What does “microfinance” mean?
What does “microcredit” mean?
What is FINCA International?
What’s a Village Banking group?
What good can $50 or $100 do?
What are the principal benefits of participating in a Village Banking group?
Why does FINCA lend primarily to women?
How do men react to Village Banking groups?
Does FINCA offer any kind of training in business practices?
What is FINCA’s overall loan repayment?
Can FINCA programs become self-sufficient?
Who funds FINCA?
What percentage of total funding received by FINCA goes toward administrative expenses?
What is the demand for microcredit?
How can companies/individuals support or get involved with FINCA?

What does “microfinance” mean?
Microfinance means financial services for poor people. Poor people, like everyone else, need a full range of financial services: working capital for their businesses; credit to help meet life emergencies as well as everyday needs; insurance to reduce vulnerability; and a safe place to deposit savings.
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What does “microcredit” mean?

What is FINCA International?
FINCA stands for the Foundation for International Community Assistance. Established in 1984, FINCA is best known for having pioneered the "Village Banking method"--one of the major forms of microcredit--and for leadership in microfinance overall. The mission of FINCA International is to provide financial services to the world's lowest-income entrepreneurs so they can create jobs, build assets and improve their standard of living. Our vision is to be a global network collectively serving more low-income entrepreneurs than any other microfinance institution, while operating on commercial principles of performance and sustainability.
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What’s a Village Banking group?
The Village Banking method is the form of microlending that FINCA pioneered. It is economic democracy in action. A Village Banking group is a support group of 10-50 members—usually mothers—who meet weekly or biweekly to provide themselves with three essential services:

• small self-employment loans-–as small as $50 or $100--to start or expand their own businesses
• an incentive to save, and a means of accumulating savings
• a community-based system that provides mutual support and encourages personal empowerment.

Village Banking group members guarantee each others’ loans and run a democratic organization. The group guarantee is important, since borrowers don’t have the kind of collateral a commercial bank would be seeking to lend them money. Groups represent grassroots democracy in action; members elect their own leaders, design their own bylaws, keep the books, manage the funds, and are fully responsible for loan supervision, including enforcing penalties for non-compliance.
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What good can $50 or $100 do?
To the lowest-income microentrepreneurs in the developing world, $50 is a fortune. They can invest that money to make their labor far more productive. They might buy a used sewing machine so that they can make dresses faster than by hand-stitching. They might invest in a used refrigerator to keep the produce they sell from going bad overnight. They might buy thread for weaving in bulk, at wholesale prices, so they make more on every item. Economist Milton Friedman once said that “the poor stay poor, not because they’re lazy, but because they have no access to capital.” FINCA provides them with capital to help them break out of poverty.
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What are the principal benefits of participating in a Village Banking group?
Village Banking programs break the vicious cycle of poverty. Without credit, low-income people may work hard but stay poor because of a lack of opportunity and capital. FINCA borrowers receive working capital so that their efforts can become more productive. For instance, they can buy rice in bulk at wholesale prices and resell at retail prices. They can buy a used refrigerator to keep produce fresh. They can purchase a sewing machine instead of stitching by hand. As Village Bankers become more productive, they increase their income and are able to accumulate savings for other investments and for emergencies.

By participating in a Village Banking group, mothers can better care for their children. FINCA borrowers often say they spend increased earnings on children first, improving nutrition, health, and educational status, in that order. In most cases, borrowers greatly expand—even double—family food purchases with the first loan. As nutrition and health improve, women then invest income in education, followed by home improvements.

Having a steady income and a savings account raises a woman’s self-esteem and her status, even in a society where women are consistently treated as second-class citizens. A woman in Uganda told us how the bank had affected her, "My knees are softer," she said. "I used to have to kneel to my husband to beg for money for every little thing. Now I don’t have to kneel much, so my knees are softer."
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Why does FINCA lend primarily to women?
For several reasons. First, the feminization of poverty is a worldwide trend. Seventy percent of the world’s poor are women, largely because of their limited access to education or to productive resources like land and credit. Another worldwide trend is an increase in woman-headed households, in which a mother provides the sole support for her children. Most victims of severe poverty are children. According to UNICEF, at least half of the 12 million children aged five or younger who die each year, die from malnutrition associated with severe poverty. The most direct way to improve childrens’ survival and welfare is to strengthen their own mothers’ ability to take care of them.
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How do men react to Village Banking groups?
In some cultures, men initially express fear of women becoming empowered from their participation in the groups. However, after a few loan cycles, most men realize that Village Banking activities benefit the family as a whole, and so they support the effort. In some instances, men even become partners or employees in their wives’ enterprises.
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Does FINCA offer any kind of training in business practices?
This varies from country to country. Some countries offer classes in bookkeeping, accounting, or basic business practices. Some offer module training in business management areas such as pricing and marketing. Most of the businesses, however, do not demand that level of sophistication. There is no formalized, network-wide training curriculum.
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What is FINCA’s overall loan repayment?
Despite the fact that we’re working with some of the world’s poorest, the repayment rate is outstanding. Globally, our average, on-time repayment is more than 97 percent--as good or better than most commercial banks expect.
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Can FINCA programs become self-sufficient?
FINCA International’s aim is to help all FINCA country programs become self-sufficient – i.e., reach the point that they can cover all their costs and rely on their own resources or the commercial capital markets instead of donations - so that they can all greatly expand their outreach to the poorest of the working poor. Several FINCA programs that began with donated capital have moved on to commercial sources. Three FINCA programs–-Ecuador, Uganda, and Kyrgyzstan–-reached self-sufficiency long ago and have transformed into licensed, regulated financial institutions so that they can take deposits from the public to fuel their growth. A number of FINCA programs regularly generate enough earnings to cover all their costs and other affiliates are making steady progress towards self-sufficiency.
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Who funds FINCA?
FINCA funds its work through a variety of sources: borrowings from commercial capital sources; interest income from the programs themselves; and donations. Our donated funding comes from the U.S. Agency for International Development (USAID), United States Department of Agriculture (USDA), other nations’ governments, private foundations, corporations, service and religious organizations, and individual donors.
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What percentage of total funding received by FINCA goes toward administrative expenses?
The FINCA Board of Directors mandates that administrative costs, including fundraising, never exceed 25 percent of our total expenses. For the fiscal year ended August 31, 2008, FINCA’s fundraising costs represented 3% of total expenses, with general and administrative costs of 4%, leaving 93% of the budget for direct program expenses. This efficiency, one of the highest not only in the microfinance industry, but in the charitable sector, earned 7 consecutive 4-star evaluations from the prestigious Charity Navigator.
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So far, an estimated 13 million microentrepreneurs have benefited from microcredit, using their loans to increase their incomes and lift their families out of poverty. But the need is estimated to be 200 million people.
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How can companies/individuals support or get involved with FINCA?
There are many ways you can help FINCA and support its mission. You can help make a sound investment in self-reliance by making a contribution to provide FINCA clients with loans. You can also make a commitment to empower the poor by supporting the Village Banking Campaign, spreading the word about FINCA, suggesting that your company or organization make a donation, asking your employer to make a matching donation to FINCA, or by giving in honor of a loved one.
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