A hand-up rather than a hand-out...
I have recently become involved with Kiva.org's microfinancing process. The concept is pretty freaking amazing. An entrepreneur in a 3rd world country makes a request for a business loan to support her / his business. A photo of the prospective borrower and brief description of the business plan are posted on Kiva. Then a person in the US (not sure if people from other western countries can participate yet) gives a loan to fulfill either all or part of the requested money. The loan is then repaid over a relatively short time period (18 months in the case of the loan I made). Apparently the repayment rate is nearly 100%.

Yesterday, I made our first loan to an entrepreneur in Indonesia. I am excited to see how this works out. Facts about Kiva:

• 100% of the loaned amount is passed along to the borrower.


• Kiva does request the lender to consider giving an additional tax-deductible donation (typically 10% of the loan amount) to cover Kiva's costs.


• The lendor does not receive any interest on the money; Kiva works with microfinance banks which are allowed to charge a small / nominal amount of interest (typically 2%) in order to cover the banks' costs


• When the loan has been repaid in full, the lendor can either withdraw the money from the Kiva account (which works through paypal), or can lend the money out to another borrower. IMHO, the general expectation appears to be that loaning the money back out is the most common use of repaid money

The more I think about this concept, the more I like it. By lending money through Kiva, I encourage people in the developing world to work to improve their lives by actively participating in the economy of their countries. Its kind of like not just giving a person a fish, not flying all the way across the world to teach a person to fish, but financing that person's purchase of a larger net with which to bring in many more fish!