, and they never use emotional blackmail. In fact, their emails are always the first I look at when I open my inbox, because they’re always positive: “X, whom you helped, is now fully funded!”, a thank you, or news that all of my £15 has come back and I can reinvest it. Looking back over 2014 and the number of people I managed to help with my £15 gives me such an amazing feeling of being connected to people in other parts of the world – people who are really trying to improve their lives, and the lives of their local communities. The minimum investment amount of £15 is so small, really – the price of a simple pub lunch for two, or a couple of cinema tickets."

Register on Lendwithcare today and join Jan in supporting entrepreneurs in developing countries work their own way out of poverty.

Promoting solar power in Pakistan

The city of Lahore is renowned as the literary, educational and cultural heart of Pakistan and has a long history of beautiful architecture dating in particular from the Mughal period with buildings such as the Badshahi Masjid and the Shahi Qila or Lahore Fort.

Shakeel and Rehan from Akhuwat on the roof  where the solar panels are located

Although on a much more modest scale the new, purpose built headquarters of Akhuwat, Lendwithcare’s partner in Pakistan, continues this custom of bold, innovative design while respecting historical tradition.  The seven storey offices, completed in 2014, is the first large building in Lahore that can be run exclusively on solar power as up to 48 kilowatts of electricity can be generated from the 160 large solar panels located on the roof of the building. The energy is stored in 136 batteries all housed in a special control room on the top floor. When fully charged the batteries can power the entire building, which houses almost 70 staff, for almost eight hours or the whole of the working day. 

Furthermore, rather than install air conditioning units that are expensive and use lots of electricity, the narrow, open plan design of the building incorporates natural ventilation systems to simultaneously cool and channel fresh air throughout the building. Even during the hot summer months in Lahore when the average daily temperature routinely exceeds 40 degrees centigrade, the temperature inside the building remains much lower at around 25-30 degrees centigrade.

Shakeel  from Akhuwat in the control room

Dr Amjad Saqib, Akhuwat’s Founder and Executive Director, explains that the motivation to install solar power was not only an attempt to reduce carbon emissions and promote the use of renewable energy, but also in fact a response to the daily reality of frequent and often prolonged electricity cuts in Pakistan or ‘load shedding’ as it is referred to locally. Load shedding means that households and businesses alike receive electricity continuously only for a few hours each day, with power outages longer in rural areas. Whereas larger buildings and businesses can afford to rely on generators for power when there is no network electricity, small businesses are often forced to simply down tools and wait for the power to return. The costs to the economy in terms of lost production are staggering; one estimate is that annual gross national product has been reduced by 7%. Arguably nothing causes as much frustration and inconvenience for ordinary Pakistanis as load shedding.

Dr Amjad explains “I am convinced that solar energy can offer a practical and affordable solution to the thousands of microentrepreneurs that Akhuwat supports”. Therefore, to enable them to continue working during the frequent bouts of load shedding, Akhuwat intends in 2015 to start providing loans of between 20,000 and 100,000 rupees (approximately £130-£650) for small businesses to purchase and install solar power systems.  Since monthly electricity bills are often in the range of 2,000 to 3,000 rupees a month, Akhuwat estimates that the investment in solar power for most borrowers will actually pay for itself after a couple of years as their electricity bills will be much lower.

Such loans should soon be featured on the Lendwithcare website.

By Dr Ajaz Ahmed Khan, Microfinance Advisor at CARE International UK

How to increase investment in micro-enterprises (and get your money back)

This blog was orginally posted on CARE Insights.

Today CARE has submitted written evidence to the International Development Committee (IDC) of the House of Commons on our peer-to-peer lending network, Lendwithcare. (For a snappier and more entertaining overview of Lendwithcare, see our new Christmas animation above.) The IDC is currently looking at jobs and livelihoods and is interested to understand more about the role that a relatively new way of funding micro-enterprises can play in generating growth and jobs in developing countries.


Lendwithcare.org has been hugely successful since its launch four years ago, and now supports over 14,000 MSMEs by engaging online with over 18,000 lenders who have each, on average, loaned £35, raising nearly £5 million in the last four years. These really are loans – almost all are repaid within the agreed timescale. To date, only death and major disasters, like Typhoon Haiyan, have prevented our microentrepreneurs from repaying. Of course, our committed lenders very frequently recycle their loans to other entrepreneurs, keeping money in the system and reaching more businesses.

Lenders find Lendwithcare a compelling proposition: they can choose who to lend to, based on detailed information on the individual and their business plans, they get regular feedback on progress, and they know that they are helping resourceful individuals lift themselves and their families out of poverty. And they get all of this within a web experience in their own language, culture and currency. The other compelling aspect is that, when you put money into Lendwithcare, 100% of the money goes to the entrepreneur who is borrowing – CARE does not take a slice off the top. Rather, our modest administration costs are met from other funding within CARE, and until recently, by sponsorship from the Co-operative Group.

The opportunity (and the key issue)

There is a lot of scope for expanding Lendwithcare’s operations – there is certainly no shortage of small enterprises requiring loans. And we believe that there are many more microfinance institutions out there who are likely to meet our (demanding) criteria. We know this because Lendwithcare only lends in nine countries, compared to the 80 countries in total in which CARE International works.

We also believe that there are considerable opportunities for expanding the lender community of the Lendwithcare model. For instance, we believe that it is likely to be successful in other European countries where there already exists a CARE office. As this includes Germany, France, Austria, Norway and Denmark, there is a lot of opportunity. We would also like to explore rapidly developing countries such as India and Brazil. We know that lenders find it important to link with an organisation in their own country, for reasons of language, currency, tax laws and cultural affinity.

