I'm no hippie, but this is some very cool social activism

[doombug]

Off topic, just where it belongs. 

The idea is amazing, revolutionary, and ... a bunch of other exalting adjectives. 

I posted a while back about Prosper.com (www.prosper.com), a website where people conduct person-to-person lending/borrowing. 

According to Wiki, and for the benefit of the uninitiated, here's how person-to-person lending typically works...

"Person-to-person lending is lending done between individuals circumventing the bank's traditional role in this process.

"Community lending had the advantage that people's interpersonal relationships fostered increased fiscal responsibility. The risk was that without the benefit of diversification, when something went awry the entire community could suffer.

"Lending through banks has benefitted from scale and diversity. By pooling the available money supply and lending it out again, the impact of any one default would be trivial in light of the timely payment of the vast majority of the notes. The downside to this model is that it has introduced greater transaction overhead and removed community loyaltly from the equation.

"New ventures are seeking to blend traditional practices with new scale economies via online marketplaces. The marketplace serves many functions. Most notably it facilitates bringing borrowers and lenders together. Furthermore, it simplifies what might otherwise be a cumbersome process to properly document and service the resulting loans.

"It is hoped not only that these new markets will be more efficient by removing the bank as middleman, but that factors leading to default can be mitigated by reintroducing a social component to the mix."

Well, along comes another outfit, Kiva.org (www.kiva.org), that's more global, less profit oriented (for the lenders), and--for the take-charge, bleeding heart in each of us  --proactively progressive.  It's person-to-person lending, but with a broader approach--reaching out to people from across the world; to people who are starting up or expanding micro-businesses; for whom "wealthy Westerners" like us represent a more efficient means to aid beyond that provided by the UN/IMF/local banks/et al.  We kick in loans to these people--non-interest bearing--for terms ranging anywhere from 6 to 16 months (maybe longer, though I've yet to see such durations.)

Most borrowers derive from Africa and Central/South America (I see numerous Hondurans, Mexicans and Ecuadorians among the list of borrowers), though I just lent to a woman from Moldova.  (At the moment, they've restricted lending to $25 amounts.  Peanuts to you and I, but cumulatively, what an impact this can have.)

These are effectively "microcredits," and Wiki offers a thorough explanation of how these work:

"Microcredit is the extension of very small loans to the unemployed, to poor entrepreneurs and to others living in poverty who are not bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimum qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of financial services to the very poor; apart from loans, it includes savings, microinsurance and other financial innovations.

"Microcredit is a financial innovation which originated in developing countries where it has successfully enabled extremely impoverished people (mostly women) to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility in the mainstream finance industry and many traditional large finance organizations are contemplating microcredit projects as a source of future growth. Although almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun in its modern incarnation as pilot projects with ACCION and Muhammad Yunus in the mid-1970s, the United Nations declared 2005 the International Year of Microcredit."
http://en.wikipedia.org/wiki/Microcredit

Of course there's always the risk that some of these people could default, but Kiva claims, so far, that 100% of the loans are current (as in, not in default).

So, hop on the bandwagon, ballers!     


http://www.kiva.org/app.php
 
By the way, if any reader has contacts in Colombia, Peru, etc. (basically, any of our favorite climbs), who are affiliated with community organizations there, you might want to see if they'll participate in jump starting Kiva-linked loans in those countries as well.  An existing list of microfinance institutions at the disposal of Kiva can be found here.

And per Kiva:

"Kiva partners with quality microfinance institutions. To partner with Kiva your organization must be registered with your government, and must have regular internet access. Kiva prefers to partner with organizations that have a long history of lending to the poor.

"If you think your organization would be a good fit for a partnership with Kiva, please send the following information to partnerships@kiva.org":

The name of your organization
Your organization's website address
Your areas of operation
The number of your clients who currently have outstanding loans
Your average loan size
Typical use of the loans you grant

Peace out, my chilli dawgs!