Kiva.org

[yix]

My brother, makaer, recently pointed me to kiva.org, a site that is doing some interesting stuff with microfinancing. I've been reading about how much microloans are helping communities in developing countries, and Kiva has come up with, what I think, is a compelling way of helping people get involved

Comments

[penk]

I've been considering working into the microlending area for a bit. I spent a few days doing a lot of analysis of Prosper.com which is a very similar model as Kiva, except it's targeted at domestic microlending.

I think both are great ideas, but as in any money venture, it's importnt to understand all the pitfalls in the arena, and I wasn't quite ready to jump into prosper.com without really understanding it.

Maybe when I get the time to do some real reading, I'll get into it. Great idea all around IMHO.

[yix]

I hadn't heard of prosper.com before. That's a very interesting idea also, though I think the basic motivation behind both may be slightly different. With Kiva your loan amount never gains in value, so if you put in $25, you only get $25 back out. The idea is that the banks doing the leg work on these loans get whatever interest the people pay back.

Besides the pitfall of not getting your money back, what other pitfalls do you think might be worth researching?

I'm going to check out prosper some more as well. Thanks for the pointer.

[yix]

After doing a bit more reading about prosper, it really feels like these sites are two entirely different animals, though they both use the microlending idea. I don't expect to pull my money out of Kiva, so this falls under my budget of charitable donations (though not tax deductible, I would think). I'm not going to put all my charitable donations into this area, but this seems like a fun and interactive way to help out people in other parts of the world.

[jennylisa]

I don't know, they really do seem like different animals to me... And maybe it's because people seem to be digging themselves out of debt (Something I've done) and trying to start web design businesses. It's not that they don't deserve money, it just feels like people are being helped on a different level at kiva... But, I'm sure my own biases about americans and their carelessness with money come into play. (Myself as prime example...)

[makaer]

Yeah, you can't use kiva as a tax deduction unless they don't pay it back and then you can take it as a capital(?) lose.

The one pitfall that I am concerned about (which hasn't stopped us from giving) is what happens to the lendees when they don't pay. I am sure they will find a hard time getting another loan, but I don't know how much pressure is exerted against them to try and get them to pay. Now microfinancing was started to help communities so in that spirit I don't expect them to be 'big and evil'. But I can't help thinking about how the IMF basicly loans countries into debt for projects that are huge boondoggles. (How many poor countries have huge hydro-electric dams that only use a fraction of the energy - a lot!).

As I get more involved I might send emails to the micro-banks themselves to see if I can get at this worry. (they have all the contact info on kiva already).

[jossel]

We keep saying yes to the 10% donation to Kiva for overhead every time you lend thing - I think that's the only tax deductible part. (I started working on our charity budget spreadsheet last night so I was allocating that part differently).

[yix]

I decided not to do the 10% over thing and to donate separately to kiva through their donate link for exactly that purpose. I figured it would keep my accounting easier.