No-interest micro loans: Philanthropist’s new tool in preventing homelessness
It’s one thing to give someone a monetary loan for use in home repairs or a new television. But what if a person asked for a no-interest loan to make it to work or to afford groceries with a stipulation that the money could not be spent on any of the items they were borrowing?
It’s a concept that Philanthropy East Bay and other Bay Area nonprofits are using through the No-interest Micro Loan Program.
The program, open to anyone with a personal or business checking account, was initiated by Don McAlister, who started the program in 2001. A few years ago, he teamed up with local Bay Area nonprofit organizations, including The Arc of the Bay, to launch the program.
No-interest loans are particularly useful when it comes to homelessness. During the past four years, a growing number of people who were once homeless have found themselves in shelters because of the economic downturn. Many have been in those situations for years, and their only option is a spot in a shelter. Now people are in shelters for weeks, months at a time.
People spend months working to pay rent, but their incomes have dropped. In addition, many of those who were formerly homeless are now working, but cannot find work that pays enough to support their families. No-interest loans can be used to fill that financial gap.
“I think it will go a lot further,” McAlister said.
He says, “It’s very important in terms of the way we’re doing homelessness, that people have a means of being able to buy groceries, for example, that way they can maintain their dignity, that way they can have some sort of a quality of life.”
McAlister is a former president of the Bay Area Council and an alumnus of Scripps College, where he received his bachelors degree in history. His career has been