I've been fascinated by the concept of microfinance for some time now. Comparatively small loans that are made to the working poor and low income entrepreneurs, for small business projects that have the potential to vastly improve their lives. Money for merchandise, seeds, even goats. Low income and subsistence workers rarely meet the criteria for lending from banking institutions, so a number other institutions have risen up to link these entrepreneurs and potential lenders together.
Deb over at freakgirl wrote a blog entry about an organisation called Kiva. I've just spent the past few hours wading through the website and I'm blown away. Kiva personalises the activity of microfinance by profiling each entrepreneur, and by having the volunteer field workers (who are posted with local micro-lending institutions that administer the Kiva funds) write regular blog style updates on the activities of the entrepreneurs in their area. Repayments by the entepreneurs are tracked, usually over a period of 6 - 12 months, and repaid to the lenders. Lending amounts are made in increments of US$25, and you choose who the loan goes to.
Rather than donations, the money is lent and eventually repaid so that the lenders can elect to retrieve their outlay or lend it to another entepreneur. The default rate on the loans seems really low at around 1.3%, but as Kiva warns it is often due to the nature of local unstable economies or even nature (such as crop failures) and so often out of their control. I had a quick look at some of the lender profiles, and some of these people are amazing! Like one retired couple who's portfolio of loans made runs to 5 pages! I love the idea that the money has a life, one that cycles through the lives of these people, helping them achieve new levels of independence, and then can be recycled to help others.
Currently US$25 is a little over AUS$38. Thirty eight bucks! Not such a big amount at all. A trip to the movies and a couple of drinks afterwards. A paperback novel or two. The price of a little indulgence. When I get paid tomorrow I'm going to sink that $38 into a loan instead. Maybe it'll buy a goat or two.