Eradicating poverty is a major problem for most countries in the developing world. To achieve the goal of improving the economic status of people belonging to low-income groups and making them self-reliant, microfinance plays an important role. Institutions, which are a part of this segment of the banking sector, pay close attention to understanding the needs of poor people. They are constantly developing of better ways to deliver financial services and assistance that cater to those requirements. This goes a long way in helping such people earn a decent living and provide a better future for families.
Joe Johnson Mercy Foundation is a non-profit making organization, which strives to improve the livelihood of people living below the poverty line in developing countries. This philanthropic institution provides financial assistance to poor people around the world to become self-reliant by acquiring underutilized properties that are eligible for tax deduction. Many corporate enterprises in America have real estate assets that they no longer need but cannot sell them in the normal way. This is because such businesses will incur huge tax liabilities. In such a situation, these companies sell such properties to charitable institutions for a price that is below their fair market values. They claim the difference between that sale price and fair market of these properties as a charitable donation, which is eligible for deduction under prevailing tax laws. This enables the members of this foundation to provide safe financial assistance to those people who require it the most.
The experts of this charitable institution explain that providing credit to people living in poverty to establish income-generating businesses play an important role in increasing economic growth in any country. They say the main advantages of micro financing in enhancing the livelihood of poor people who do not have access to other forms of capital are as follows:
Banks and other financial institutions will not give credit in the form of loans to people with no suitable asset. However, the philosophy behind the concept of micro financing is that by leading small amounts of money to poor people who need it can go a long way in ending poverty.
Poor people who receive financial assistance via micro financing are more likely to send their children to school to improve economic status.
Better percent of repayment
Organizations operating in this financial sector generally give micro loans to women borrowers, as they usually do not default in repaying such financial assistance unlike men. This move also goes a long way in empowering women.
Creating Job Opportunities
Micro financing activities acts as a catalyst in creating more jobs for poor people in rural and semi-urban areas. This helps to improve the local economy of such areas.
Experts from the Joe Johnson Mercy Foundation further clarify that the working loans they give to poor people goes a long way in helping establish a small business. This acts as a motivator for them to get their families out their current economic hardship and do their utmost to improve their conditions.