Kiva - Empowering Individuals and Groups to be International Financiers

In high school (early 1990s for me), I remember rich and famous people like Bill Gates and Ophrah visiting poor people around the world.  They made donations, gave speeches, started foundations and were hailed as making a difference.  However, there seemed to be a large gulf between “them” (rich, famous people) and “us” (regular people like me).

I thought, maybe in 20 or 30 years, I will be relatively wealthy and successful and make a difference in the future.  It was a vague dream like writing a novel or climbing Mt. Everest — yes it really could happen, but it is extremely unlikely.

Then something amazing happened.  The internet exploded and transformational organizations like Kiva.org enabled regular people like me to become international financiers and helping needy micro-entrepreneurs all over the world.  In my first batches of Kiva loans, I made loans to entrepreneurs in 5 different continents (no Australia yet; Antarctica may be tough :).  The businesses have included farming, a beauty parlor, grocery store, and construction.  Unsurprisingly, 100% of my loans were paid back.  Though these are small businesses and not revolutionary, they serve real community needs and provide a better quality of life for the family - better nutrition, housing as well as education for the children.  Grameen Foundation has conducted some research to capture these quality of life improvements with its “Progress Out of Poverty” metrics.

By using an innovative internet model and strategic partnering with effectively run local MFIs, Kiva.org has empowered ordinary individuals like you and me (and now ordinary communities - schools, businesses and even blog communities to become powerful internationial philanthropists who are giving impoverished people a hand out and not a hand out.

If you love Kiva.org, I encourage you to spread the word and to be “happy microfinancing” as the blogger Gavin put it.

Finally, please check out my Facebook application Cool Duels where you can both help the environment AND earn real money to donate to Kiva.org or your favorite cause.

Stanford Social Innovation Review - Site of the Week

To take a broader view, microfinance is one piece of the puzzle of poverty and other social problems.  This week, I would like to share a great site, Stanford Social Innovation Review, which has many news, research articles, and links to leading nonprofits, foundations and social businesses.

There are a couple of critical articles on microfinance - it is always good to hear some criticism in order to improve.  One article from last year,  Microfinance Misses Its Mark talks about some of the problems with microfinance (relatively high interest) and a lack of small to medium businesses that can scale and create jobs.  Unemployment is a huge problem in developing countries, so job creation - relatively high paying jobs with some skills — is very important.

I belive that microfinance is one part of the solution and encouraging entrepreneurship for larger enterprises also needs attention.

Site of the Week: Adelante Foundation - Honduras Microfinance

Adelante Foundation features a series of stories on their microfinance programs in Honduras on their relatively new blog. Meet members of the staff, volunteers and the local clients who are harnessing their microloans to build new businesses.  You can read about preparations for Dia del Niño, or Children’s Day on September 10.

 Check out their blog.     

Get the Adelante Foundation’s Weblog widget and many other great free widgets at Widgetbox!

Kiva Communities

Kiva now offers another exciting way to become part of the microfinance community.  You can team up with friends, classmates or co-workers to form a community group that can pool money together for a loan.

A class of students can gain insight into microfinance and the challenges of the developing world by making a loan to someone thousands of miles away.

A company can gain esprit de corps by working together for a social goal of helping others with a “hand up” rather than a “hand out”.

Each micro-entrepreneur is connected to Kiva through a local field partner.  These field partners have local expertise and ongoing relations with the micro-entrepreneurs.

Whether you have been an individual contributor to Kiva or haven’t joined yet, consider becoming part of a Kiva community.

Site of the Week: See More at SeMo - Seattle Microfinance

Seattle is more than a pioneer in coffee and software - it is also a vibrant hub in the world of microfinace.

The Seattle Microfinance Blog  covers local microfinance events, microfinance job postings like Kiva Fellows, and international news such as Mercy Corps efforts to arrange micro-mentors for aspiring entrepreneurs in the developing world.

It was encouraging to see creative events such as an Olympics party that was a fundraiser for Wokai, a Chinese microfinance organization.

