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As I write this on Wednesday evening I`m sitting in a comfortable home office, pecking on my laptop, drinking a cold beer, and trying to decide if we should go to eat at the Indian restaurant down the street. My concerns tonight revolve around Fitzmas, some arcane tax issues, and whether or not my wife's new car should be a Prius. She is in the dining room working on our son's Halloween costume; I needed a few minute's break.

But in Uganda, and Bangladesh, and dozens of other countries my counterparts are sitting on dirt floors worried about how they might buy a couple of goats, or what will happen if no one fixes the pump at the village well. My wife's counterpart may be trying to figure out a way to buy a sewing machine to earn enough to feed her children. They may not earn the price of a laptop in a year, or the cost of a Prius during their entire lives.

A small loan could help these people start a home business, or even a store, improve their small plot of land, or fix their well. But what bank will bother with a loan of $25, or $100, or even $1000. And a credit rating is as unlikely for these villagers as a vacation in Tuscany. But there is a way to make tiny loans at low or no interest rates. It's called microcredit. NGOs have been making microcredit loans for years. But a new organization, Kiva allows people like us to offer micro loans. Individual micro loans are the most exciting charitable plan I've heard of in years.

Do Micro loans really work? They are perhaps the most effective way to help the impoverished that's ever been developed. From the New York Times (archive, February 16, 1997):

Anyone who scoffs at the value of 62 cents should talk to Muhammad Yunus. In 1976, the Bangladeshi economics professor tried an experiment. From his pocket, he lent the equivalent of $26 to a group of 42 workers. With that 62 cents per person, they bought the materials for a day's work weaving chairs or making pots. At the end of their first day as independent business owners, they sold their work and soon paid back loan.

Thus began the microcredit movement, which has become the world's hot idea for reducing poverty. This month, microcredit's backers met in Washington to begin to broaden the program's reach and raise money from developed nations and institutions such as the World Bank. Eight million people are now getting microcredit, half of them in Bangladesh. Microcredit proponents want to expand that to 100 million people by 2005.It is a worthy goal that the United States should support.

The first microcredit program was the Grameen Bank, founded by Mr. Yunus. Now almost all its borrowers are women, who tend to be poorer than men, have fewer opportunities and are much more likely to spend new earnings on their children. Grameen requires its borrowers to organize themselves into groups of five. All are cut off if one borrower defaults. They meet every week to make loan payments at commercial interest rates and critique one another's business plans. They also pledge to boil their water, keep their families small and carry out other good health practices. People who repay small and loans on time can take ones. Grameen, which now makes a profit, claims a higher repayment rate than traditional banks. One-third of its two million borrowers have crossed the poverty line and another third are close.


You don't need to go back very far to hear of microcredit's success. Try tying `microcredit' into Google news. This is from today's Vietnam News

HCM CITY -- Tran Trung Tam lived hand to mouth for nearly 20 years, helping to feed and house his eight children by doing any odd job he could find. His wife, Tran Bich Lai, worked as a helper for market vendors, carrying food and other items from place to place.

With only a primary school education, the couple thought their lives would never improve. But after receiving a free house in 1999 from their local People's Committee and a VND10 million (US$630) loan from the Bank for the Poor, Tam and Lai, 40, were able to set up a household business making plastic bags, which now earns them at least $250 a month.

There's lots more information on microcredit on the web. But this diary is about just one program that uses the net to match those in need with individuals, rather than banks or NGOs.  Kiva is based in Palo Alto and works in Uganda. Colman over at European Tribute posted a story about KIVA from The Sharpener. After looking over the site and reading some press and blogging about Kiva I came away very impressed with the idea. Instead of sending off a check to some NGO and not knowing what happens to it, Kiva allows individuals to participate in the process. I expect this will offer lenders real motivation.
From the Kiva website

Kiva was born out of Matthew and Jessica Flannery's combined professional interests, experiences, and expertise. In spring 2004, the couple spent several months working in rural Kenya, Tanzania, and Uganda - Jessica as a staff member with Village Enterprise Fund (VEF), and Matthew as a filmmaker. They were struck by the success of hundreds of small businesses started by VEF, the incredible impact of those businesses on their communities, and the vitality and potential of those businesses' entrepreneurs. <snip>

What We Do
Kiva lets you connect with and loan money to unique small businesses in the developing world.

By choosing a business on our website and then lending money online to that enterprise, you can "sponsor a business" and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive monthly email updates that let you know about the progress being made by the small business you've sponsored. These updates include reports on loan repayment progress, photos of new capital equipment, narratives on business growth and standard of living improvements, and more. As loans are repaid, you will get your original loan money back.

How does the loan process work?
By partnering with existing microfinance organizations and institutions, Kiva finds outstanding entrepreneurs who need loan funding. Our expert in-country staff works with these partner organizations to conduct due diligence on each business, and once approved, post each business' profile on our website. This is where you come in. You can choose loan money online, using your credit card or Paypal, in increments as low as $25 toward the loan needs of a business. With your participation, Kiva gives entrepreneurs access to the capital they need to lift themselves out of poverty.

