How WILFund Fits: About Microenterprise Development

What is Microenterprise Development?

A way to help turn poverty-stricken communities around

The Objective: Combating Poverty.

If long-term transformation out of poverty is to succeed, families need opportunities for self-sustaining economic stability.

Microenterprise development can be a powerful catalyst for turning a poverty-stricken community around. It has been proven that helping a poor community gain access to financial resources can help that community begin to thrive economically and become self-sufficient.

Many different organizations are involved in microenterprise development around the world. But WILFund is unique for a few reasons. First, WILFund is just for women. By investing in women, WILFund is giving hope to thousands of families and communities in need around the world. Second, WILFund is a program of World Vision, which addresses five fingers of development to meet the holistic needs of the beneficiary.

The Strategy: Microfinance Institutions and Microloans

WILFund grants loans in increments of $100,000 to microfinance institutions owned and operated by World Vision in 45 countries around the world. A microfinance institution (MFI) is a local lending office within a community, managed by indigenous professionals whose experience ensures that donors' funds are well protected and wisely invested. These MFIs use the money they borrow from WILFund exclusively for loans to women. WILFund's MFI microloans give women a powerful tool they'd never have otherwise--choice.

The Security of Microfinance Institutions

With World Vision MFIs, you can have confidence that your philanthropic investment is s afe. WILFund's assets are safe because WILFund only grants loans to MFIs that are owned and operated by World Vision. This means that WILFund’s assets are protected from political corruption that may exist in a given region. Additionally, these MFIs charge market-rate interest to loan recipients. By doing so, they are able to remain sustainable operations, further ensuring the safety of WILFund's assets.

How Microenterprise Development Comes into the Picture

Reaching Thousands

World Vision started its first microcredit program in Columbia in 1993; today the organization operates microfinance programs in more than 45 countries. In 2003, World Vision provided microloans to 250,000 people (64% women). The total portfolio of these disbursed loans is more than $70 million. World Vision’s goal is to serve 550,000 clients and provide $150 million in loans by 2007. With World Vision’s proven success in microenterprise development, WILFund's potential to help women in need is limitless.

The Microfinance Lending Process at Work

WILFund benefits women by enabling them to access loans of different sizes, based on their needs and lending history with a World Vision MFI. MFIs utilize three primary forms of lending: community banks, solidarity groups, and individual loans.

Community Banks

The mutual accountability of women in a community bank leads to high repayment rates of 97 percent on average. Community banking has proven to be an effective lending methodology. These loan-and-savings circles create an opportunity for many of the poorest women within a community to obtain credit. Women entrepreneurs typically band together in groups of 15-25 members who agree to cross-guarantee each other’s loans, which range in size from $100 to $500. The women work together to screen potential borrowers and track each repayment, all the while building their leadership skills and a sense of pride along the way.

Solidarity Groups

Designed for more experienced and larger enterprises, solidarity groups consist of 3-6 women members who guarantee each other’s loans. These loans range in size from $300 to $800. The women in these groups who make repayments are eligible for larger individual loans.

Individual Loans

Women who have grown their businesses through a solidarity group or have an established mid-sized business are able to qualify for higher loans, ranging in size from $500 to $5,000. These loans generally require collateral of two guarantors, and borrowers often create formal business plans under the guidance and business mentorship of their credit officers.

Fueling the Economy of a Community

Self-Sustaining Programs

By charging market-rate interest for microloans and maintaining low arrears, the local MFIs with whom WILFund works are able to cover their ongoing operational costs, and actually generate additional income. Once an MFI has become 100 percent or more operationally sustainable, it attracts capital loans from global markets, which ultimately limits the need for outside assistance and donations. This is where WILFund's work really begins.

Self-Sufficient Communities

Successful self-sustaining MFIs can pave the way for self-sufficient communities. As women loan recipients improve their entrepreneurial skills, their incomes increase, their businesses thrive, and jobs are created for the community. The enterprise-minded begin to lift themselves and their families out of poverty and fuel their community’s economy.