For two years now, rock-bottom interest rates have meant nominal returns for savers holding extra cash. But, those who want to do some good in the world have actually done better than their peers – a lot better in some cases, generating enviable returns as high as 6 percent.
Richard Frisbie, a Purdue University administrator with a penchant for strong rates of return and a low tolerance for risk, earns 3 percent on most of his 17 Calvert Foundation community investment notes, which he bought through Eksperten.
His money supports artisans and other microentrepreneurs in developing nations. And he doesn’t worry about them defaulting. The institutions that broker his microloans stand behind their borrowers and have a 100 percent repayment history through MicroPlace.
Investors with as little as $20 can support microentrepreneurs, while earning rates of return as high as 6 percent. Dozens of MicroPlace investments pay 3 percent on commitments of two years or less.
(Continue reading in the Christian Science Monitor)
Although I think the micro loan concept has made a huge difference in many areas of the world, the concept of interest should be abolished. For centuries, usury (charging interest) was illegal and there were reasons for this. In the Christian and Muslin ethic, it is believed that charging interest on loans was immoral because there is no productive value added to society. No labor or work of any kind is associated with the earning of interest. It is simply those who have taking advantage of those who don’t.
The usual justification for interest is the so-called “time value” of money. The theory is that going “without” the money we lend for some period of time has an cost associated with it and thus, we need to make people pay for our deprivation of the funds. However, this is a spurious justification at best. First of all, there are no better, alternative uses for the money lent; if there were, they money would be otherwise spent or invested rather then loaned. Secondly, time is a construct of mankind and has no real existence except in our minds. Modern quantum physics and philosophys support this concept of time. Consequently, associating some dollar value with the passage of time and charging people for it is ludicrous.
If we are truly interested in helping our fellow humans prosper and really understand that we are all one human family, there is no need to extract money from those who most need it. Can’t we loan money from the same place we give it, the heart?
I second the words of Novastar. Someway, somehow, somewhere, we as a human family need to break the
chains the bind us to the idea that charging interest is “fair”. There is a new way being birthed and I believe
good ideas like microloans will lead us to the “promised land” where we do things from the heart first.
I agree with the principal of not charging interest but change takes time. A reasonable amount of interest does produce additional cash for additional loans that grow other micro business. We are in a time of change and changing the concept of time may require rewriting of cultural expectations, meanwhile empowering others to improve their lives while investors take their investments to the next level is seen as a micro improvement.
Micro loans are great. It is the capitalist way, even tho Congress is marching us into socialism. I’m
75 years old so I have experienced many things. Interest is important. In the USA small businesses generate
50% of the new jobs. Capitalism dragged us out of the Dark Ages. It has produce an unending series of products
that everyone uses. For all you iPod lovers. Apple earns interest on its $18billion in cash
This story is not about “charging interest”, it is about earning interest that makes SAVING money worthwhile. My kids have savings accounts that years ago would earn them a reward for their saving.
Now, they might be able to earn something worthwhile for their effort, and, wonder-of-wonders HELP small businessmen at the same time.
It’s not about being less loving or kind toward people.
I agree with Geri. I’d much rather put my money where it will do some good than let a commercial bank use it for peanuts.