The Kiva site offers descriptions of business needing loans and of those who have already received them. This one is typical. Geoffrey Obanja Jasu started with a $100 loan, and is now trying to expand his business.

Partner: Village Enterprise Fund
Partner Rep: Moses Onyango
Location: Tororo, Uganda
Entrepreneur: Geoffrey Obanja Jasu
Activity: Produce wholesales
Loan Amount: $500
Loan Use: Buying more produce each time for greater profit
Start Date: April 1, 2005
Loan Repayment Term Range: 6-12 months
Amount Repaid: $400

The following description was written by Moses Onyango, a volunteer with Village Enterprise Fund and partner representative for Kiva in Uganda:

Geoffrey Obanja Jasu is one of the most hard-working beneficiaries in Tororo District.

He got a grant of 100 US dollars form Village Enterprise Fund as a kick start.

He started with baking local bread called Mandazi, Kabalagala (pan cakes) and also Samosa.

After attending training on business skills twice, he got wide knowledge on how to choose and run his businesses effectively.

He then shifted to running a produce business, including the buying and selling of millet, sorghum, rice, groundnuts, peas, beans, green grams and sunflowers.

His business picked up very much and he got enough profit to hire a store for stocking the produce before selling it.

He now moves around the district buying all the produce from the beneficiaries of Village Enterprise Fund.

I expect him to do greater business to bring development in the lives of our people who are the poor of the poorest.

Given a loan of 500 US dollars, he will excel very much.

He is capable to handle repay the loan effectively.

The UN General Assembly designated the year 2005 as the International Year of Microcredit, so what better time to look at Kiva's site. It really is a brilliant idea, and the site is very informative.

I know diaries like this one don't get lots of comments; they don't make "the list": and they aren't as much fun as scandals. But this kind of an idea can change not just the country; it can change the world. It reaches those people who would consider the poorest victims of Katrina well off, who don't have the luxury of engaging in politics.  

UPDATE: I just received an e-mail from Matt Flannery at Kiva, and another from one of his colleagues. They seem amazed at the number of dKOS folks who are contributing. Matt says he is “stressed out” trying to qualify and put up new businesses needing loans fast enough. Good work Kossacks.

Originally posted to Chris Kulczycki on Thu Oct 27, 2005 at 04:16 AM PDT.

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Comment Preferences

  •  Instead of tipping , please click on the link. (4.00)


    "The bicycle, the bicycle surely, should always be the vehicle of novelists and poets" , Christopher Morley

    by Chris Kulczycki on Thu Oct 27, 2005 at 04:30:54 AM PDT

    •  Doing both (4.00)
      And hotlisting for future reference.
    •  excellent diary (none)
      thank you for posting this!
    •  Jesus, we funded every single loan availible. (4.00)
      Slashdotting for social justice! Or something like that at least. I just set up an account and there aren't any people left on the site to contribute to. All the loans have been fully funded.

      The power of the net to incite what are essentially benevolent mobs in response to obscure causes still absolutely floors me some days.

      Good diary, should go in the Dkos Hall of Fame if there ever is such a thing.

      To lodge all power in one party and keep it there is to insure bad government and the sure and gradual deterioration of the public morals. - Mark Twain

      by Windowdog on Thu Oct 27, 2005 at 07:51:33 AM PDT

      [ Parent ]

      •  just sent them a note (4.00)
        Pointing them to this thread so they have some clue about what's going on. Maybe we'll hear from them in a day or two. I love this idea, I've been reading about microcredit for years but I had no idea there was a way for ordinary mortals to play.
      •  one still left (none)
        at 8:28 AM Thursday

        •  Nope that one is full (none)
          Just hasn't been moved over yet to active. It is listed as needing $0 for completion.

          To lodge all power in one party and keep it there is to insure bad government and the sure and gradual deterioration of the public morals. - Mark Twain

          by Windowdog on Thu Oct 27, 2005 at 08:47:08 AM PDT

          [ Parent ]

          •  They've put new ones up now. (4.00)
            I just donated to a hair salon. Really great idea, hope to christ it's legit :-P.

            To lodge all power in one party and keep it there is to insure bad government and the sure and gradual deterioration of the public morals. - Mark Twain

            by Windowdog on Thu Oct 27, 2005 at 10:23:15 AM PDT

            [ Parent ]

            •  that's the thing (4.00)
              I used to work in nonprofit work and traveled to Africa among other places for my work. The old model of western aid was huge monster projects through the local government. It turned into one big graft machine. The current wave is to fund NGO (non-governmental orgs) which is working out much better as it's easier to disengage if there is a problem and you can pick and choose which orgs to fund based on past performance so it sets up an aid market where the qualified, effective organizations get funded and the graft-riddled ones get weeded out.

