What does the name Oikocredit mean?

Our name embodies our core value: belief in people. In ancient Greek, oikos means house, community or world – the places where people live together. Credit obviously refers to our financial operations, but the word derives from credere, to believe.

At Oikocredit, our central belief is in the power of households and communities to build a better world by lifting themselves out of poverty.

What is microcredit?

Microcredit steps in where traditional banks are unwilling or unable to operate, providing loans and services where they would otherwise be unavailable – or in areas where the market is claimed by predatory lenders.

Time and time again, when given an opportunity to lift themselves out of poverty, our borrowers have done so with incredible success, repaid the loans at astonishing rates, and have provided investors with a stable rate of return on investment. When done with honesty and transparency, microcredit is a sustainable, win-win approach to changing the world.

Learn more about How Your Investment Works.

How Do I Invest?

There are two ways to invest with Oikocredit:

1. Invest in an Online Community Note. For as little as $20, anyone with a computer can invest in alleviating global poverty.  Payments can be made by PayPal or electronic check, and interest is paid directly to your PayPal or bank account.
2. Invest in a Definitive Community Note. Individuals, congregations and other institutions are invited to invest directly in Oikocredit USA with a minimum deposit of $1,000. We’re working hard to enable investments in this category to be made online, but until then, please use our simple mailing system.

How long has Oikocredit been investing in people?

Oikocredit was founded in 1975 as a way to change the world with investment. Since then Oikocredit and its partners have reached more than 17 million people in over 70 countries.

Why loans and not aid?

Nearly three billion people in the world lack access to basic financial services. Without credit or savings, they have little hope of improving their living conditions. Unlike traditional foreign aid, access to available credit empowers those in need to invest in themselves and create their own path out of poverty. By providing fair loans instead of aid disbursements, Oikocredit’s is a sustainable, long-term solution.

Our experience proves that loans are a more appropriate instrument than grants to achieve economic productivity and self-reliance. If a project is financially viable, loans will stimulate sustainability. Additionally, in a loan relationship, both parties are business partners who rely on each other with mutual respect.

When do I receive a return on my investment?

If you invest in a Community Note via Microplace, interest is paid quarterly. Beginning 90 days before maturity of the Note, you may receive a notice giving you the option to reinvest the funds, or having the funds returned to you. If you invest in a Community Note of $1,000 or more, at the time you make your investment, you have the option of investing for a term of 1, 3, or 5 years. Interest is paid annually, and 45 days before maturity of a Note, Oikocredit will mail a notice providing instructions for reinvestment or redemption of funds.

How Do I Increase My Investment?

Investors may add to an existing Definitive Note in amounts of $250 or greater at any time. Such increases will be added to the Oikocredit Global Community Note at its existing term and interest rate. At any time, investors may increase their investments in Online Notes for any available Oikocredit listing at Microplace.com.

Is my investment safe?

In the history of Oikocredit, we have never defaulted on paying our investors.  At the same time, every investment involves risk and it should be noted that historical returns are no guarantee of future performance.  We pride ourselves in offering a modest but stable rate of return to socially motivated investors – and a way to change the world with their investments.

When you invest with Oikocredit, you receive a dual return: a modest financial benefit with high social impact. Borrowers pay a low and reasonable interest rate on their loans, and Oikocredit absorbs the costs of business workshops, skill education, and other needed business services.

What percentage rate will I receive?

Oikocredit has historically paid around a 2% dividend to its shareholders. By limiting ourselves to a modest financial return, we maximize our ability to fight poverty.  If you hold an Online Note, your interest rate was assigned at the time of your investment at Microplace. If you hold a Definitive Note, you selected your rate of return when you sent in your investment. Please contact our USA office if you would like more information.

Why do other microcredit organizations offer higher rates of interest?

Oikocredit pays a modest dividend to its shareholders. This varies, up to 2%. The fact that we limit our dividend to this modest level enables us to charge reasonable interest rates on our loans – without extra fees and commissions – and to extend credit to partners with a higher-than-average risk profile. There are a number of reasons why other organizations may provide higher rates of interest to investors:

1. Many institutions charge the borrowers higher interest, and pass some of that on to you. For the borrower, obviously higher rates of interest make it more difficult and costly to pay the loan back.  In some extreme cases, institutions are charging outrageous rates to borrowers (upwards of 100%) and are acting more as loan sharks out specifically for their personal financial gain. In stark contrast, Oikocredit delivers to its investors a modest but stable rate of financial return, as well as a significant social return:  a way to change the world with their investments.
2. Other institutions do not provide borrower services beyond capital funds. However, Oikocredit believes these services are necessary for business success so we absorb the costs of business workshops, skills education, and other needed business services.
3. Unlike other institutions, we provide loans in local currency. This is valuable for our project partners, who earn their income in local currency. A hard-currency obligation can be disadvantageous – or even disastrous – in the event of devaluation.
4. We do not charge extra fees or commissions to our borrowers. We have a flexible interest rate on both our hard and our local currency loans, taking into consideration market rate, project and country risks, development relevance and cost coverage.

Does this really lift people out of poverty?

The desire to achieve positive social impact is a driving force and motivation for Oikocredit.  We are committed to the creation of a more just society worldwide, and our data shows this method works.  Come read the stories first hand to find out how credit change lives.

To ensure we continue to create positive social impact in the world, Oikocredit is leading the charge in social performance measurement, monitoring, assessment, management and impact for microfinance institutions. Additionally, we consult on microfinance impact studies, perform exit interviews with clients, and appoint independent agencies to execute impact assessment studies on projects in our portfolio to evaluate the social and economic impact of the credit.

How does Oikocredit choose to which entrepreneurs it will give credit?

Oikocredit screens potential loan recipients for financial soundness and social impact, using the following six criteria as guidelines:

1. The enterprise benefits poor and disadvantaged people.
2. The project’s earnings are widely distributed and do not enrich only a few organizers or investors.
3. The project contributes to the social and economic progress of the broader community in which it is located. Special attention is paid to ecological impact.
4. Preference is given to cooperative structures that enable poor people to participate directly in project management, and to projects that directly benefit and include women in decision-making.
5. The enterprise is economically viable, has appropriate management and technical leadership, and will become self-sustaining within a reasonable period of time, allowing Oikocredit’s capital participation, loan or guarantee to be phased out.
6. Foreign investment will benefit the project and can be provided within terms compliant with government requirements.

What Are MFIs?

MFIs are our partner lending organizations – credit unions, small local banks, NGOs, or credit cooperatives – who work locally with borrowers one-on-one by issuing loans, collecting payments, and offering important business services. Due to their proximity to our borrowers, they are best able to provide much-needed advice and training to borrowers, as well as a network of support systems, savings accounts, and social services such as basic health care. To manage and monitor our MFI operations, Oikocredit has a global network of 11 regional offices staffed by local professionals with extensive experience in microfinance.

Where does Oikocredit lend?

Oikocredit lends to microfinance institutions (MFIs) and co-ops in over 70 countries across Africa, Asia, Europe and Latin America. In order to work efficiently, however, we focus primarily on a limited number of countries selected based on the following important criteria:

• Social, economic, and political stability
• Marketability of microloans
• The existence of a sound legal system
• A strong support network for our Regional Managers and partner organizations.

How do I invest if I’m located outside the United States?

Investment possibilities depend on the legal and regulatory situation in each country. Oikocredit has a network of support associations in selected countries offering local investment opportunities – for investment opportunities in your country, please select your country below: