Student Name: Amit Kamma -- Finalist (High School Cohort)

Grade During 2019-2020 Academic Year: 10th Grade

Hometown: Atlanta, GA

Microfinance Lending: The Future of Indian-American Philanthropy

While India is currently one of the fastest growing and modernizing nations on earth, it still battles basic social and economic issues such as weak infrastructure, poor sanitation, and inadequate access to water and electricity. As Americans and Indian-Americans, it should be our duty to help address India’s most critical challenges, but unfortunately, such vast problems can never be solved only with our charity dollars. Instead, we must provide India with the resources it needs to make economic and social strides. But how do we help India help itself? We can look to the regular citizens of India, and their incredible energy for entrepreneurship, to help fix the nation’s problems.  

Among India’s poorest residents, and those who toil in the nation’s vast informal sector, an unassuming culture of entrepreneurship is alive and booming. Many Indians of modest means are creating small-scale businesses, which are not only providing income for themselves and their community, but also creating innovative solutions to some of India’s biggest problems. In Mumbai, the energy of positive entrepreneurship pulses throughout the city’s largest “slum,” Dharavi. Many of Dharavi’s residents are employed in an informal recycling economy, where scores of workers recycle and repurpose unused plastic, cardboard, and other materials, providing the impoverished residents with work, while also making Dharavi an unassuming “mecca of clean industry.” The area’s economic and community structure is supported by over 5,000 small businesses, many of which are slowly providing electricity, clean water and televisions to an increasing portion of the poor population. Dharavi is just one example of how India’s poorest residents are refusing to simply wait for their government to provide basic needs; instead, they are using an entrepreneurial spirit to do it for themselves.

The value and impact of small-business entrepreneurship in India is clear, so how can Indian-Americans help the residents of our native country build more businesses? There is one option that shines above all: microfinance lending. Microfinance is a simple concept: organizations supported by higher income individuals provide small loans to low income individuals who otherwise have no access to capital. These loans are used for social entrepreneurship, and building or fixing up businesses. Microfinance can be used as a powerful international philanthropic tool, best demonstrated by the website Kiva. Kiva is a non-profit online platform that connects lenders living in the United States with poor, small-business entrepreneurs in developing nations such as India. The entrepreneur’s story and desired funding amount are posted online, and lenders in America can individually contribute any amount of money they desire. Once the borrower’s financial goal is reached, the loan will be made. 96% of the time, the lenders are repaid, but these loans are still given from a philanthropic standpoint--meaning they are completely interest free, and the borrower faces no consequences if they default on a loan.  Kiva and similar platforms allow us to provide the necessary capital to Indian entrepreneurs who will create real social and economic change in their communities. And there is reason to believe that philanthropic microfinancing could actually be an important way for the Indian-American community to have a positive impact in India.

Unfortunately, Indian-Americans are far behind their American peers when it comes to philanthropy, and their habits with donation are unlikely to change overnight. However, microfinance lending through platforms like Kiva offers an attractive compromise between inaction and making an outright donation, meaning that a wider group of Indian-Americans can support Indian causes and get most of their money back. In this situation, philanthropy is performed not by directly donating money, but by willing to take a risk on a loan for entrepreneurs in India, with the understanding that the loans may occasionally become donations, should the entrepreneur default. While lending may not be as generous as donating, the fact that lending implies return of the money, means it may have a wider appeal among the Indian-American community.  

There are numerous other reasons why philanthropic microfinancing might prove to be successful among the Indian-American community. For one, many Indian-Americans are entrepreneurs themselves, and it’s not hard to imagine that some may feel a sense of kinship with fellow entrepreneurs in India, and thus be more willing to provide loans. Additionally, microfinance is always attached to a particular face and personal story, allowing lenders to see exactly who their money is going to and how it will help them. This contrasts with donations to a large charities, where there is often a lack of emotional connection that would compel someone to donate. For many Indian-Americans, it will be especially touching to know that their money will be used to help fund a specific business in their native country. 

Microfinance will not only be meaningful for individuals and families, but potentially for organizations and businesses as well. Indian-American business owners could begin lending a portion of their profits through websites like Kiva to businesses in India. Since many businesses might not be able to completely forfeit their profits, lending can be a good philanthropic alternative to donation. The same principle is possible at community and religious institutions like temples, gurdwaras, and mosques. Microfinance can even be supported through fundraisers at schools and universities. A high school in Atlanta, Georgia, provides a good model of how microfinance can be carried out on campuses. About five years ago, the school’s Latin American Studies class held a fundraiser, using Kiva to lend the raised money to poor entrepreneurs in Honduras. About a year later, the money was returned from the loan, and the group of students reconvened to choose another entrepreneur to re-lend the money to. This has been repeated every year, and the students have now touched multiple lives in Central America over multiple years using a single funding pool. Such a model could be replicated by investment-minded Indian-American student groups aiming to help India.

It’s important to note that Kiva is presently focused on operations in Latin America and Africa, and thus has a limited presence in India. Kiva faces many barriers in the lending process when it comes to operating in India. They have to comply with government policies related to foreign lending, and identify strong local partners. But this is where the Indian-American community should help. Societies and organizations, like the Indian Philanthropic Alliance, should actively volunteer to go into partnership with Kiva and similar platforms, in order to help navigate these challenges. Our community can utilize our inherent connections to India to both increase loans to Indian entrepreneurs and increase lending engagement among Indian-Americans.

India is a spectacular nation on the rise, and its social and economic problems shouldn’t overshadow the massive potential of its people and their willingness to take entrepreneurial risk for the betterment of the nation. The flexibility of microfinance lending through platforms like Kiva means that even the most frugal Indian-Americans can become philanthropists and fund entrepreneurs in India. As Indian-Americans, it is our duty to help India; and we can do that by loaning money to enterprising Indians who will create businesses that change their community and nation for the better.