              The micro-credit approach is even better. First, most little guys tend not to be very corrupt, in most places, the great majority of people are honest. The beauty of micro-credit is that you're able to reach those folks and bypass the smooth operators. Secondly, even if some of them do turn out to be fraudulent it's easy to cut your losses since your exposure isn't very big with any one individual. Finally, working in small villages, like Kiva is doing, also has advantages for vetting projects - everyone knows everyone else and the scam artists are going to be known to local folks and quickly identified.

    •  Tremendous leap forward ... (4.00)
      I have been (minimally) involved with microcredit for over 15 years.  While I've donated to some of the involved organizations that I trust / respect, the Kiva approach linking individual donors with specific projects is wonderful.

      I assume / hope that they are taking their management costs from whatever 'profit' / fees (e.g., interest) comes on top of the loan.

      And, for someone like myself, they're creating the option where I can 'roll over' the money from one project to another -- increasing my 'investment' level bit by bit.  Thus, perhaps my coming 'investment' might be $100.  A year from now, if I add another $100, then I'll be able to do a $200 program if the loan's been paid back.  And, bit by bit, I could create a position where I could have enough to really have an impact in a specific town / region in the world with years' worth of reporting on how my little bit has helped changed the environment of the town.  

      And, guess what, everyone who deals with Kiva could do the same thing.  This is GREAT!  

      And, thank you very much for posting this diary -- if you get 25 of us linked up with Kiva, think about the long term impact you've had ...

    •  Nice Diary. (none)
      Thanks for sharing this. I've been getting frustrated just giving to causes and organizations that will help people. This is a direct line to small business owners who are ready to put some investments to good use. I'm checking them out right now.

      This ain't yer daddy's Watergate.

      by E Man on Thu Oct 27, 2005 at 10:38:35 AM PDT

      [ Parent ]

    •  Stop campaigning for Kinky!!! (none)
      oh.  err. wait.  um wrong diary.
    •  FINCA - women (none)
      Please click to learn more about "Village Banking" from FINCA INTERNATIONAL.

      Not just loans (which are paid back), but community development.  

  •  interesting (4.00)
    Thanks for posting this.  I had not heard of this and am going to read more on it.
  •  Recommend this diary, please!! (4.00)
    Here at dKos we tend to focus on things here in America, which is certainly understandable.The truth of it is, though, that we can't have full democracy here while folks are destitute elsewhere, any more than democracy here at home can flourish when CEOs get 400 times what their secretaries earn. This is a concrete way to change things.

    If you are uncomfortable with the idea of a loan and repayment, a group with a similar outcome (economic independence and community development) is the Heifer Project, (second half of the comment).

    -- Be the change you wish to see. Gandhi

    by Wee Mama on Thu Oct 27, 2005 at 04:32:23 AM PDT

    •  Heifer International (3.83)

      This, too, is a strong movement to lift individual families.  Reputation for integrity, verifiable results, clean and efficient administration.

      Personally, I would like to see the Christmas budget of Kossack's families put into either of these projects.  I can talk all I want about being liberal but until I stop buying things we don't need, and put some disposable income into the hands of those who are in need, I am pro-war and anti-peace.  

      Sorry for the early-morning rant.

      I am recommending this great diary.  Thanks for introducing this program.

      "An inglorious peace is better than a dishonest war." - Mark Twain

      by skwimmer on Thu Oct 27, 2005 at 06:07:19 AM PDT

      [ Parent ]

  •  This is wonderful. (4.00)
    Thanks for the Diary.

    Recommended, bookmarked, and earmarked for future loose cash.

    Just one thing...  Sally Struthers isn't going to pop in on me, is she?


    Invest in your future - VOTE DIEBOLD!

    by Jaime Frontero on Thu Oct 27, 2005 at 04:46:32 AM PDT

  •  WWJD? (4.00)
    Too often I think of these so-called "christians" and how they use Jesus as a weapon to bludgeon all of us heathens over the head, and think "if Jesus were here, what would he be doing?"

    Would it be stamping out gay marriage, or helping feed the hungry?  Would it be pushing "moral values" into every nook and cranny of our personal lives, or clothing the naked?  Would he be building mega-churches and lining His own pockets with donated cash, or would He be out among the least of us, helping to heal the pain and suffering inflicted by this world?  To me, this is a way all of us can help to alleviate some of that pain and suffering, and give someone a chance to change their life for the better.  So all these right-wing religio-fascists should put their money not into the collection plate, but into an organization like this, IMHO.

    Here is an example of how we all could help the helpless and make a difference in someone's life, which could in turn perpetuate a chain of karmic shifts and bring us all closer to realizing our true nature as humans: compassion and love for our fellow humans and all creatures of the earth (except cockroaches...need I explain?)

    Thank you for turning me on to this idea. A great way to start the day...and a great way to change a life (mine included).


    The Meek Shall Inherit NOTHING

    by LickBush on Thu Oct 27, 2005 at 04:47:43 AM PDT

    •  Indeed. (3.80)
      Living on the fringe of the bible belt makes me angry at times. It makes me want to throw up when I see these enormous mega-churches, the size of small shopping malls. Then there are schools on the same roads where the kids have to learn in trailers.

