People Helping People Global was founded March 25, 2009 in Fairfax, Vermont. We created this organization to provide individuals with the tools necessary to eliminate the suffering that they and their families are experiencing due to extreme poverty. We implement many different strategies to assist building communities in the developing world. We believe that through stronger, more economically viable communities, greater global citizens will emerge, and extreme poverty will no longer be a problem that must be addressed. Our work is focused towards supporting community members so they grow towards becoming economically sustainable and are able to better support their families.
Microlending is the largest and most successful program that People Helping People Global operates. Our unique method of offering interest-free loans is what separates PHPG from most other lending groups.
The process is rather simple, and the results have been incredibly positive. We start by communicating with other nonprofits and community members to determine the areas that could benefit the most from our microlending program. After we do this, we hold meetings in the area to get a feel for the community and to educate community members about the microlending process.
After we hold these informational meetings, individuals are invited to submit an initial request for loan (ranging from $50 to $400), along with a simple business plan. We then conduct interviews to evaluate need, business acumen, and character. If selected, the individuals are organized into groups of five to twenty individuals. Each individual is only responsible for her own microloan, but the group/community aspect is very important to the success of our programs. In addition to encouraging community discourse, the group mentality encourages individuals to repay their loans on time and in full, so that other members may have the same opportunity to develop business and build their community.
Our loan recipients have between six and eighteen months to repay their loans. Some of our loan recipients repay monthly, while others repay weekly. It is up to the lending group to determine the repayment schedule. As the loans are repaid, more loan groups are created in the same area and the poverty reducing cycle continues.
Microlending is so effective for several reasons. One reason is that individuals realize that these loans are not hand-outs. Our microloan recipients often express great pride as they repay their loans. They talk about how the system makes them feel much better than those that just give them things, such as houses or clothing. The other major reason it's so effective is that the capital stays in the community. Once the first group of recipients repay their loans, their neighbors get the same opportunity to help their families and build the community they live in.
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People Helping People Global takes pride in helping build stronger communities. We believe that our microlending model is effective, because it encourages communities to work together. Through our repayment meetings, borrowers get to know and trust each other. They learn how to work together to complete their loan repayments, so that others may receive loans in the future and can have their chance in building their community. It is encouraging to see borrowers that were once complete strangers interacting with one another. Now they know the names of their neighbors’ children, help them fix a leaky roof, and share strategies with one another to develop business. These new connections that we help build within the community are very important to the future of the communities where we work.
PHPG has a repayment rate well above 90%, and we attribute a large part of this outstandingly successful percentage to our community development efforts. We do not function like a bank, and we do not make the borrower come in and deposit their repayment. We go to them. We require them to attend each community meeting whether they have the money or not. We encourage borrowers to talk about what’s going well and what problems they are having with their business. We also invite all potential loan recipients to attend and learn about PHPG’s microlending system. Having the whole community present places pressure on the borrowers to repay so that others may be able to receive.
0% Interest Model
In 2006, the Nobel Prize Committee changed the world of philanthropy by awarding Muhammed Yunus and the Grameen Bank the Nobel Prize in Economics. A thirty-year-old industry that was virtually unknown to most of the world was thrust into the forefront of modern-day giving. With this kind of immediate 21st Century-popularity comes the good – tons of funding, new companies, and success stories – and the bad – tons of wasted funds and corruption.
Nicaragua has been the perfect place to observe all of these good and bad occurrences. There were several microfinance organizations that were operating in Nicaragua for many years before the boom that followed the Nobel Committee announcement. Over the past five years, that number has exploded into the hundreds (and some argue the thousands).
For the first few years, the increase in microfinance funding started to help alleviate the extreme poverty across the country. However, the industry leaders around the world started to push for the microfinance institutions (MFIs) to expand rapidly in order to be able to reach more individuals in need. In order to do this, many MFIs decided that increasing the interest that they charged for these microloans was the best option. Many in the industry justified this move by likening it to the current-day lending practices in the industrialized nations. However, comparing the two makes about as much sense as comparing the needs of a Philadelphia inner-city school child to that of a rural West Texas student.
This move towards charging higher interest rates functioned as a welcome mat for many unscrupulous lenders to enter the market. It has literally become a “get-rich-quick” scheme in many parts of the world. It was not unusual to see MFIs charging upwards of 80% annual interest on these microloans. At these rates, it is quite difficult for these loan recipients to be better off than when they took out the loans.
In Nicaragua, the loan recipients decided that they were not going to be taken advantage of anymore, and the No Pago (no pay) movement was born. Repayment rates dropped from the 98 percent levels to somewhere in the 40 to 50 percent range. People knew that not repaying meant that their houses would be raided by these lenders and that they would be threatened with physical violence. However, they knew that this was a small price to pay to send a message to the MFIs who were taking advantage of them.
That is where we came in. We are very convinced that microcredit is one of the best ways to provide individuals with a way out of extreme poverty. The unique thing about this method of philanthropy is that the money is reusable among many beneficiaries. Also, people who receive loans are not receiving a handout. They are responsible for repaying the loans, and this creates a sense of empowerment and independence that does not occur with other forms of aid.
But how do we maximize our clients’ chance for success and combat the No Pago movement at the same time? We came up with the idea of charging zero percent interest. This allows the full principal to be used by our client, and we ask our donors to cover the cost of facilitating the loans. This combines the benefits of microcredit with the principles of philanthropy. Plus, our clients have no reason to not repay anymore – they aren’t paying any interest!
So far, we have seen our repayment rates remain above 90 percent. Our microloan recipients smile when they see us in the distance. They share stories with us about their business success and their happy children. We walk into their newly renovated houses with new walls, a solid roof, and maybe even a brand new latrine in the backyard. Microlending is working. Our clients are beating extreme poverty. They’re building better lives for their families. And they are repaying their loans so that others in their community can do the same thing.
People Helping People Global offers fair-trade through our Expanding Markets program. We work directly with over 20 different artisans throughout Nicaragua, El Salvador and Guatemala to bring their products to a market in the US. We guarantee that each and every artisan receives a just payment for their work. PHPG creates contracts with each of our artisans allowing them the opportunity to plan on a reliable salary. For many of PHPG’s artisans, our purchases provide over 30% of their annual income.
PHPG hand selects the artisans with which we work. We contract with skilled, honest, hard-working and low-income artisans. Our artisans deserve every penny they receive, because their work is of very high quality and is quite unique. At PHPG, we are thankful to provide a market for so many artisans because we know our purchases are creating change. We are also thankful that our Expanding Markets program has helped and will continue to help many artisans and their families build better lives and stronger communities.
Where We Work
People Helping People Global determines project location based on extreme poverty rates and the project viability within each region. In 2009, we pinpointed Nicaragua as a region of extreme need due to its statistical ranking as the 2nd most impoverished nation in the western hemisphere after Haiti. We have served communities in Nicaragua since 2009.
The communities where our projects currently operate are located in the departments of Granada and Matagalpa. In these areas live some of the country’s most extreme poor. Here you will find people who work hard to provide the basics for their family. These people live hard lives and struggle to provide for their families. Most live in shacks made out of plastic and rusting tin which were found in the local dump. Their diet consists almost exclusively of rice and beans. They struggle daily to stay in good health throughout Nicaragua’s long and unforgiving rainy season. PHPG is thrilled to work with this population, because, despite all of the hardships that they endure, they display the a tremendous will to succeed.
As of May 2015, we have issued 668 micro-loans to families in Matagalpa and Granada. We are currently working on expanding our services to other departments across Nicaragua.