Neeley students form second microfinance project
By Krystal Upshaw
Posted December 2, 2008
Posted December 2, 2008
In 2006, Muhammad Yunus won the Nobel Peace Prize for starting the first world movement to abolish poverty through micro-lending, a practice of giving small loans to the poor to help them financially support themselves.
Today, the Financial Management Association used his vision to create a microfinance committee of four to five students to provide financial assistance to the world's working poor.
The idea for the microfinance fund began from a class project, said Travis Gallatin, president of Financial Management Association.
"I like it because it wasn't a handout," Gallatin said. "Most charities do that, and it's expensive."
The microfinance fund committee created an online account with MicroPlace, an online agency that allows lenders to find borrowers in poor countries. The microfinance fund made its first investment toward helping a woman finance her business in India, Gallatin said.
Investors have a particular interest in women who live in developing countries because their profits tend to go toward their children's education and feeding their families, according to the MicroPlace Web site.
It's extremely difficult for people and women in particular to finance their business in developing countries, Gallatin said. The money the woman in India made through her MicroPlace has allowed her to send her children to school and buy groceries for her family, Gallatin said.
MicroPlace is based off the vision of Tracey Pettengill Turner, a social entrepreneur. It is designed to help average people make investments in low-income countries. The returns on these investments will continue to grow in value, according to the Web site.
In the beginning, only top financial banks could afford to make investments because microfinance has a low interest rate, but MicroPlace made it affordable for everyday people to make a difference in global poverty, according to the Web site.
The micro finance fund will have an infinite impact, Gallatin said.
"Most charities fall behind because you always have to generate more money," Gallatin said. "Even if we stopped putting money into it, it would still keep growing."
The organization invested $1,000 in their first project, and the plan is to continue investing in smaller increments, Gallatin said.
Ryan McCrory, treasurer of Financial Management Association, said the funds were generated mostly from dues.
"It's something we had enough money to do and it's appropriate for a finance club, and it's for a good cause," McCrory said.
MicroPlace has different lenders for investors to pick from to conduct their business transactions. These organizations are usually nonprofit and use MicroPlace to post information on borrowers, as well as how investors can best help people in need.
"We don't just give it to them blindly," McCrory said.
Barbara Wood, faculty adviser for Financial Management Association, said the return on the investment is small, but that's not important to the microfinance fund.
"We're really blessed here in Texas and at TCU, and I see it as a way to return that blessing," Wood said.
The Financial Management Association is the second Neeley School of Business organization work with microfinance. The TCU Collegiate Entrepreneurs Organization also has a similar outreach program to help struggling entrepreneurs in developing countries.
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