      My signature lines have been awful recently.

      by alkland on Thu Oct 27, 2005 at 05:49:06 AM PDT

      [ Parent ]

    •  geez, when i think of "Christians..." (4.00)
      i think of my friend, doing missionary work with Sudanese refugees in Uganda, i think of my friend teaching in innercity Boston, i think of my friend working to end unjust trade policies at Christian Aid, i think of my mother's church, sending relief money to the Pakistani earthquake victims, i even think of Rick Warren, a big-time mega church evangelical, and his new endeavor to help Rwandans get over the trauma of war. I think of Bono's  One Campaign to end poverty. i think of Father Roy and the Catholics trying to shut down the School of Americas.

      are there right wing asinine Christians more obsessed with gays than they are about the larger issues of the day? of course. they're in the White House and in the media. but for everyone one of those folks, i know another one who is seeking to do good, to love justice and mercy, and is serving the least of these, as they are called to by Christ, not ranting and raving on TV. I'm sorry you  haven't met those folks yet, but they are out there.

      •  I agree wholeheartedly (none)
        that there are good Christians out there...hence the quotes around the word "christian".  I was referencing the so-called "christians" who are all talk but no action.

        The thing many forget is that there are plenty of good NON-christians out there too.  Christianity doesn't have a monopoly on good deeds, although the so-called christians would have us believe that.

        I was speaking specifically about they hypocrites who wave Jesus at us all with such bravado, but when it comes to their deeds, they are all hot air.  Sorry if that was not clear.  But thank you for the reminder that generalization is unwise in any discussion of merit.

        The Meek Shall Inherit NOTHING

        by LickBush on Thu Oct 27, 2005 at 04:26:34 PM PDT

        [ Parent ]

    •  Reminds me of something... (none)
      Cordelia: "...D'you know, if you weren't an agnostic, I should ask you for five shillings to buy a black god-daughter?"


            "It's a new thing a missionary priest started last term. You send five bob to some nuns in Africa and they christen a baby and name her after you. I've got six black Cordelias already. Isn't it lovely?"

      Accountability moment, my ass!

      by orthogonal on Fri Oct 28, 2005 at 04:35:15 AM PDT

      [ Parent ]

  •  Kiva claims a 97% payback rate for (3.85)
    microfinance generally, and 100%, so far, for their operation. This fits with what I have read about other microfinance projects.

    Read carefully. No interest. No tax deduction. Then go for it. Cast your bread on the waters.

    I hope this gets a wide readership. Kiva was new to me. Thank you.

    Please, everyone recommend.

    And CK, please post at Street Prophets.

    -7.88, -7.74 In the end, we will remember not the words of our enemies but the silence of our friends.

    by melvin on Thu Oct 27, 2005 at 04:49:00 AM PDT

  •  I used to send money to (3.80)
    a lending organization that worked with women in Africa, and got status reports and letters from the women.  I was happy to do so.  Then, one morning I got a letter from Citybank and seems they got into the mix.  So I was not interested any further.  Once a huge banking institution got involved, seemed to me that the flavor of the endeavor soured.  So I'll check this out.  This is a terrific idea - it gives people dignity - not charity.  I particularly like the idea of each of the borrowers being held liable for the group.  It is surely responsible giving.  Everyone wants to give back (well, except the neocons) if they can -- and the people in these organizations give back - to each other and their communities.  

    The beneficiaries are likely to be...large corporations and development firms. (O'Connor, J. dissenting in Kelo). God bless you, J. O'Connor.

    by xanthe on Thu Oct 27, 2005 at 04:53:45 AM PDT

  •  microcredit (4.00)
    Could microcredit work for U.S. poor?
    •  The amount doesn't mean as much (4.00)
      to people living in the US...and I'm sure the check cashing places would fight it tooth and nail.

      Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

      by someone else on Thu Oct 27, 2005 at 05:07:08 AM PDT

      [ Parent ]

    •  I think there are (4.00)
      programs in the US but the microfinance amounts would probably have to be considerably higher.  There have been problems in the developing economies with local established banks saying that these foreign-sponsored microlending institutions are competing unfairly but the established banks don't service the poor, just help the criminal rich launder their funds.  So, we have had to fight back the big banks there.  Not sure whether there would be a fight from the big banks in the US but if it meant a fight in that they started servicing the underprivileged, then so much the better.  Let competition start for this sector.
    •  Perhaps... (none)
      mesocredit...except I think most Americans have already tapped out most of this on the credit cards and home equity lines of credit.

      People in Eurasia on the brink of oppression: I hope it's gonna be alright... Pet Shop Boys: Introspective

      by rgilly on Thu Oct 27, 2005 at 05:12:58 AM PDT

      [ Parent ]

    •  community investing (4.00)
      Microcredit is one form of community investing, and community investing works in the US. The amounts are larger, but the concept is the same -- give a fairly small loan to someone who traditional lenders consider uncreditworthy so he or she can buy a home, start a small business, or otherwise contribute to local economic development. A lot of the CI programs also provide financial counseling, business start-up assistance, or other similar resources to loan recipients, and that helps keep loan repayment rates high.

