In a new effort to aid entrepreneurs in developing nations, three Georgetown students are launching a microfinance club at the university. While they want to focus on distributing funds to help entrepreneurs in the third world, the club also plans to educate students about the potential of microfinance.

The club, founded by Ben Sacher (SFS ’12), Mohammad Barhoush (COL ’12) and Brian Gallagher (MSB ’10), will focus on three elements of the microfinance process: raising funds to loan out, managing these loans and selling fair trade goods from developing nations to the campus community.

In the practice of microfinance, donors offer relatively small amounts of funds to aid recipients in launching specific projects for their communities, like starting a manufacturing business. Loans are typically repaid in under a year and range from $250 to $750, Gallagher said. Microfinance has a 98 percent rate of repayment – one that is much greater than rates for other lending practices, he said.

Through Web sites like Microplace.com, which facilitates connections between donors and recipients, the club will donate its first funds. The ultimate goal, however, is to circumvent such Web sites and forge connections with microfinance organizations in the local communities.

The club will start with a series of efforts to raise money for the loans, then reach out to alumni for donations, launch a mail-based campaign and host social fundraising events, Gallagher said.

Beyond simply loaning funds, Gallagher said he wants the finance operation to educate members about the different entrepreneurial operations in the economies in which they are based. The aim is closely tied to the ideals of the university, he said. Gallagher said he hopes to meet some of the entrepreneurs that the club underwrites.

“For each loan that we make, we’d like to learn something about that entrepreneur and the economy he is starting the business in. We will treat each loan as an individual case study. We want to make sure that all loans we make are socially responsible,” Gallagher said.

The club plans to organize a fair trade sales operation with on-campus sales of handmade goods from women entrepreneurs in Guatemala. The sales will promote transparent trade operations, Gallagher said, as the customers will know the exact cost of producing the goods and the profit that the club makes on each sale.

In his experience as a student, Gallagher said he has heard of very few instances of microfinance being part of course curricula.

“We want to teach people about contesting theories of microfinance and we want to raise awareness on campus and in the community about how microfinance combats poverty and is sustainable and logical. It’s not just charity,” he said.

The club is the first of its kind to be established through the Center for Social Justice, so its approval process has been more drawn out than for other new organizations, Gallagher said. He hopes to have an organizational meeting by the end of the semester.

“It fits well into the Jesuit model of helping others help themselves and empowering people,” he said.”