Spes Nova works with local microfinance institutions (MFIs) to identify potential borrowers among the working poor. These borrowers will use the funds to start or expand small businesses in their communities, creating employment for themselves and often family members and neighbors. The loans are typically very small (our current average is $500) and very short-term (our current average is 12 months), but provide long-term employment and income.
Qualified loans are posted on our website and offered for sponsorship. Sponsors may support as little or as much of offered loans as they choose and can follow the progress of loans as they are funded and eventually mature. As loans are repaid, sponsors may elect to retrieve their funds or start the process all over again with a new loan.
Loan funding is accomplished through Pay Pal, who collects funds and receives instructions from Spes Nova for forwarding to the MFIs. The MFIs use the funds to make the loans (or receive reimbursement if the loan has already been processed). Loan repayments are made through the MFIs back to Pay Pal, who will then credit the funds to the appropriate sponsors.
Most of our borrowers have too few assets to post traditional collateral, yet our MFI partners typically experience default rates of less than 1%. This remarkable result has been generated through a combination of group lending (effectively, joint and several liability) and the use of “social collateral” (relying on family and village commitments to strengthen the obligation to repay loans). Nonetheless, our sponsors need to remember that their loans are non-recourse and that they should never lend more than they can afford to lose.
Consistent with its mission, Spes Nova does not offer interest to its sponsors on their loans. The savings on the cost of funds are passed along to the borrowers.
Spes Nova also works with trusted partners to identify artisans whose products are suited for purchase outside of their local communities. These will typically be hand-crafted goods, such as clothing or other home goods.
Qualified artisans and their products are posted on our website and offered for sale. Purchases are completed on our site, with instructions sent to our local partners and the producers. Payments are made through Pay Pal, who will forward the funds to the partners for distribution to the producers as the products are shipped to our sponsors. Payment includes the cost of shipping and any taxes or duties.
Gift cards are available for purchase and may be e-mailed to anyone you choose. These gift cards may be used by the recipient to make loans, make purchases or make a donation to Spes Nova.
How Spes Nova Funds its Operations
Spes Nova is a non-profit organization, but must still fund its operations. This is accomplished in three ways. First, we charge our MFI partners 2% for the loans that we funds. Second, we charge our local shopping partners 2% on the goods that are purchased through our website. But most importantly, Spes Nova relies on donations from its sponsors. These can be made at the time of a loan or purchase transaction, upon repayment of loan principal or any other time a sponsor is able to provide financial support.
Spes Nova is staffed by a combination of employees and volunteers. Importantly, none of the founders or directors of Spes Nova receive remuneration. Our financial statements are available upon request.
Spes Nova is an IRS-approved 501(c)(3) organization. All donations to Spes Nova are tax deductible. However, loans and purchases made through Spes Nova are not tax deductible. Only donations.