      Co-op America has written a lot on the subject:

    •  There is a big microcredit movement in the US. (4.00)
      They usually lend to very small businesses owned by the poor. The amounts are more like $1000 to $25,000. That's micro in the US, but it could rebuild a whole village in some countries. Most of us can't afford to lend that much. Still it's a wonderful idea. Google it and you'll find lots of info.
      This reminds me of something from my childhood. We had recently emmigrated to the US. My Mom, who grew up in wartime Poland, said, "The US is the only country in the world where the poor drive cars to the aid office."

      "The bicycle, the bicycle surely, should always be the vehicle of novelists and poets" , Christopher Morley

      by Chris Kulczycki on Thu Oct 27, 2005 at 05:34:37 AM PDT

      [ Parent ]

      •  My wife used the UMLF in Salt Lake for equipment (4.00)
        The Utah Microenterprise Loan Fund provided a loan for ski tuning machinery. She would have never been loaned the money by a bank.

        "Our lives begin to end the day we become silent about the things that matter." Dr. ML King, from a jail cell in Birmingham, Alabama in 1963.

        by bewert on Thu Oct 27, 2005 at 07:38:47 AM PDT

        [ Parent ]

    •  It Might Work for Me (none)
      Having been aged out of tech employment, and left with 40 years of time to kill in the economy, I'm making things in a growing home craft business.

      True micro-loans in the hundreds wouldn't help, but "mini" loans in small numbers of thousands could.

      A thousand dollars will buy an entry level metal lathe, or a combination of several other small machines such as a bandsaw, tool grinder, belt sander and drill press setup. A $1000 mini-loan would go a long way towards setting up a home whitecollar office startup.

      This kind of money could be important money in ghetto situations, and I've had personal knowledge of such off-the-books community loaning on this scale in a number of different ethnic or immigrant groups going back into the 60's.

      The other use of a very small mini loan would be for a short apprenticeship or internship. A couple of weeks' working at very low pay for some established operation could be sufficient job training for many people, especially those at the real bottom who are profoundly lacking in experience & connections into the world of work.

      And this brings us to the point of considering setting up entire alternative noncorporate community economies for everyone.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

      by Gooserock on Thu Oct 27, 2005 at 07:33:22 AM PDT

      [ Parent ]

    •  There are some programs (4.00)
      I have a friend who belongs to a "lending circle."   Small business owners are belong and can borrow from $500 - $2000. Each circle has about 8-10 people who meet weekly to track one anothers progress. Each person contributes $10/week to the loan fund. When a loan is repaid, the next person by seniority gets to borrow.

      It has been very successful for her. She has borrowed several times for things like paying for business cards, upgrading her phone system, hiring temporary help, etc.

      She is African American as is the rest of the group and says she has known of this system in African American communities all of her life.

      This race is about restoring trust...that the things we talk about in a campaign are not promises to be broken, they are promises to be kept. - John Kerry 2004

      by etherapy on Thu Oct 27, 2005 at 07:38:50 AM PDT

      [ Parent ]

      •  another great idea (4.00)
        I'm starting a landscape business and have gotten loans from family. Within my family, we have a trust fund from when my grandfather died and it's been used several times to fund things like this.
    •  and it doesn't have to be cash (none)
      There is a Guatemalan-American fellow in town who wanted to start a side business in lawn and yard work. He's a pretty fair small engine mechanic, so we gave him an old lawnmower--working but nothing spectacular. One of the neighbors gave him one their gas powered lawn trimmers, another person tossed in some new line for it. Another family provided some new plastic trash barrels, and so it went.  It didn't take long before he had all the basic equipment. The next steps were his. He contacted several elderly people in town, some two/three job families, and some who just flat hate yard work, and now during the summer months he has a sideline business of his own. This is entreprenuership--good old fashioned American work ethic and imagination! It didn't take tax cuts for the upper 2% of the country to create this just took some generous members of the community.
  •  As Someone Who Has Been Involved (4.00)
    in microfinance, let me say simply, "It really works."  The most interesting finding in microfinance is that it pulls up women who are extremely underprivileged even among the underprivileged.  Why does it help women more?  Because they are the most responsible borrowers with a payoff rate well over 90%.  For men, the figure, last I checked, was around 70%.  So, the microfinance institutions understand that they will get paid back by lending to women.  This is an interesting idea that we can participate as individuals.  Not sure what the return is for us, if one is looking at it as an investment, but one can safely know that the money will be spent to actually help people.
  •  first learned of microcredit at U of M (4.00)
    during a wonderful Executive Education program in 2000.  Of all of the amazing things I learned there, the Grameen Bank case study was the most profound, and its lessons have stuck with me the longest.

