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GRADE LEVEL: 9-12
TOPIC / SUBJECT MATTER: Economics, Business, Entrepreneurship, World History
TIME ALLOTMENT: Two 45-minute class periods
OVERVIEW:
In this lesson, students will be introduced to the practice and industry of microfinance, learning how the provision of unsecured loans to low-income, small-scale entrepreneurs in the developing world has improved the business prospects and quality of life for many desperately poor people around the world. In the Introductory Activity, students will define key terms relating to entrepreneurship and business lending, and will explore “case studies” of hypothetical entrepreneurs in the developing world, brainstorming how these small business owners could potentially expand their businesses if they were to have access to monetary loans.
In the Learning Activity, students will view segments from the PBS series The Ascent of Money to compare two economic models for the global alleviation of poverty, one based on property ownership and the other – microfinance – based on unsecured lending. The students will be introduced to the concept of microfinance and will explore how the model of creditworthiness used in microfinance differs from the traditional “bank” model.
Lastly, the students will view profiles of real microloan applicants on the kiva.org website, preparing reports to present the stories and businesses of real-life entrepreneurs to their classmates.
This lesson is intended as a stand-alone resource, but also follows nicely upon the “You Can Take That to the Bank!” lesson on the Ascent of Money website.
MEDIA RESOURCES
VIDEO
Clip 1:
Is property the route to wealth?
Clip 2:
Microfinance
Access the streaming and downloadable video segments for this lesson at the Video Segments Page.
WEBSITES
CitiFinancial: Resource Center: All About Credit
http://www.citifinancial.com/resourcecenter/allaboutcredit_lender.php
This Web site from Citibank details criteria for granting a loan or issuing a credit card.
FRONTLINE/World – Uganda: A Little goes a Long Way
http://www.pbs.org/frontlineworld/stories/uganda601/video_index.html
A 15-minute video produced in 2006 for the PBS series “FRONTLINE/World” showcases the small business entrepreneurs in Uganda who were helped by the microfinance lending organization Kiva.org in its first year of business.
Kiva.org
www.kiva.org
Kiva.org is a person-to-person microlending web site started in 2005 by a young American couple, Matt and Jessica Flannery. The site enables individual lenders all over the world to provide localized microfinance institutions with the capital for loans to needy entrepreneurs, and allows the lenders and loan recipients to have ongoing contact through email and the internet.
STANDARDS
National Standards for Economics
Standard 10: Role of Economic Institutions
• Institutions evolve in market economies to help individuals and groups accomplish their goals. Banks, labor unions, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy.
Standard 14: Profit and the Entrepreneur
• Entrepreneurs are people who take the risks of organizing productive resources to make goods and services. Profit is an important incentive that leads entrepreneurs to accept the risks of business failure.
Standard 15: Growth
• Investment in factories, machinery, new technology, and in the health, education, and training of people can raise future standards of living.
McRel Compendium of K-12 Standards
Business Education
Standard 15: Knows unique characteristics of an entrepreneur
Level IV [Grade 9-12]
• Benchmark 2.Knows that entrepreneurship relates to the capacity to take responsibility for one’s own future, to initiate creative ideas, develop them, and to carry them through into action in a determined manner.
Standard 20: Understands the financing necessary to start a business
Level IV [Grade 9-12]
• Benchmark 1.Knows factors that affect the amount of money needed to start a business (e.g., nature, size, and location of the business; current economic conditions; credit policies)
• Benchmark 5.Knows the financial statements a lender would evaluate when considering whether to grant a loan to an entrepreneur (e.g., projected income statement, cashflow statement, balance sheet)
National Standards for History
World 5-12 Standards
Era 9 – The 20th Century Since 1945: Promises and Paradoxes
STANDARD 3: Major global trends since World War II.
Standard 3A: The student understands major global trends since World War II.
Therefore, the student is able to:
• Analyze causes of economic imbalances and social inequalities among the world’s peoples and assess efforts made to close these gaps.
MATERIALS
For each student:
• “Terms and Definitions” Student Organizer (PDF) (RTF)
•A description of an entrepreneur, cut from the Entrepreneur Descriptions sheet (PDF) (RTF). See the “Prep for Teachers” section, below, for instructions.
•“Profiles of Microloan Applicants” Student Organizer (PDF) (RTF)
For the class:
• Terms and Definitions Answer Key (PDF) (RTF)
•A computer connected to an audiovisual projection system, for viewing video segments
OBJECTIVES
Students will be able to:
•Define key terms related to entrepreneurship, lending, and microfinance;
•Understand that poverty is a wide-reaching global problem, and describe two economic models designed to ameliorate it;
•Name the criteria used by banks to evaluate the creditworthiness of a potential loan grantee;
•Describe the difference between a “traditional” bank loan and a loan given by a microfinance institution;
•Understand that poverty in and of itself is not opposed to creditworthiness;
•Give examples of entrepreneurs in developing countries who might benefit from a microfinance loan;
•Discuss the ideas and actions of the American entrepreneurs Jessica and Matt Flannery, who founded kiva.org and expanded it into a successful social enterprise.
PREP FOR TEACHERS
Prior to teaching this lesson, you will need to:
Preview all of the video segments and Web sites used in the lesson.
Download the video clips used in the lesson to your classroom computer, or prepare to watch them using your classroom’s Internet connection.
Bookmark the Web sites used in the lesson on each computer in your classroom. Using a social bookmarking tool such as del.icio.us or diigo (or an online bookmarking utility such as portaportal) will allow you to organize all the links in a central location.
Prepare the “Entrepreneur Descriptions” for the class – cut out the individual descriptions along the lines so each applicant is on a separate strip of paper. Make sure there are enough strips for each student (or pair of students) to get one (multiples of each applicant are ok).
If you prefer, print out the “All About Credit” page from the CitiFinancial: Resource Center: All About Credit website for student reference in the Introductory Activity (otherwise students may visit this site online).
Make copies of the Student Organizers.
Next: Proceed to Activities
Lesson plans for THE ASCENT OF MONEY were created by the LAB@Thirteen, Thirteen’s Community and Educational Outreach Department.
