Two Jews and two Palestinians joined together at the Wharton School of Business at the University of Pennsylvania to launch a non-profit internet microfinance brokerage called “Lendfor Peace.org” (LFP). Like Kiva.org, LFP facilitates microloans from individuals around the world to partner microfinance institutions (MFIs) who on-loan the funds to women living in poverty that want to start small businesses. LFP, however, focuses exclusively on the Palestinian territories. During the most recent escalation of violence in Gaza, LFP cofounders released a blog explaining their common motivation in launching the microfinance support platform: “The current crisis will increase the number of people who are financially and emotionally strained and has the potential to result in echoes of desperation and violence in the future. We believe that support systems in these regions are more crucial than ever and that an infrastructure for rebuilding the economies of the affected areas will be important for the success of any accord.”
At LendforPeace.org users can scroll through a list of profiles of Palestinian women seeking microloans, and choose which women they would like to support through the extension of a minimum USD 25 loan. The loans are distributed in full by LFP to partner MFIs in Palestine, which in turn, distribute the loans to the borrowers. The partner MFIs also screen and monitor borrowers, and collect payment installments with interest. The interest covers the costs of the partner MFIs, and the loans are repaid to the LFP user. LFP, as a non-profit, operates on donations from philanthropic organizations such as the Clinton Global Initiative, Ashoka Youth Venture, Davis Projects for Peace (USD 10 thousand), and the Shurush Initiative, and from individuals who donate through the website.
LFP’s website says that it hopes to “humanize” both sides of the conflict. It will allow users to “gain a more personal view of the Palestinian experience,” and will contribute towards the “healing process of Palestinians when they learn that LendforPeace.org was founded by and is funded by Jews as well as Palestinians working together.” MicroCapital has recently released a number of articles on the impact of microfinance in promoting peace including “MICROFINANCE PAPER WRAP-UP: Beyond Economic Benefits: The Contribution of Microfinance to Post-Conflict Recovery in Asia and the Pacific” and “MICROCAPITAL STORY: International Symposium on Microfinance as a Tool for Peacebuilding Discusses Rebuilding the Social and Economic Fabric in Post-Conflict Areas of Colombia through Microcredit”
LFP currently has two partner MFIs, the Palestinian Business Women´s Association (ASALA) and FATEN. ASALA was established as a non-profit in 1997, and it operates in both the West Bank and Gaza Strip. In 2007, ASALA reported to the MixMarket, the microfinance information clearing house, that it had 2018 women borrowers, a gross loan portfolio of USD 1.8 million. It had a debt-equity ration of 31.9 percent, and was only 36.7 percent operationally self-sufficient. FATEN was founded by Save the Children Foundation USA in 1995. In 1998 it became an independent non-profit with a Palestinian Board of Directors. The MixMarket reported that in 2007 FATEN had 3771 borrowers, and a gross loan portfolio of USD 5.9 million. It had a debt-equity ration of 8.09 percent, and was 92.15 percent operationally self-sufficient.
To reduce risk to the LFP user, partner MFIs either put up an equal amount of capital or join in a risk-sharing agreement. This mechanism provides incentive for partner MFIs to screen for borrowers that only they themselves would lend to. The website stresses the transparency of its partner MFIs, and that they comply with the US State Department’s anti-terrorism clause. Loan officers reportedly visit borrowers regularly before and during the loan term to determine the client’s local reputation, sources of income and previous criminal records, and to ensure proper use of the loan. The partner MFIs are regularly audited by international accounting firms, and LFP also conducts its own periodic audits of its partner MFIs.
LFPs four co-founders are Sam Adelsberg, Andrew Dudum, David Fraga and Allam Taj. David Adelsberg has spent five months of the last three years living in Israel, and three months in Egypt studying Arabic. He is a former Senior Program Director for PlaNet Finance, a nominee to be a Goldman Sachs Global Leader and Ashoka Entrepreneur, and a candidate for a degree at the University of Pennsylvania in Philosophy, Politics, and Economics. Andrew Dudum, an Arab Christian, is a student at the Wharton School in Finance and Real Estate and founder of myGreek.org, a professional social network designed for current and former fraternity and sorority members worldwide. David Fraga, a Cuban Jew, is an Analyst at Insight Venture Partners, a firm that invests in software and Internet businesses. He has a double major in Economics and Political Science and a minor in Hispanic Studies from the University of Pennsylvania. Allam Taj is a Dubai-born Palestinian Muslim, raised in Philadelphia, who has worked as a Financial Analyst at Johnson and Johnson and Legg Mason. Mr. Taj is set to complete his studies at the Wharton School of Business and University Pennsylvania Law School this May, at which point he will being working for Citigroup and New-York based corporate law firm Skadden, Arps, Slate, Meagher and Flom.
Nearly 50 percent of the population in the Palestinian territories is below the poverty line, and over 30 percent is unemployed. According to PlaNet Finance more than 95 percent of all businesses in the Palestinian Territories are micro-enterprises, 90 percent of which are without access to microfinance. LFP cofounder, Andrew Dudum said, “We realize that the economic stability in the West Bank is key to the final end-goal for peace in the region. By giving these people a chance to feed their children, to keep their job and a chance to have hope, we’re trying to lay the basic foundation of a stable economy and a stable region.”
By Ryan Hogarth, Research Assistant
Additional Resources:
LendforPeace.org: Blog
LendforPeace.org: Home
The Daily Pennsylvanian: “Non-profit Aims to Bring Peace to the Middle East”, by Emily Fox
The MixMarket: ASALA Profile
The MixMarket: FATAN Profile
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[…] Two Jews and two Palestinians joined together at the Wharton School of Business at the University of Pennsylvania to launch a non-profit internet microfinance brokerage called “Lendfor Peace.org” (LFP). Like Kiva.org, LFP facilitates microloans from individuals around the world to partner microfinance institutions (MFIs) who on-loan the funds to women living in poverty that want to start small businesses. LFP, however, focuses exclusively on the Palestinian territories. During the most recent escalation of violence in Gaza, LFP cofounders released a blog explaining their common motivation in launching the microfinance support platform: “The current crisis will increase the number of people who are financially and emotionally strained and has the potential to result in echoes of desperation and violence in the future. We believe that support systems in these regions are more crucial than ever and that an infrastructure for rebuilding the economies of the affected areas will be important for the success of any accord.”… [click here to read the rest of this article…] […]