    Demand Energy Independence by 2025!

    by Doolittle Sothere on Thu Oct 27, 2005 at 05:23:30 AM PDT

  •  Micro-credit (4.00)
    is one of the most important tools in lifting people out of poverty.
    •  Come on let's not exaggerate (4.00)
      Tax Policy, trade policy, education, fair credit laws, labor laws etc., all are huge parts of the puzzle of which micro-credit is just one piece.

      "The more they spoke of honor, the more I checked my wallet."

      by bankbane on Thu Oct 27, 2005 at 07:05:52 AM PDT

      [ Parent ]

      •  no shit (none)
        that is why Sterling said is ONE of the most important tools
        •  I object to "one of the most important" (none)
          Because that modifier is so divorced from the reality of what actually controls economic development in Third World countries. This is emblematic of a historical problem with progressive action in this country. Instead of dirtying our hands by effectively working to change, regulate, control and harness existing institutions, we have people with short attention spans, unwilling to study the history of an issue, who develop new "pure" organizations that for the most part remain marginalized and marginally effective except for the few which succeed and are soon deemed to be tainted and sell-outs by the new generation of "progressives" who have the "new" great ideas.

          Kiva may be a very good organization and it may be doing good things but the fact is that few if any of the people who have been proclaiming this the greatest thing since sliced bread know shit about the organization. For all we know they could be just another version of the Nigerian Prince scam artist emailers.

          If someone were to post a diary here asking for help to increase the Community Development Financial Institutions funding in the FY06 budget this year from $54 million to $80 million (Money that by and large goes to provide micro-lending in this country) they would get a yawn and a dozen comments if they were lucky, because that would be nitty-gritty, ambiguous get-your-hands-dirty political lobbying of politicians who have been declared corrupt and sell-outs because they didn't vote the way we wanted them to vote a few times.

          Let me tell you how I really feel!

          "The more they spoke of honor, the more I checked my wallet."

          by bankbane on Thu Oct 27, 2005 at 02:17:41 PM PDT

          [ Parent ]

          •  Oh look! A parade! (4.00)
            Guess I better rain on it...
            •  I don't rain on Mardi Gras (none)
              Just on Mardi Gras pretending to be progressive activism

              "The more they spoke of honor, the more I checked my wallet."

              by bankbane on Fri Oct 28, 2005 at 08:10:45 PM PDT

              [ Parent ]

              •  Riiiight. (none)
                Because loaning money to a guy in Uganda who wants to start a fishmonger business so he can feed his children is SUCH a phony baloney thing to do.

                What an ass.

                •  As someone who works for an organization (none)
                  that provides micro loans in the US and has spent over twenty years working on making credit available for the underserved, I would laugh off your comments and move on, if they didn't illustrate a big problem that we progressives have in the blogosphere.  

                  If you follow my comments through this diary you will see that I support the idea of micro-lending; what I objected to was the exaggeration and gullibility about what was being portrayed as a  new idea. About 30 years ago Grameen Bank pioneered the concepts that Kiva seems to be building on. Almost 4 million of Bangladesh's 150 million people are active borrowers from Grameen Bank. 95% of those borrowers are women and they represent the most rural, poorest people in Bangladesh.

                  Yet I doubt that few of even the most passionate supporters of Grameen would claim that microlending is one of the most important economic forces in Bangladesh, when compared to education, trade policies and other macroeconomic forces. Grameen has done excellent sustained work that has reached a significant portion of the country's population and yet Bangladesh remains one of the poorest countries in the world.

                  In contrast to Grameen with a proven track record, an independent board of directors, audited financials statements that any one can look at, Kiva is not yet incorporated, nor does it have 501 (c) 3 status, or any indication of who the board of directors are; just a good web site and some compelling stories. In addition Kiva's tweak on the Grameen model raises questions about whether this is really a sustainable effort, or one that will quickly fade away once they stop being able to attact new donor/lenders.  That's OK because everybody has to start somewhere and innovation helps us learn.

                  But we're in serious trouble if the comments on this diary are a fair representation of the blogger world's knowledge base on these issues, their historical sense and their ability to do critical thinking. Then we're doomed to watch bloggers with the attention span of rabbits lurch around chasing the latest fads instead of building and developing a solid movement with real historically rooted political and economic skills.

                  "The more they spoke of honor, the more I checked my wallet."

                  by bankbane on Sat Oct 29, 2005 at 06:11:47 AM PDT

                  [ Parent ]

  •  one more (4.00)
    good organization that does this is FINCA.  The village groups also run the banks, so the community is invested in the loans & the bank as a business.

    They work in Africa, Central America and countries that were in the former soviet union.

    Thanks for posting on this.  Microcredit really works.

    although it's getting late, you still have plenty of time

    by maracuja on Thu Oct 27, 2005 at 05:42:37 AM PDT

    •  didn't link right (none)
      it's here

      although it's getting late, you still have plenty of time

      by maracuja on Thu Oct 27, 2005 at 05:43:49 AM PDT

      [ Parent ]

      •  Holy Crap!!! (4.00)

        From Begging for Bubbles to Running Her Own Business

        When she was 13 years old, Nayima Umaru was married and two years later gave birth to her first child. She had seven more children with her first husband before he became ill and died, leaving her pregnant with twins and no way to make a living. Her neighbors shunned her because she was an unmarried woman with many children, and had no one to provide for her.

