A pioneering charity has launched a new initiative in the face of the credit crunch, to take loans from people who need a decent return on their income, and invest their money to help those in the developing world.
Offering a return of up to 10% on the loans that they take, the charity RedAid connects investors with people who need money for life-saving projects in Africa and Asia.
The charity calles it 'Positive, Renewable Philanthropy'. It works on the investment principle that normally, the people best placed to deliver relief and development work are local people. The charity also points out that these people are usually the worst funded and least supported.
RedAid doesn’t believe in just giving handouts. It believes that people should be given the incentive, the encouragement, the help and the support to help themselves sustainably - for the long-term. It therefore takes the loans that people give them, and connects the investment with people who will really benefit.
It already has an impressive track record, working with local charities in areas affected by the cyclone in South East Asia. In Sri Lanka it has helped rebuild the businesses of fishermen affected by the Tsunami including helping them to repair (and buy) boats & equipment. It has also helped people to rebuild houses affected by earthquakes in Pakistan.
What will attract many investors ia that they can also get a substantial return on their investment at a time of falling interest rates.
The charity is able to repay the loans with interest (up to 10 per cent) because it raises donation funds separately for the loan funded projects & programmes. These additional funds come from public and private donors as well as public & corporate trusts, grant making bodies, government agencies and social funds. They also have have private and dedicated supporter groups who acts as loan underwriters. They use these donation funds to repay all loans in full, along with any returns, on dates agreed when the loans are made.
The charity hopes that many would-be 'Venture Philanthropers' will also consider investing their returns in future projects.