What do you think about rich people who loan money to poor people? You might feel it will be better off if they give away the money like situations where millionaires give money away for free. There are a lot of rich people who are willing to help poor people with money. Nevertheless, they will not be give the money to you just because you need it. Some rich people set up charities that provide loans to people in need. These types of charities are not banks or financial institutions. They are similar to what is often called microcredit institutions. Others call this service micro-finance.
Why This Happens
The basic idea is to get poor people into business. That is to say they will help those with little financial backbone to start up a business and they will also provide financial advice. This is a great initiative because it means those who are getting the aid will not get into more financial difficulty due to lack of sound business ideas. The fact that those benefiting from these types of initiative get help to manage their businesses means that money will always be used for the purpose for which it was given out.
Examples of Rich People Lending Money to the Poor
An outstanding example of a rich person providing loan to poor people is the Noble peace prize winner Muhammad Yunus. He was one of the pioneers of what is now commonly known as micro-finance or microcredit. The success of this initiative has encouraged some banking brands to join and provide similar services. Of course, they're not doing it because they want to help the poor. In all forms of lending there is money to be made and that is why anything banks get into must have profit as its aim.
Peer to Peer Lending
You don't even have to be rich to provide loans to poor people. There is also what is called the peer to peer initiatives similar to these are the services provided by Kiva, Zidisha and Lend for Peace programs. These are web based programs where people with money can participate and help poor people within the scheme of the micro-credits plan.
It is interesting that in most developed world, rich people will normally just give away money for free to charities. The charity will in turn provide some form of service to the general public. This is not a bad system it is just different. In developing countries however, rich people providing loans to the poor has helped a lot of people start their own business and flee the plague of loan sharks.