        Mrs. Umaru moved to a single room with her children. They had nothing to eat; Mrs. Umaru couldn't even afford a piece of soap. She would sweet-talk whomever was doing laundry, asking them to give her their used bubbles so she could wash her childrens clothes. Because they were so poor, all the children were forced to drop out of school. Mrs. Umaru's family members only called on her when their maids were away and they had chores to be done. She obliged them willingly, however, because she knew her children would have a full meal from the leftovers.

        Mrs. Umaru began selling bananas and fried cassava by the roadsides, but still her life didnt change much. Then her friend introduced her to her village banking group so she could expand her banana business. At first, the group members shunned her because she was considered half-caste - her father was not Ugandan. They believed she would run away with the money, and they would be responsible for paying her loan. But her friend pleaded with them to accept Mrs. Umaru; they consented on condition that the friend would repay Mrs. Umaru's loan if she defaulted.

        Mrs. Umaru's first loan was 100,000 Uganda shillings (US$50). Her dream was to operate her own small business and improve the lives of her children, so she saved a portion of each loan and, today, after eight years as a village bank member, she runs a small restaurant and a catering business. Two of her daughters are now married and work at the restaurant; four of her children are still in school; and one son works at a petrol station. She has remarried for companionship, and plans to complete her four-bedroom house this year.

        Mrs. Umaru is grateful that her friend sponsored her in their village bank group, and thankful that FINCA Uganda has been there for her as she has fulfilled her dream.

  •  Isn't this what Credit Unions used to be? (none)

    "You might think that. I couldn't possibly comment." Frances Urquhart (House of Cards)

    by Yankee in exile on Thu Oct 27, 2005 at 05:45:35 AM PDT

  •  Damn! (4.00)
    This is an amazing idea!

    Here we are outsourcing jobs to the rest of the world precisely because the value of a dollar goes so much further, and we've been missing out on the fact that sending capital rather than jobs can be profitable for exactly the same reason!

    More profitable, even, considering that it doesn't require the movement or construction of a physical plant in order to cash in on the relative advantage of low wages and cost of resources. Plus, the dollar amounts needed are so low as a result of those factors, that investors of relatively modest means can actually participate, unlike in the U.S.

    This is fantastic!

    I guess it could be thought of as a little bit exploitative, but it's a hell of a lot better than leaving all that potential on the table for the multinationals to gobble up.

    I'm definitely gonna look into it! As an investor here in the U.S., I'm a pipsqueak. Nobody wants to talk to me and my little stash. So I'll do what the corporations do: essentially "save" money by doing business abroad!

    •  This post confuses my sensors (none)
      Half of it seems sincere, and half snark.

      With the low-to-no interest on the microloans, it's not something one should look at as a profit-making mechanism (with a weakening dollar, your return may even be negative).

      Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

      by someone else on Thu Oct 27, 2005 at 06:14:47 AM PDT

      [ Parent ]

      •  Well, it's serious. (4.00)
        Kiva may or may not be the program to deliver it, but the potential is there for an actual for-profit investment vehicle, just as I explained it.

        It won't necessarily be the vehicle of choice for those seeking to maximize their profits, but it has real potential as a "micro" program on the investor side. I don't have huge chunks of cash lying around to invest in mainstream vehicles here in the U.S. But I could certainly consider participating on a micro scale in projects overseas.

        I don't need a huge profit. Savings accounts, CDs, money market funds, etc. aren't returning a whole hell of a lot as it is. And nobody in real need benefits from those investments anyway, as far as I know. So if there was a way to get even the same relatively low returns out of a program of microloans that I get now, I'd actually be excited about participating.

        But yeah, there'd have to be a profit in it to make me pay close attention and commit significant resources. I don't think that's inappropriate to say. I can't afford to give the money away, and if I'm going to put time and effort into parceling out what little I've got to invest, then I'd like it to be worth something as well as be somewhat socially responsible.

        Ultimately, I find that to be the biggest potential motivator for expanding participation. And it shouldn't be any secret as to why.

        But I'm absolutely serious about my interest in the way it leverages relative advantage for small investors. Why should that arbitrage value be left on the table for multinational corporations to take, and for God knows what purpose? Why not take some for yourself, and help someone else while you're at it? Do what you want with the profits, but there's no shame in there being any.

        •  right, and what's unique about Kiva (4.00)
          Is that it is truly person-to-person. The other programs that people have brought up in comments so far seem to only accept donations, or have loan programs for accredited investors only. (For those who don't know, for an individual to be an accredited investor means you have a net worth of $1M or more, or consistent income for several years of $200K or more.) With Kiva it's person-to-person and you can take your money back out. That's very cool.