Has your local organization hosted any successful fundraisers or events recently?  Please leave a comment so that we can share your success and try to duplicate in our part of the global village.

How to Find Microfinance Blogs

One obvious way to find other microfinance blogs is through Google. You can also do a blog specific search on Google.

One of my favorite’s is Grameen Foundation grameenfoundation.wordpress.com. They don’t have excessive posts, so it is always something intere3sting when they do.

Technorati is one of the best places to look at top ranked blogs: it shows blogs by category, keyword and gives you an idea of how many blogs link to another blog. Here is my Technorati Profile

So check out your friends’ blogs, and blogs from their email signature. You will find out more about your friends and hopefully discover a bgreat blog.

Do you have a great blog about microfinance? Then please add your comment to this post.

Football Season and Microfinance

What does football have to do with microfinance? A “cheap” ticket for an NFL game can easily cost $80 or more. That same $80 would be the typical loan amount for a micro-entrepreneur starting her small business. While a small craft or livestock business may not be as glamorous as a professional sports game, the additional income can be a winning touchdown for children to pay fees to attend school.

So if you are a football fan, please buy or sell your tickets from our StubHub link to benefit microfinance. Perhaps, watch one game from home and donate the money to a great non-profit like Grameen Foundation. Thank you and good luck to your favorite team!

Microfinance Plus - Beyond the MicroBusiness

How can the reach of microfinance expand beyond tiny loans? What are the limits of microfinance?

Most of microfinance has focused on micro-businesses with one employee. The additional income can make a great income to the family - can pay for school fees and can improve shelter and food quality. The Grameen Foundation’s progress out of poverty indices have attempted to track this progress.

Larger businesses are also needed in the mix to create jobs and fight poverty. Two notable examples created by Nobel Peace Prize winner Muhammad Yunus are a yogurt company in Bangladesh (Grameen Danon) and an eye care hospital. See the details in the Grameen Foundation blog.

Laura Vanderkam’s article in The American noted that researchers studying poverty in the developing world found some benefit from microfinance, but a large benefit in the creation of middle class jobs.

Dan Herman’s blog noted that in addition to microfinance, social lending in larger amounts is needed for small to medium businesses. Developing countries need these businesses and the jobs the create for a stable middle class. Dan cites an editorial by James Surowiecki about the need for social lending of up to $10,000 to create these larger businesses that create more jobs.

I would argue that microfinance is trying to meet extreme poverty right now, while forming larger enterprises and the accompanying jobs may be a longer term process. With over 1 billion people living on less than $1 per day [the World Bank’s definition of extreme poverty], there is great suffering and multiple solutions are needed. Some people work best with micro-enterprises and many people may do best with more traditional jobs in larger businesses. However, the larger businesses may take more infrastructure and time to develop. An illiterate person can run a micro-business with common sense and determination, but a larger enterprise requires more specialized skills (again, good in the long run).

Dr. Yunus has called for a “social stock market” and other venues where socially oriented investors can make loans or investments for entrepreneurs in developing countries.Poverty is an incredibly challenging problem. Microfinance can be a big part of the solution… and social lending for larger scale businesses can also be a part of the solution.

Microfinance - 5 ways to spread the word

1) Tell your friends - (in a casual way, not preachy)

2) Include your blog or a link to a microfinance organization like Grameen Foundation or Kiva in your email signature.

3) Send an e-card on special occasions, like the Grameen Foundation ecard for Mother’s Day.

4) Make a Kiva.org loan to honor or remember a friend or family member.

5) Write about microfinance on your blog

Play the Cool Duels Application to Raise Awareness for Microfinance

Online, several friends and I “fight” for GrameenFoundation.org and other organizations using the Cool Duels Facebook application.

This game allows you to raise awareness for the environment by sending EcoGifts [animated icons of environmentally friendly objects] and also raise funds and awareness for your favorite cause such as Grameen Foundation.

[Disclaimer: I developed this application, so have a bias.]