Microloans and Microentrepreneurs

I've recently been introduced to another opportunity to give to the poor and help underdeveloped communities... though with a small little twist-- you get your money back. The idea is that there are entrepreneurs in developing nations that are intelligent and hard working, but they don't have the capital nor the collatoral and credit history to obtain loans from local financial institutions to startup their own businesses. Even if these peopole are able to obtain local loans (often from loan sharks), the loaners often charge high interest rates putting families precariously into debt should unfortunate and unexpected circumstances arise.

The idea of a microloan is that "investors" loan small amounts of money (anywhere from $25-$1000) to individuals in developing nations who have been screened by "field partners"-- organizations in the local communities that work to help educate the people (in how to manage their finances and start a business), screen entrepreneurs and distribute/collect the money. Loans are paid back after a certain period of time (sometimes with a small interest) and the investor is able to loan the money again to another entrepreneur or withdraw the money.

After a quick google and wiki search-- I found 2 organizations that I was interested in both helping facilitate transactions between investors and entrepreneurs over the internet.

The first and probably most prominent organization is called Kiva which spearheaded the microloans movement on the internet in 2005. Kiva is very transparent in how it operates (it even provides short bios to all it's leaders) and is probably the most extensive of all the microloans organizations with entrepreneurs all over the world. There are about a thousand potential entrepreneurs on the website and you can read through all their biographies and see their pictures.

The other organization I looked into briefly is called "Rang De." This organization is much smaller, newer and based only in India. The point of interest that drew me to the organization was that they promised a return of 3.5% at the end of your social investment.

I haven't had an opportunity to invest myself in either of the organizations (though I plan to), however I read that involvement with the entrepreneurs doesn't just end after you hand over the money. Often there are newsletters from the entrepreneurs and updates on how their business is going and they are held accountable to how their money is being put to use.

This form of charitable giving is certainly very attractive in that it is very clear where every doller that is contributed is going and how it is helping lives. Not that I doubt the honesty and validaty of World Vision and where they put my money-- but through microloans I have a much more complete story of how I am contributing. Additionally, it's also neat that at the end of the partnership, you walk away not just with the knowledge that you've helped an individual and family, but the opportunity to do it again.