Poverty is universal. Despite the plethora of global aid initiatives, many in our slums live in abject penury. They do not make attractive clients for the banks, because the risks are too high to be considered a worthy investment. Without access to credit, the marginalized poor have no means to help themselves and help improve their economic situation. Often they turn to loan sharks who charge excessive interest rates making it extremely difficult for them to repay and get out of the debt trap. This is the problem that microfinance seeks to answer. However, recently there have been instances of many for-profit microfinance institutions who are also charging heavy interest on their borrowers, not much lower than the loan sharks. For those in poverty, paying for a loan and its interest is a heavy burden and these microfinance institutions have become a problem rather than a solution.
At Lifeline however, we have an interest free, fully not-for-profit, low cost delivery model. This approach resolves the major issues faced with for-profit models and also, we believe, is a more humane approach of minimizing the burden on the poor. At Lifeline we seek to institutionalize voluntarism and philanthropy. We minimize our operational cost by relying heavily on volunteers and seek to cover the low administrative overheads through recurring donations.
We also apply the Grameen model of social accountability, our groups receive loans one at a time to be repaid over an average of twenty weeks. Similar to Grameen, we work almost exclusively with women. Studies have shown that providing support for women is a successful poverty-fighting strategy throughout the world.