I have just stumbled upon a great website - Kiva.org, a project started by Matt and Jessica Flannery, which helps small entrepreneurs in developing countries get funding from all over the world. The feature that makes it great is that you do not give the money away, but rather loan it to the entrepreneur of your choice. The amount is as little as 25 bucks which you can pay by paypal or credit card.
The scheme is roughly as follows:
1. You choose an entrepreneur on the site.
2. You make your loan to the businessman.
3. You start receiving feedback from the project’s partner institution about the sponsored entrepreneur’s progress.
4. In the end you receive your loan back from the entrepreneur, which you can withdraw or re-loan to smb else.
I have no idea what makes up the profit for the project owners, but this is a very cool way one can help people who need help and who are willing to work and develop. The project is being supported by many respected managers (YouTube’s Steve Chen among them, e.g., or Reid Hoffman of LinkedIn).
Kiva guys define 2 risks for you as a lender:
1. Entrepreneur risk. To reduce this risk, Kiva is cooperating with local field partners - various microfinancial institutions who are screening each applicant for eligibility before posting on the website. The Field Partner looks at a variety of factors (past loan history, village or group reputation, feasibility of business idea, etc) before deeming the entrepreneur as credit worthy.
2. This leads to the Field Parner risk - bankruptcy, fraud or just lack of knowledge. This is reduced by Kiva people who have rated the institutions from 1 to 5.
In general, I have had a very positive impression of this project - a great idea, well executed and supported by many respected managers and companies from various industries. I hope this will be a long living project, good luck, guys…