This blog has focused primarily on the stock market. But, In light of the recent earthquake in Haiti, and the ensuing Humanitarian crisis, I wanted to address a less lucrative investment, but one that can help others in need. What do people in crisis  need to rebuild: Capital. Investors supply capital, thus humanitarian investing is not such a far fetched concept. But the goal for the result, might be different or tempered from the usual desire to maximize return.

Part of my personal portfolio involves making micro-loans to people all around the world. Some of the micro-loans I make are charity, on others I make a small profit. For this forum I will address the for profit micro-loans, which are investments albeit, high risk, low return investments.

A micro loan is a small loan, usually hundreds of dollars to economically disadvantaged persons in the third world (although I have also invested here in the United States). These loans are often for things like seeds for planting, or a goat, to sell milk. The idea is to lend capital to small entrepreneurs who would not otherwise be able to raise capital through traditional channels.  The borrowers pay back the loan over time with some small amount of  interest.

Microplace, is a sort of aggregator, of micro-loan funds. If you go to the  website they present different microloan funds all over the world. But today I am talking about Haiti. This is how the website describes their partner in Haiti,” Fonkoze is Haiti’s “Alternative Bank for the Organized Poor.” As the largest microfinance institution in the country, Fonkoze serves more than 150,000 Haitians with microloans, savings accounts, term deposits, remittances, credit / life insurance and more. Clients also have access to healthcare services and education covering topics from basic literacy to business skills and reproductive health. With a network of 37 branch offices, it is the only microfinance institution operating nationwide, including both rural and urban areas.”

But why invest in Haiti? Will it really do any good? Again from the Microplace website, “Haiti is the poorest country in the Western Hemisphere. Nearly 80% of the population survives on less than $2 a day. Business activity is largely informal, meaning the vast majority have no access to loans from commercial banks. At Fonkoze, we have more borrowers as (sic) all of Haiti’s commercial banks combined. For our clients, we are their only hope of ending the cycle of poverty. Your investment will allow us to extend our services to more clients and help reverse the fortunes of the poorest among us.”

These are illiquid, long term investments. The Investment in Haiti is a four year investment at 2% per year. There are no guarantees, no FDIC protection. This is considered a risky investment. Before you invest you should read the prospectus at the website. I can tell you from personal experience I have not yet lost a penny investing this way in the more than three years I having been doing it. But then part of reason for doing this has little to do with the profit motive. I hope simply to get sufficient return to offset whatever losses I may incur and to keep the invested funds revolving to other entrepreneurs who need capital.

If you like to help Haitian rebuild, I cannot think of another way that you can also make 2% per year on your investment. Go to this Microplace link.

Disclaimer: I have invested over $400 in the Haiti fund I have described at Microplace. Please do not make any investments, without doing your own due diligence. Just because someone on the internet says something is a good idea, doesn’t mean it is.

4 Responses to “Helping Haiti by Investing with Microloans: Humanitarian Investing”

1. ValueHuntr
   January 16th, 2010 @ 3:43 pm

   You could also contribute to ValueHuntr’s Haiti Relief Fund. I’m offering free premium memberships in exchange of donations until next week. I hope you can share with your readers. Please see this for more info: http://valuehuntr.com/2010/01/15/haiti/

2. chroma
   January 16th, 2010 @ 9:07 pm

   I have already contributed $50 via your website. Please check out ValueHuntr, which has a great offer and terrific website.

3. Jaimee Rogers
   April 8th, 2010 @ 1:25 pm

   To whom it may concern: I am an American volunteer working on the tiny island of Ile-a-Vache, Haiti. I know first-hand how successful a microlending program can be in this impoverished area. I could really use your help in advancing this idea. I have many people waiting in line for a few hundred dollars to start their own enterprise, but I am only one person trying to help. If you would be willing to help finance some of them, my burden would be lessened and more people could be making money on their own. I would love the opportunity to speak with you further and await your reply. Best regards, Jaimee Rogers

4. chroma
   April 8th, 2010 @ 3:43 pm

   I have sent you a private email response.

Leave a Reply