Grameen Bank is not just spectacular for its ability to provide financial assistance to the world's poor, but also for the revolutionary and social-change-worthy assumptions underlying their nonprofit model. Loans from Grameen Bank help people, most of them Bangladeshi women, to buy animals, open food stands and purchase phones that owners can rent out to generate profits.
Grameen Foundation President and CEO Alex Counts recently spoke about Grameen's method of dealing with poverty through lending to the poor. When asked why most anti-poverty programs emphasize charitable giving over help to entrepreneurs, Counts said that "people of relative privilege assume that the poor aren't educated or experienced enough to succeed in business". In addition to sharing his personal experience in the microfinance sector, Counts also relays interesting information about Grameen's learn-as-you-grow mentality. For instance:
Successful microfinance often requires experimenting with business models. When Grameen Bank tried to offer health insurance to the poor for a small yearly fee plus a co-pay for doctor visits, "The poor weren't too happy. They said, 'Why do I have to pay for it when I'm well?' But then we said, 'Okay, you have savings accounts. What if we just deduct $3 a month?'" The switch got enough people to buy the insurance, and the program is now recovering almost all of its costs. Grameen's experience is consistent with economic research showing that people are more likely to spend when companies eliminate the physical handing over of the cash, Counts said.
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