I was reading about disaster relief in situations like the tsunami and
how the most difficult part is the rehabilitation, in part because its
hard to get funding once the initial crisis is past. People like to
support rescue efforts but they're not interested in helping with
like buying fishing nets to get fishermen back on their feet. So I was
thinking of something like a mutual fund of disaster-recovery
microloans. People could invest in it, expecting a modest return on
their money as the fishermen (for example) paid off their loans with a
small interest rate. Investors would be motivated primarily by
altruism, but giving would be made easier by the expectation that the
return on their investment would at least keep up with inflation, so
they would suffer no net loss. Bundling the loans into mutual funds
would address the fact that it will take a very long time for the loans
to be repaid. (so maybe a large capital donation would be needed to
things going). Maybe the government could even insure investments a la
the FDIC -- a public subsidy to private charity.
Does this make any sense economically? (I suspect it might be the
financial equivalent of a perpetual motion machine. I only got about 4
hours sleep last night). I guess if it does somebody is probably
already doing it. . .
it might make sense - sounds like a socially
responsible mutual fund that uses positive screens
(criteria to pick "good guy" investments) instead of
negative screens (criteria to eliminate "bad guys"
from your investment pool). Positive screens
historically are riskier and underperform markets, but
you're not looking for high return.
The real problem is identifying who should get the
microloans and administering them. I don't really
understand the microloan business - they say it works,
but if it does, why doesn't everyone do it?
If the idea can work, I think organizations that are
already in the microloan business like the Grameen
Bank would be the ones who could pull it off. I don't
know if they accept investments or if they rely solely
on donations. Maybe it's a business model they should
look into if they haven't already.
The next day after that dialogue, the local NPR station had a call-in show on microcredit/microloan
institutions, and 2005 just so happens to be the International Year of Microcredit
I tried to call in Bill's question, but couldn't get through. Did my best, man. The show referred everyone
to a website listing microcredit organizations. I can't tell after 5 minutes of research (that's a lot for me)
if any of them function as investments for people rather than simply as donations, but maybe someone else can take over from here.
Thursday, February 10, 2005
Like, intellectual dialogue
Friend Bill writes: