Microloans at Internet-scale
13 April 2007 00:20

Not too long ago, my wife and I watched a documentary on BYU TV called "Small Fortunes." From the documentary's website:

Millions of the world's poorest--mostly women--who are unable to provide the necessary collateral to secure a traditional loan are turning to microcredit institutions for help. These institutions give "micro" loans, often for less than $100, to those for whom the entrepreneurial spirit is still in its purest, most basic form. Whether it's through milking a buffalo, selling tortillas, or weaving cloth, most borrowers are able to pay back their loans--and have enough profits to reinvest in their businesses, their homes, and their children.

I was inspired to see the amazing changes to people's lives that were brought about by these small loans. The effect is generational--as one generation pulls itself out of poverty by way of these loans, the next generation becomes able to acquire education, better work, and overall a much better way of life. Many of these people live hand-to-mouth, with 3 meals a day a rarity. After watching the program, I wanted to find some way to get involved in the microloan movement.

The other day while browsing ConnectBlogs I read a post by Richard Miller about kiva.org, which allows anybody to get involved in these kinds of loans. Kiva.org has 'profiles' of a large number of entrepeneurs seeking microloans in poorer parts of the world. You can browse through all these profiles and choose to donate $25 or more to fund any of these microloans. 100% of what you lend is given to the entrepeneur. Once you've made a loan, you can receive updates of the repayment progress, and of the business you, along with others, have funded. Once the loan is repaid (and kiva.org reports 100% repayment thus far) you can choose to withdraw your funds, or reinvest them in another loan.

Richard Miller calls this "long tail philanthropy", an apt description. I remember reading a blog entry about a guy who maintained some Open-Source software, and whose hard drive (containing some important source code) had crashed. He blogged about it and in no time he had people who used the software quickly contributing enough to get him back up and running, and to take his drive to a data-recovery place to get his bits back. There is great power that can be harnessed in the masses of the Internet--and which can be harnessed for so much more good than meeting-up via the latest social networking site. A tiny amount multiplied by millions goes a long way. Long tail philanthropy is one way in which those with more can each give a little to make a large difference in the lives of those with less.

Just browsing kiva.org makes me feel good--seeing the faces of those who are being helped--reading their stories--seeing the faces of the hundreds of nice folks who are helping out by making loans. This is Good Stuff(tm)! It allows people to retain their dignity, to "make their bread by the sweat of their brow," so to speak. Instead of perpetuating dependence and poverty by handouts, this kind of system fosters self-reliance and industry, smart thinking and hard work. Both those who give and those who receive benefit and are better off.

I think for me, the most powerful aspect of all this is that I can, with a few clicks, give a little of what I have, and make a significant difference in the life of someone in need halfway around the world. I wonder what other ways there are in which we can harness this kind of Internet-scale power in helping to feed the hungry, clothe the naked, and help the sick and afflicted?