Since its rise in the late 20th century, microfinance has grown exponentially in its ability to reach and empower people living in poverty to transform their lives.

Over 3,300 microfinance institutions reached 211 million people with a small loan by the end of 2013. 114 million of these clients were among the poorest when they took their first loan. 83 percent of these poorest clients were women.

But where did it all begin and how did we get to where we are today?

Microcredit can actually be traced back to the early 1800s when Jonathon Swift tried to empower families in poverty through the Irish Loan Fund. While the theory was there, the system was flawed and its goal of financial independence for the rural population wasn’t achieved.

Over a century later, Muhammad Yunus provided a small amount of his own money to a community in Bangladesh. He was astonished at how his money was able to rebuild the community. In 1983 he founded the Grameen (Village) Bank, which created a huge microcredit industry in Bangladesh.

Similarly, Opportunity International was founded in the 1970s by two businessmen, Australian David Bussau and American Al Whittaker. David was living in Indonesia, while Al was in Columbia. The local communities were poor, disempowered and lacking in hope. But David and Al recognised the clever business ideas of the local people who wanted to work but were unable to access funding from formal financial institutions, and as a result, were without opportunity. Their response was offering women small loans and a hand up out of poverty.

Stories like this led to the boom in microcredit in the 1990s. Traditionally, the microcredit model was based on the concept of ‘social collateral’, where a group of rural or semi-urban women would meet and receive training in financial literacy, small businesses and other profit related theories. They would then gather together and one woman would receive her loan. Upon the repayment of this loan, it would be passed to the next community member and so on.

The 1990s saw this trend evolve into ‘microfinance.’ Not only was microcredit something available to people in poverty, but a broader suite of products such as savings, insurance, pensions and remittances were developed. The Microcredit Summit in Washington (1997) legitimised the concept and aimed to build upon the success of the previous three decades in order to alleviate poverty.

The 21st century has also produced notable achievements in microfinance. In fact, the United Nations declared 2005 the International Year of Microcredit in order to draw attention to the cause and give it global importance. Muhammad Yunus won the Nobel Peace Prize for microfinance in 2006 and David Bussau was awarded Senior Australian of the Year in 2008 for his work in microfinance, social justice and human rights.

However, between 2008 and 2010, there was a microfinance crisis that affected developing countries heavily. Some say this crash was due to the repercussions of the microfinance industry expanding too quickly and others maintain the opinion that there were direct links to the Global Financial Crisis in 2008. Regardless of the cause, the Universal Standards for Social Performance were developed in order to regulate the operations of microfinance organisations.

Later in 2013, the Smart Campaign Client Protection Certification outlined the minimum standards of service that an organisation could offer their clients. The values include transparency, privacy and mechanisms for complaint resolution. Opportunity has a dedicated team working to equip all our program partners globally to make progress in implementing best practices in providing client-focused services that meet people’s needs through Social Performance Management. And despite the financial crisis, microfinance recovered quickly with Opportunity’s client numbers growing from 500,000 in 2005 to 3.5 million in 2015.

It is important to note that most organisations have maintained focus on women as their target clients. There are many reasons for this including the evidence that women tend to use their profits to provide for their families first rather than for personal use. This trend is important in the microfinance industry as it gives hope to empowering the next generation.

For example, meet Amina and Drina Mendez. Their family is from a rural village in the Philippines and their mother, Remy, received an Opportunity loan of Php.5,000 (A$123) to purchase three piglets. With the income from their new business, Remy was able to pay for their daughters to attend high school. Then both their children went on to University, with Amina receiving a scholarship to graduate from the Ohio Wesleyan University in the United States.

Amina is now working for ASKI, one of Opportunity’s microfinance partners. Her mother is thrilled that her children will never experience the poverty that she had faced before her loan.

It’s the lives of families like these that you can help shape today with as little as $70. Not only will it help a mother build a small business, but it also empowers women, giving them the opportunity to break the generational cycle of poverty. Donate now.

Jamie-Leigh Hecht is Opportunity International Australia's Communications Intern and is currently studying a Bachelor of Global Studies at the University of Technology.