More than 300 million children worldwide lack access to education, and about 500 million adults are illiterate, according to UNESCO. To bring these numbers down, the San Francisco-based Janta Foundation launched today to broker peer-to-peer microloans targeted at educating young people.
Microloans are small amounts of money provided by individuals rather than banks or investors, and are generally used to jumpstart entrepreneurs in developing nations. The Janta Foundation argues the model is ideal for improving education as well. Its program will give individuals the opportunity to support children and young adults in either India or Nicaragua — regions where poverty and illiteracy are rampant.
Visitors to Janta’s web site can invest increments of $25 in a student, track their educational progress and then get paid back at the end of the loan term (usually six to 12 months), helping the student either start or continue their education. Often, the parents are the recipients of the money, which is eventually paid back either by the students themselves or their families when they are in a position to do so.
On the site, visitors can choose which students to support based on short biographies and the amounts of money requested. The loans are interest free, and 100 percent of the profits go directly to the child. Individuals can also choose to donate the money rather than give as a microloan.
Every student gets 30 days to raise the money he or she needs — and the countdown is featured prominently. If time runs out and they don’t have the requested amount, they may not be able to continue their education.
Here’s a detailed description of how the system works from The Janta Foundation:
Our field partners are local educational and microfinance institutions that manage the microloan and/or scholarship programs. These organizations identify deserving students and handle loan applications, disbursements, repayments, and academic reports. They recover their costs by charging market-based or subsidized interest rates for microloans; the subsidized rates are made possible by your gifts. Costs of operating scholarship programs as well as Janta’s own operational costs are covered by a portion of your tax-deductible donations and gifts. By investing in a Janta student you are not only helping her take the first steps out of poverty, you are also supporting the local people and organizations that make the microloan possible for high-need families.
There are microloan programs outside of the education space that also work with field partners and microfinance organizations around the world. Perhaps the most visible is Kiva, a web-based nonprofit that connects entrepreneurs with those willing to supply microloans to help their businesses. The company recently announced its launch in Colombia.
It’s important to note that if you decide to give a microloan, you accept the traditional risks of losing the money you invest. It’s strongly recommended that you not loan more than you can afford to lose. After all, it is the students’ responsibility to pay their benefactors back, and they may not always be in a position to do so.