Kiva: Make microloans to entrepreneurs in developing nations

You've heard about how the internet lets you "shop in your pajamas." Well, the same holds true for making microloans to people in "developing" (read: third world) countries. Without even leaving your chair, you can help impoverished people all around the globe, enabling them to start and/or build small businesses.

To those of us living comfortably in our air-conditioned homes with broadband internet connections and a Starbucks down the block, these businesses might not seem like much -- selling fruit at a roadside stand, sewing and selling clothing, raising livestock -- but for those in need, even a couple of hundred bucks can absolutely change lives.

What Kiva is...

Kiva.org, a website launched in March 2005 by San Francisco couple Matt and Jessica Flannery, faciliates making these very small loans. But instead of a 1:1 lender/entrepreneur ratio, Kiva takes several individual loans -- generally $25 per lender -- and combines them before disbursing the total loan amount through one of their international microfinance partners. (The average loan is about $500 USD.)

But it's not just the size of the loans that's different -- or their method of deployment. What's really unique is how this system makes lending personal. You know who you're lending to and why they want the money -- and you will get periodic updates on their business or project, along with the status of repayment.

For example, here's a look at where some of my own loans stand (more details are provided on other Kiva pages):

The company's fits-on-a-napkin business statement: "Kiva's mission is to connect people through lending for the sake of alleviating poverty." Or, as Bill Clinton explained during an interview during On The Record with Greta Van Susteren in March 2008, "For as little as $25, you can actually go on this website, pick a -- let's say, guy running a garage in Afghanistan -- and contribute money, and you see the effect of your money."

... and what Kiva isn't

Realize that the money you put into Kiva is not a donation, nor is it a nice little interest-earning investment. You will be paid back only what you have loaned -- assuming nobody you have lent to defaults -- but when things go full-circle as planned, you will get that money back into your online account in 6-12 months. At that point, you can choose to lend it to someone else in need, or simply slide it back into your pocket. (Note: In the future, the company "hopes to allow Field Partners to offer non-zero interest rates to Kiva Lenders.")

Separately, you may make a tax-deductible donation to support Kiva's operational costs as a 501(c)3 nonprofit organization. The company's overhead is also offset by PayPal (one of the founders' former employer) who provide free payment processing, while Google and Yahoo have both gifted Kiva with no-cost keyword advertising.

The bottom line

If you're aiming to get a financial return on your loan, move on -- that's not what Kiva is about. But if you're looking to receive a "social dividend" by helping out people around the globe who really need a leg up, Kiva will stock your portfolio with plenty of warm fuzzies.

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