Thursday, April 12, 2007

A brilliant idea

The other night I caught two interesting episodes of "Frontline." The first, about soldiers fighting insurgents in Afghanistan, was pretty disheartening. But the second episode was unexpectedly uplifting.

It's about a nonprofit organization called Kiva. Kiva does "microfinancing" -- lending to small businesses, very small businesses, in developing countries. Kiva works with partners in countries around the world, like Kenya, Ukraine and Haiti, to find entrepreneurs in need of loans. When I say these are small businesses, I do mean small: individuals mostly, trying to carve out a better life for themselves by working hard to create a business and making it turn some sort of profit. One of the entrepreneurs featured on Frontline started her own peanut-butter-making business and her loan, a relatively small amount by business standards, helped her expand and sell more peanut butter. The loan amounts range from as small as $100 to a few thousand.

The really fascinating part is how Kiva has harnessed the unique power of the internet to bring individuals together. Anybody can go to the Kiva website and use a credit card or Paypal to make a loan to one of these entrepreneurs. You don't need connections to some kind of banking industry, or a large portfolio to invest in these hard-working folks; just a credit card or Paypal account and a desire to help. You don't have to fund the whole amount of the loan; you can contribute, say, $25, and a bunch of other people can do the same thing to reach the total amount needed. You can even communicate with your borrower and get updates from them on how their business is doing. And they can get to communicate directly with the person who is helping them out. The brilliance of this is astonishing. Allowing people to directly connect with one another, to see how their money is making a direct difference in helping someone become financially self-sufficient, takes advantage of the best qualities the internet has to offer.

Now, most of you who read this blog are knitters. One of the cool things about the website is how it lets you sift through the profiles of entrepreneurs to find someone you feel a connection to. How about Beatrice, who runs a knitting and spinning shop in Nairobi? Or Rita, who is supporting five kids and makes knitted sweaters to sell to schools? She wants to finance an industrial knitting machine so she can ramp up her production. Love your local yarn shop? Take a look at Veselina's, in a market in Bulgaria.

The more hard-headed among you may be interested to know that as of now, no one has defaulted on any of the loans and no one is behind in their payments. You don't earn interest on your loan, so you don't accrue any income that is taxable.

I'm not trying to be pushy. People have to decide for themselves whether and how they like to help others. But Kiva is a cool organization -- innovative, creative and well thought-out. I'm throwing it out there for those of you who've never heard of it. Right now, response to the Frontline episode was so overwhelming that all of their current entrepreneurs are funded, but the website promises more profiles seeking loans soon.

16 comments:

Rana said...

That IS a very cool idea. Thanks for passing on the link!

Cara said...

Thank you for the link! That is a very interesting idea.

Dodi Raz said...

This is really a great idea. I first heard about it from a friend in Israel, she told me the following details: The first person who developed the idea of microcredit: Muhammad Yunus, won the Nobel Peace prize of 2006 together with the bank: Grameen Bank he established for this purpose. the owner of eBay decided he can make for profit organization based on the microcredit concept.

Anonymous said...

Someone told me about this just yesterday and I think it's fantastic.

Risa said...

What a fantastic idea. Thank you for passing on the link!

mindy said...

Wow- love that idea. Thanks for passing it on.

Tasha said...

If people are interested in donating in this way, they don't have to wait for Kiva to catch up; there are a number of organizations that offer this service: Oxfam America, Accion International, Grameen Bank (mentioned above), promujer.org and others would be happy to accept your donations. I love this concept and hope others will contribute!

Marilyn said...

That's fantastic! I can't think of a better way to help out those who are trying. Thanks, C!

Lola and Ava said...

Finally, a tie in for the movie that I have for my students. I ordered a movie from an educational website about a man who makes micro-loans to individuals (I think he may have won the Nobel or something), but I wanted to make it concrete for them. Maybe we can raise funds and contribute. Am clicking to the link as we speak.

Carrie said...

I have heard of this organization, and I think it's a wonderful idea. Thank you for blogging about it and letting people know. The Internet is an amazingly good thing.

Diane said...

I'd never heard of this before. What a wonderful idea. I think I'll give up a yarn purchase or two to help out.

Carol said...

Brilliant stuff.

kmkat said...

A non-profit that does microfinancing, mostly to women, is FINCA (http://www.villagebanking.org/), which gets 4 stars from Charity Navigator.org. Donations to them are tax-deductible.

This microfinancing concept is so much more earth-friendly and human-friendly than the World Bank (building dams that flood farmland and village so that Western corporations can build factories and mines) or the IMF (loan billions to countries that can never hope to repay it, then use the outstanding debt as a club to enforce whatever economic *reforms* the corporate Masters want).

[*descends from soapbox, shakes head sadly*]

Christine said...

I'm glad to see that Kiva is getting some well-earned publicity. It's a wonderful organization, and their website is simple to use. I'm a "financier" for two women right now, both of whom just got their money. I love being able to directly help strong, independent people working to make their lives, and their families lives, better. I have a button on my blog for Kiva, and strongly recommend this organization.

naomi dagen bloom said...

go for it--be pushy! wonderful to read this here. one more reason why knitting blogs figure continue to be very special. thanks so much.

Susie said...

I read your post, followed the link, and am now honored to be partnering with three...count 'em...THREE! businesses through Kiva. And it cost me less than a nice dinner for four. I've been so blessed in my small business that I'm thrilled to be able to contribute to the efforts of others.

Thank you so much for writing such a compelling piece. I'm blogging about it now (linking to you, rather than rewriting the info) and hoping that others will be willing to act on the information.

Thanks.