United Prosperity: Introduction, About, How it Works

by **Tigger34** Fri Apr 01, 2011 8:13 pm

United Prosperity: From the United Prosperity Website : http://www.unitedprosperity.org/us/about_us

“United Prosperity presents you the opportunity to directly help poor entrepreneurs and transform the lives of their families and communities.

Our model of Guarantee-Loan-Impact is unique since you can:

Help people directly
Maximize your impact
Transform communities
Alleviate poverty

You select the entrepreneur to support and each $1 you contribute acts as collateral or a loan guarantee with a bank. Based on the guarantee, the bank makes a loan of nearly $2 to the entrepreneur though a partner Microfinance Institution (MFI). Once a guarantee has been made, the entrepreneur’s progress can be tracked online. On loan repayment you get your money back and you can choose to recycle it by guaranteeing the loan to another entrepreneur. Importantly, the MFI builds a strong relationship and its credit history with the local banking system, encouraging other banks to lend to the MFI. This is powerful because as more banks lend to the MFI many more entrepreneurs receive loans starting a virtuous cycle that transforms communities.

Since our launch in May 2009 and as of June 2010:

850 families have received $165,000 in loans
Ajiwika, our first partner MFI, has built its credit history with the local banking system encouraging six other banks to lend to them.
This has impacted an even greater number of entrepreneurs, their families and whole communities. We work in regions with high levels of extreme poverty and ask you to join us in amplifying this positive change and lift many more communities out of poverty.

Why United Prosperity?Learn more about what we stand for and how you can transform the lives of the poor.”

Why United Prosperity http://www.unitedprosperity.org/us/why_up

At United Prosperity, we are committed to:

1. Helping the poorest

2. Transforming the availability of capital to break the vicious cycle of extreme poverty
There are two types of capital– Patient Capital and Commercial Capital. Patient Capital usually comes from individuals and seeks social development, long-term results and empowerment. Commercial Capital seeks profit and looks for returns that are commensurate with risk. While Patient Capital is in short supply and in places that are far away from where it is needed, Commercial Capital is plentiful and often available locally within the developing countries. Separately, Patient Capital and Commercial Capital can achieve little to alleviate poverty.
United, they can work wonders.
At United Prosperity, we combine the Patient Capital that you provide with Commercial capital we raise locally to create twice the impact. Every dollar of Patient Capital acts as a guarantee that raises an additional dollar of Commercial Capital that is otherwise too conservative to participate in microfinance loans.

3. Building local self-sufficiency

Additionally our Guarantee-Loan-Impact model manages some of the risks associated with international lending better:

Mitigates currency risk: Currency risk is mitigated since the loan from the Bank to the MFI and from them to the entrepreneur are in local currency. The guarantee funds which remain in dollars will be called only in the event of a default and that is not common.
Additional loan monitoring: Besides us, the bank also monitors the loan made to the MFI.
Complete loss only if the MFI defaults: The possibility of a complete loss occurs only if the MFI defaults on the loan it received from the bank. If a few microloans to the entrepreneurs default the MFI covers the losses from their ‘loan loss reserve’.

Learn about How We Work through a detailed step-by-step description of our model.

All of the above information is from the United Prosperity website. There is much more information about United Prosperity on the website.

Entrepreneurs located here: http://www.unitedprosperity.org/us/featured_loan_listings

Note: Due to the microfinance crisis in India, there are currently no loans listed on United Prosperity. The major problems were located in a different province (from the province in which United Prosperity lends) but because of the problems, banks are not currently extending credit to borrowers. The following post will contain the blog written by Bhalchander Vishwanath, Founder & Chief Executive Officer.

by **Tigger34** Sat Apr 02, 2011 12:56 am

March 18, 2011 (blog) BY bhalchander

"It has been a long winter for microfinance in South Asia this year.

First, I would like to share an update on the microcredit crisis in India. The Malegam committee published its recommendations for microfinance in India but no new formal regulations have been published so far though it appears several clauses of the report are likely to be implemented. As I had previously written, repayments in Andhra Pradesh state are still very low. Meanwhile, loans to the tune of nearly USD 2.8 Billion (Rs. 13,000 Crores) to some of the largest MFIs in the state of Andhra Pradesh are likely to be restructured with the loan term being extended from the usual 2-3 years to a maximum of 10 years.

I was in India over the last one month and the impasse has not done much good. The confidence of bankers on lending to MFIs for microcredit has been eroded. India is one of the countries that successfully managed to encourage local banks to lend to MFIs. The uncertainty and impasse has in my opinion turned the clock back by nearly a decade.

Prof. Malcolm Harper writes that this situation seems to have produced several losers, but the biggest and the most silent losers are going to be the poor women and their families all over India who will see the flow of credit slowing down. Many aspirations will have to be postponed or remain unfulfilled.

As a saving grace, at UnitedProsperity.org we are glad that default epidemic is restricted to only one state in India. Our borrowers are in a different region and are continuing to pay back their loans, although many of them have been disturbed by the prospect of not getting the subsequent loan on time.

In neighboring Bangladesh, Nobel Prize winner Prof. Muhammad Yunus, an international icon has been subject to the most unceremonious treatment by his government. I sincerely hope that international pressure will encourage the Bangladesh government to treat with respect and dignity the man who has done so much to help women in Bangladesh and around the world come out of poverty with dignity.

Making sense of some of these events has indeed been overwhelming. We have been trying to get banks to start lending based on our guarantee. However, bank lending in India to MFIs is frozen. We also explored several other possibilities in India, but at this point due to the environmental uncertainty banks are in an ultra cautious mode.

We are also contacting MFIs in several other countries to explore if they need guarantees so that they can borrow from local banks. So far we have noticed that in most of the countries other than India, MFIs are dependent on loans from international donor organizations. We have had encouraging discussions with a couple of MFIs and we hope that some of these leads will fructify. We will continue to be posting updates on our blog and newsletter on the progress we are making.
We sincerely hope that all of us can once again cherish and celebrate the opportunity to make a difference to people’s lives. Thanks for your patience and we look forward to an early spring. "

Note: The above blog is from the United Prosperity website.

by **Tigger34** Mon Apr 04, 2011 10:58 am

India’s leading business news channel recently broadcast a special report on the state of Microfinance in India:

Link here: http://indiamicrofinance.com/microfinance-india-news.html

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