All of which would take some more investment – but we know that we can raise loans to the value of seven times the marketing and administration investment. This is a powerful win-win-win between CARE’s mission to end poverty, an individual’s desire to use some of their own hard-earned cash to help others, and entrepreneurs’ drive to build strong businesses to lift themselves and others out of poverty.

So now all we have to do is find the cash to pay for some administration and marketing…

By Gerry Boyle
CARE International UK's Senior Policy Adviser on Private Sector Engagement

Download our written evidence in full here.

Finalists for Lendwithcare Grassroots Entrepreneur Awards announced!

Public voting has closed for the 2014 Lendwithcare Grassroots Entrepreneur Awards and the ten most popular entrepreneurs, featured below, have been passed to our expert judging panel to pick an overall winner.

The standard of entrants has been extremely high. Every one of the 33 nominees is inspiring and has demonstrated an incredible level of enterprise and entrepreneurialism, often in the most challenging circumstances. The Lendwithcare Grassroots Awards recognises the most innovative and determined small businesspeople in poor communities in the developing world. The Awards celebrate creativity, enterprise and innovation, and prioritises social values and poverty alleviation.

It’s now down to our able panel of high profile names from across the business world to come to a final decision. Alastair Stewart, Deborah Meaden, Levi Roots, Nick Hewer, Richard Reed, Sir Stuart Rose, have a difficult decision on their hands! 

 Leonida Bironga Makori

 

Leonida, from Kenya, is a 32 year old entrepreneur. She has been involved in the franchise business for CARE’s Group Savings and Loan (GS&L) project. So far, Leonida has trained over 50,000 individuals on CARE Kenya’s GS&L project. She also supplies carbon-free cook stoves and micro solar lamps to GS&L members on credit, which has improved the individuals’ lives as they have been able to pay for these appliances in installments. She has distributed over 644 carbon-free cook stoves and 636 micro solar lamps to her community through the GS&L programme. Through her work with the GS&L programme, she has employed 30 community-based trainers, whom she pays from her own income, creating long-lasting community change.

La Morm

La Morm, from Cambodia, is a seamstress with a difference. She is incredibly committed to investing in her community and decided to take out a small loan to purchase sewing machines to train local apprentices. Apprentices pay $12 to be trained by La Morm over two months and once they have completed their training can take the machines home to start their own businesses. The machines cost £150 each and apprentices take on this loan if they choose to take the sewing machines home. This entrepreneurial education education has transformed her community forever.


Bora Mau

Bora, from Cambodia, is a truly dynamic entrepreneur. She used a small loan to invest in both her husband’s welding business and her fish and chicken farms, increasing her profit margins to between 20-30%. Bora Mau believes education is crucial in the fight against poverty, and in addition to investing in her businesses, the entrepreneur set-up a school where she teaches over 100 local children in the morning and evenings.

 Anwar Bibi

Anwar, from Pakistan, is an embroiderer. She went through critical illness and her son died in a fire accident, inducing heavy medical expenses. She started embroidering with her daughter, earning little. After a loan, she expanded to six employees, and now plans on sending her children back to school. She turned her fortunes around, even becoming an earning source for others. Anwar has proved that if you are determined, you can turn things around for the better. Apart from providing a better lifestyle to her family, she has also become a source of income for four families.


Bertha Nkhata

Bertha, from Malawi, runs a bicycle taxi business alongside her smallholding farm. This taxi business enables her to pay the school fees for her two children as well as buying a solar light to enable the family to be productive in the evenings and use basic kitchen equipment. Bertha also employs casual labourers for her farm, thus creating much needed local employment.
She is happy to know that she is a self-sufficient woman, giving her independence rather than having to always rely on her husband.


Teresa

Teresa, from Egypt, first took a loan of just £17 and purchased ducklings. She was able to repay the loan and earn some money. The whole family work in poultry and expanded their business with further small loans. She encouraged her friends and neighbors to form Village Savings and Loans groups and she trained them on how to raise ducks. Moreover, her group members elected her to be the chairwoman. Being the group chairwoman affected Theresa’s character, and the leadership and decision making skills she has  learned have changed her community.


Appoline Ahossi 

Appoline, from Benin, produces cassava flour and tapioca. She only employs young women and girls, paying them fairly and allowing weekends off, as she believes in women’s potential to be an economic driving force in Benin. She has employed up to ten women simultaneously. Aware of environment protection, Appoline uses clean, fuel-efficient stoves in her production.



 

Elisabeth Houessou

Elisabeth, from Benin, is an example of achievement and innovation in her village. She has overcome a variety of problems related to her production and has managed to become a quality producer of gari (cassava flour), also innovating and developing new products like a snack from coconut milk and sugar. Also, Elisabeth employs staff permanently, always recruiting women in difficulties showing solidarity with other women and a desire to help her community. Finally Elisabeth has been training women in the production of quality gari for 10 years, passing on her knowledge to other people.


Amake Albiro Ogoudele

Amake, from Benin, produces cassava flour, employing eight full-time staff, and exporting her produce across the Nigerian border. During the busy December month, she hires more staff. Aware of environment protection, Amake uses fuel-efficient stoves to reduce firewood consumption, and participates in reforestation campaigns. She is a role model for her community.




Victorine Fianyo

Victorine, from Togo, is a fantastic example of how microfinance can give people living in poverty the opportunity to transform their lives. 18 years ago, she accessed her first loan of just £25 to buy basic ingredients for her ‘Kom’ (a corn meal very popular in parts of West Africa) stall which she set-up outside her home. Today she produces Kom wholesale, has built her own shop where she sells a diverse range of goods, employs seven people, and can afford to send all her children to school. Indeed, much to the entrepreneur’s great pride, her fourth daughter has just gone to Germany to complete higher education – something quite rare indeed.

Have your chance to invest in next year's Grassroots Entrepreneur of the Year and visit www.lendwithcare.org today!