Microfinancing changes lives around the world — measurably

IT is the question I hear more than any other — does microfinance actually work? It's a good question and one we should ask about any activity that purports to have an impact on the lives of the poor, marginalized and vulnerable. But answering that question is rarely as straightforward as a simple yes or no.

Having worked in international development for 28 years, I have seen thousands of women like Kanti Yadav, a single mother who was able to take a loan from Unitus partner Mimo Microfinance in Dehradun, India, to start a tailoring business that supplements the small amount she makes selling plastic bangles. With the 50 percent increase in income, Kanti was able to take control of her household finances and send her kids to school for the first time. The positive impact a microfinance program has had on her family is undeniable.

Yet, as the popularity of microfinance has grown, so too has the level of interest from researchers looking to accurately measure the economic impact microcredit programs have on the lives of the world's working poor. In a few recently released studies designed to assess the purely quantitative difference participation in a program has on borrowers' lives, the findings have failed to tell the remarkable story of progress and empowerment that access to financial services fuels.

So out of concern that these studies are giving the inaccurate impression that increasing access to basic financial services has no real benefit, Unitus has joined with several leading U.S.-based nonprofits representing a global network of microfinance institutions to ensure the women like Kanti don't get lost in the data. Along with the CEOs of ACCION International, FINCA, Grameen Foundation, Opportunity International and Women's World Banking, we are proud signatories of "Measuring the Impact of Microfinance: Our Perspective," available for download Thursday at www.unitus.com.

The document addresses some of the concerns raised by the recent studies and makes the case for considering the distinct ways microfinance can benefit a family beyond the bottom line. Our worry is that if these studies can't empirically demonstrate significant economic impact in a short time period, the public will be left with the impression that microfinance has no value — especially dangerous at the exact moment microfinance is poised to do more than ever to alleviate global poverty.

As outlined in the book, "Portfolios of the Poor: How the Poor Live on $2 a Day," people living in poverty are entangled in a complex web of informal, inefficient and unreliable financial tools to keep their families afloat. Income is incredibly low and irregular, transaction costs are high, and there is very little protection against unexpected catastrophes.

We need to remember that someone living on $2 a day does not earn $2 each and every day — uncertainty and vulnerability plague their daily lives. This reality creates a real urgency for us at Unitus to continue expanding the boundaries of microfinance and developing additional financial tools and delivery channels to help poor families continue the movement out of poverty and hopelessness.

So how do I answer the question "does microfinance actually work?" Usually it's pretty simple — I'll tell the story of Kanti or one of the thousands of mothers like her, and then ask how can we tolerate living in a world where she is never given the chance to work for all that she has gained?

Brigit Helms is CEO of Unitus, an international nonprofit organization.