What is Microfinance?

Microfinance (MF) refers to the provision of financial services to low-income clients, including consumers and the self-employed. In KMBI, MF includes group loan, micro-insurance and capital build-up.

What are our Microfinance products?

KMBI provides group loans for micro-businesses, micro-insurance program and a capital building scheme for its program members. Along with the micro-enterprise development program, basic business training, mentoring, financial planning and leadership to its members are provided.

Is Microfinance the sole business of KMBI?

No. KMBI is in the business of holistic transformation. It recognizes that provision of capital funds alone is not enough to ensure the growth and progress of members. Therefore, each member is equipped with business skills to grow their enterprise, along with positive value formation.

What is an ENTREP group?

An ENTREP group consists of 30 or more women bonding together to create a peer group that KMBI will endorse the loans to. It is also referred to as a trust bank, since it employs mutual guarantee. ENTREP members are referred and chosen by the members themselves. Led by five persons chosen among their ranks, the groups meet once every week for activities under the Entrepreneurial Nurturing through Transformation, Reformation and Empowerment Program (ENTREP).

Who are the people that you are helping?

KMBI focuses its attention to poor entrepreneurial women. Often asked to stay at home, microfinancing helps empower these women to get out of the house, organize in a group, find their own voice and augment the family incoming by being self-employed.

These women are also the first step in entering into the family. If we want to have social change, they are the best resource persons to be tapped since they have profound influence over their families.

How many clients do you serve?

KMBI currently serves more than 146,000 clients. By 2011, it intends to reach 250,000 program clients.

What kind of businesses do your clients operate?

Almost 80% of KMBI’s clients operate sari-sari stores. In the Philippines, this is the local variety store, which often sells household items in retail. The other 20% manufacture shoes, sew, get into crafting, grow vegetables, engage in small eateries, sell in the market or do other unique businesses that utilize the resources of their area.

Do your clients have a good record of repaying their loans?

Yes. KMBI program members have maintained an average repayment rate of 95 percent or better.

Where are your clients located?

All over the Philippines. KMBI currently has 42 branches operating in Luzon, Visayas and Mindanao, and is opening 19 more in the second quarter of 2009.

Do you charge interest?

Yes. The rate is 20% in one cycle (six months). This sustains the operations and helps the organization grow and reach out to more people in the rural areas.

How are you funded?

Majority comes from the operations of our branches. Aside from wholesale lending from commercial banks and other MF providers, we also receive funding from governments, corporations, individuals and foundations.

What motivates your work?

KMBI wants to see people in communities live in abundance with strengthened faith in God and in right relationship with their fellowmen and the rest of creation.

If you are earning from your Microfinance operations, why should I donate?

KMBI is a not-for-profit organization. Income generated from the microfinance operations are used to open more ENTREP Centers and branches as well as provide training for its the clients and staff. Last 2008, 57% of the profits of KMBI was spent on capacity building through the following departments:

• The Entrepreneurial Development Department (EDD) develops services and programs that aim to increase the business skills and market access of resource-poor entrepreneurs to improve their income generation and asset-building capacity. This is divided into two units:

The Entrepreneurial Development Services (EDS) profiles and analyzes our clients to respond to their needs as entrepreneurs. They provide knowledge sharing through training and development (e.g. financial literacy, business tips, etc.). Previous projects that have materialized are the Center Leader’s Conference (CLC) and the Entrepreneurship and Community Organizing Workshop (ECOW). Through the units endeavours, outstanding microentrepreneurs are recognized by giving the KMBI Entrepreneur of the Year (KEY) awards. Awardees are given cash prizes to fund existing or new businesses. This is a good way to promote clients, expand their existing network and link up with new contacts.

The Community Development (ComDev) is focused in adopting poor communities by infusing skills and funds to build their capacity in the hope of stimulating economic activity within the area. KMBI’s pilot project along with AusAID and Opportunity International can be found in Carpenter Hill, Koronadal, South Cotobato. KMBI believes that given a chance to have better access to capital, capacity, and have the time to hone their character, these people can boost the local economy.

• The Transformation Department focuses on building the character of the staff and clients. They publish books and magazines to inspire KMBI’s employees and clients as well as create activities, such as accountability groups, to promote camaraderie amongst staff and to bring them closer to God. For clients, mass weddings are organized to promote the sanctity of marriage and family life. Activities for clients are under the Action for Community Empowerment (ACE) program.

The Training Department also launched the Leadership Enhancement and Development (LEaD) program back in 2007 to enhance the soft and hard skills of the KMBI staff.

What do I get in return from my donations?

KMBI is a member of the Philippine Council for NGO Certification (PCNC) and granted Donee Institution Status by the Bureau of Internal Revenue. Certification for donee institution status is part of the provisions of Republic Act 8424 otherwise known as the Tax Reform Act of 1997 provided in Chapter VII, Section 34 (H). It stipulates that contributions, gifts, or donations actually paid or made to donee institutions, which are accredited/certified domestic non-stock, non-profit corporations and associations organized and operated exclusively for religious, charitable, scientific, youth and sports development, cultural or educational purposes, or for the rehabilitation of veterans, or to non-government organizations, shall be allowed as business deductions for income tax purposes.
Donations to donee institutions are tax-deductible and/or exempt from donor’s tax (Section 34(H) and Section 101 of the Philippine Tax Code). In other words, aside from being exempt from donor’s tax, local donors, whether individual or corporate, can deduct the amount they have donated from their taxable income derived from trade or business as computed without the benefit of the deduction.

Where are you located?

Our main office can be found at 12 San Francisco Street, Karuhatan, Valenzuela City, Metro Manila, Philippines.