How we multiply your money - and your impact
The nature of microfinance means that donations to Opportunity International Australia are continually at work.
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1. A donation is received
Microfinance provides a business solution to the problem of poverty. By giving out loans instead of hand-outs, Opportunity stewards your donations, making sure that for each dollar you invest in our work with the poor, more than one dollar will end up in the hands of those who need it most.
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2. Funds are leveraged
Once received, the funds we send to the field are usually leveraged by our partner microfinance institutions, often four to six times (depending on the country they work in). The funds we provide (thanks to your donations) are used as an indication of financial strength and security – enabling our partners to borrow more money from commercial providers. These combined funds are then available to loan to a larger number of clients, maximising the impact of your initial donation.
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3. Recycling takes place
Loans are then recycled, ensuring that your money is continually at work. Opportunity has a loan repayment rate of 97%, meaning that once a client repays their loan, it is then re-lent to someone else. This next loan will also be repaid, re-lent and so on. This recycling effect means that more and more clients are able to start businesses and begin to work their way out of poverty – using what are essentially the same funds. In effect, your gift keeps on giving.
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4. Costs are reduced
Leveraging and the recycling of loans mean that the one-off costs it takes for Opportunity to run our programs represents a continually diminishing proportion of your donation. As time goes on, the percentage of the initial cost we used to manage the program and provide technical assistance, governance, advocacy, reporting and administration gets less and less. There are no more costs, but your donation remains at work, increasing your impact.
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5. Impact is increased
As loan recipients create successful businesses, their business profits will have a ripple effect. With an increased income, a family can begin to afford better food, proper shelter, medical care and an education for their children. Plus, as clients use loans to expand their businesses, many go on to employ others – creating jobs for others in their community and boosting the local economy.
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6. A sustainable solution to poverty is developed
Underpinned by sound economics, microfinance is one of the few anti-poverty mechanisms that can become self-sustaining – creating a lasting and cost-effective solution to poverty. Through the multiplier effect outlined above, the power of your donation is magnified, helping more people work their way out poverty and transform their lives. And for every new donation you make, other people in need are able to take their first step on the pathway out of poverty.
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