You might find this more recent blog post of theirs more helpful.

http://blog.givewell.org/2010/09/03/new-research-and-recommendations-for-microfinance/

JD – how about a GRS Kiva team? I’m an avid listener of the “Stuff You Should Know” podcast, and they have a Kiva team, which sounds like a very cool idea!

http://www.kiva.org/community

In short, I think the book makes the issue of poverty very real for people like me that have never experienced it and don’t understand the challenges that truly poor people face. Where it fell short, and this is just a minor quibble because I highly recommend this book, is the political stuff. I still don’t get how Yunus speaks so highly of members of one political party (and has only negative things to say about the opposing party), when Grameen’s political stance seems to fundamentally oppose some of that party’s core beliefs. This could be due to my own misunderstanding, but I do wish he had clarified that more because it confused me.

Maybe people get confused because it’s a non-profit bank and here in the U.S. we can’t really get our heads around “non-profit” as being anything BUT a charity.

Adrian – I completely respect your position, but you know, BECAUSE of the cultural aspects Mr. Yunus started Grameen to address, his customers are largely people who CANNOT earn enough to improve their lives without that small initial debt.

Historically, cultural change follows economic change. Oppressed groups get greater freedoms as they accrue economic power.

People in power NEVER want to share it just because it’s the right thing to do. From the perspective of those who hold power in oppressive societies, they have power because they’ve always had (or were able to seize) power and therefore were meant to have power.

The main criticism about it, though, is that micro-lending institutions are essentially charity. That is, unlike the traditional notion of a lending bank, they do not turn a profit or break even due to the high transaction cost of making the loans relative to the low interest received from these micro-loans. There is nothing inherently wrong with operating a charity. The criticism stems from the impression that this type of lending is commercially viable when, in fact, it is not.

Also, while I am not sure of the Grameen bank’s policies specifically, some microlending institutions group several women together and lend them money together, as a whole. The idea is to reduce default risk. But, in so doing, it transfers questionable repayment pressure tactics to the lendees themselves lest their credit pool- and each member individually- take a hit and threaten their ability to get additional loans.

Bear in mind that I do no know the Grameen’s financial statements or any specifics. These are just the generalized criticisms about microlending as a concept.

However (similar to Tyler K.) here is my take:

While I admire the generous and passionate personality of the bank inventor, Mr Yunus, and I do not question his motives, I still feel that capital for a business should moreso be EARNED rather than LOANED, despite where you reside and in what condition you live. This way, there is much less risk for a family in poverty to fall further into debt if a business fails. (We see this all around the world) The same applies to post-secondary education for that matter: ganing the money for funding is not IMPOSSIBLE, infact it teaches the valuable lessons of: hardwork, responsibility, deterring desires, prioritizing, saving, patience and focus; tenets of a sound financial education useful for the duration of one’s life.

Being a micro-business owner myself that grew up in poverty (yes, the little food kind) I realized earlier on in my life(through taking out usurious student loans) that I cannot take the chance of owing money to ANYONE when I and my family did not have much money of our own, as well as if my venture fails, or I do not obtain a career, I will owe interest on top! A very ugly notion for those with little recourse.

I also feel that Mr. Yunus failed to address that clearly it is cultural & traditional practices that essentially prevented his “borrowers” from starting their business rather than poverty, as clearly stated in his examples: it was that women were not allowed to borrow due to their husband’s expectations — and therefore perhaps it is a questioning and altering of traditional customs and beliefs that would ultimately lead to the solving of this issue amongst many others.

This is simply my personal opinion on what I feel to be an interesting concept, as I ultimately live and love entrepreneurship, but after seeing what so many have gone through including my very own family, I feel that ANY DEBT can be TOO MUCH DEBT. Therefore, I GIVE rather than LEND, and I EARN rather than BORROW.

Have A Pleasant Day Everyone!

I don’t think ANYONE has “vilified” small-business lending, at least not here at GRS!

Although, hey, J.D. – maybe add that to the pipeline: a look at small-business lending in the U.S. and its relationship to PF?

April, thanks for reminding me about Mr. Yunus. I’ve been following his work for years but never caught up with his book.

Even when money got a bit tight for me, I figured I was still in a better position than most people in the world and I should keep my monthly contribution to Grameen alive. I’m glad I did! I saw my name in their last report as one of their top donors! At $50 a month (plus a few one-time larger payments), it has added up nicely I trust they’ve done good work with it and helped people help themselves.

There’s good information here on microfinance and what you can do if you really want to help:

http://www.givewell.org/international/economic-empowerment/microfinance

@Kevin–Yes, he goes into more detail about politics, and I was trying to get a mention of it in the review without turning my post into a novel. I could have written so much more, but it’s best to pick up a copy and let Yunus explain it. There were actually those in Bangladesh who felt Yunus was preventing the poor from starting a revolution because he was helping them to solve their immediate problems of homelessness and hunger. Yunus replied that if those naysayers lived in poverty themselves, they wouldn’t feel that way.

@TylerK-I don’t think people in this country vilify business loans amongst ourselves, which is what Grameen is lending.

BTW – I noticed the loan recovery rate was 97.29% – and the current proportion of female customers was 97%. Coincidence?

@Elysia – click http://www.grameenfoundation.org/, there is a Donate button at the top right.

I like to donate to charities via JustGive.org. They do charge 3%, but this way you can do it anonymously. When you are anonymous, they have no one to send piles of literature to, thus saving them money, quite possibly much more than the 3% you have spent. It can also save your sanity. You won’t get their stuff, and if they sell your information, you won’t get stuff from a million other groups either.