          But ... I'm not sure that there is any sort of way to get even a modest personal profit out of something like this just yet. The reason Kiva doesn't provide interest is to avoid a lot of extra regulatory rigmarole. The instant it starts returning profits to investors, there's a LOT more paperwork involved.

          It does seem like it'd be possible for something like Kiva (or Kiva itself, after several years of growth beyond its current infancy) to be created that would allow for some sort of profit-taking. There are a lot of logistical problems, though. Paperwork and regulatory filings are one.

          Then you have the problem of limiting it to your target market of ordinary investors -- if the investment looks safe enough that some big corporation decides to drop a measly (to them) $10M into it, well, that turns it into a substantially different operation. You need a way to make sure that doesn't happen and that it stays in the "micro" realm.

          I don't know. It just seems like there's a high risk of power (money) corrupting. Kiva can work because it's small and socially-oriented, not profit-oriented. Once you start bringing in profits, it seems like it might have difficulties. But if you manage to find or start something like that, let me know.

          •  Yeah, I see that now. (none)
            But boy, would I be excited about a program that was set up for profit. Not so much because I demand a return on my investment, but because it could potentially bring in so much more money to the program, from fence-sitters. And being Internet-based, it leverages the same pooling power of small donors investors that "netroots" politics can -- that is, a reach so wide it makes small dollars worthwhile to collate.
          •  So how about it? (none)
            Do we have anyone with the experience to tell us whether this is possible? How about to actually do it?


        •  Bigger individual lenders do get interest (none)
          Individuals who make more significant investments in microloans get interest. I don't know what the minimum level is, but I expect it's probably around $25K or $50K. If a philanthropist invests that much, she does get a return on her money, but it's of course not as much as she'd get with a more traditional investment. Some philanthropists just think of the difference as a donation.
        •  I respect that (none)
          I guess my snarkometer needs recalibrated.  I'm thinking it was the !'s that threw it off.

          Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

          by someone else on Thu Oct 27, 2005 at 08:30:12 AM PDT

          [ Parent ]

      •  A way to leverage your contribution (4.00)
        While you can ask to get from one to three percent interest from microlending, I see it as more a way to leverage my contributions.  If I put $1000 into a microlending bank and say I don't want interest, it is costing me from $10 to $40 a year compared to what I would get in a bank. At the end of the time (hopefully more than 1 year) I take back my $1000.  That money has had much more impact that my $30 contribution would have. I was a venture capitalist - but my added capital was hope.
  •  I'm hugely excited by this idea... (4.00)
    I'm going back to work next week after a nearly four month layoff, (luckily the layoff was expected and I had saved up for it) I'll get my first paycheck in mid-November and this program is definitely going to get some of it. Thanks for posting this!

    "We have too many high-sounding words, and too few actions that correspond with them." Abigail Adams 1764

    by greeseyparrot on Thu Oct 27, 2005 at 05:50:01 AM PDT

  •  Just Joined KIVA (4.00)
    and loaned some money. This is going to be interesting, fun and a much better use for the money than almost anything I can think of offhand. Good idea for a diary.  Also liked your diary on cute little cars.
  •  Accion International (4.00)
    Here is another one that  focuses on Central America, the Carribean and Africa.
  •  Just one technical question (none)
    Wow - this is a great idea. I would like to participate. I just have one technical question. Does anyone know what are the US tax implications of this system? (I'm referring to my personal income tax.) Do I need to report anything when I contribute? Do I need to report anything when I get repaid (if I take it as a repayment?) If I don't accept the repayment, is it considered a tax deductible charitable donation at that point?

    I beg to dream and differ from the hollow lies..

    by lesliet on Thu Oct 27, 2005 at 05:59:33 AM PDT

    •  from the FAQ (none)

      What is my loan considered, financially speaking? Is it a tax-deductible donation? Is it an investment? Is it something else?

      When you "sponsor a business" you are lending money with the intention of being paid back. This is not a donation, so it is not considered tax-deductible.

      Because we do not repay our lenders with interest, the SEC does not consider a Kiva loan a security. If we did offer interest, the SEC would consider Kiva loans to be securities that could be heavily regulated, which would be prohibitive for Kiva, for lenders, and for sponsored businesses.

      We believe Kiva's charitable loan program encompasses the best of many worlds. It is a new financial product best suited for someone who isn't concerned about getting a tax deduction, likes the idea of getting their money back, and is interested in having a customized, high-engagement experience learning about a small business enabled by their microloan in East Africa.

      It's a loan, not a donation, and therefore is not tax-deductible.

      But since it earns no interest, there is no income to report from it and so there's nothing to do tax-wise.

      I suppose if you don't get repaid, you might be able to write off the loss, but you'd have to ask an accountant about that. Personally I would be inclined to just look at it as a better form of donation: I will only donate money that I can afford to lose, and if/when it gets paid back turn around and put that money back into the system.

      •  Thanks, that's what I thought (none)
        But it's always good to be sure about these things.

        I beg to dream and differ from the hollow lies..

        by lesliet on Thu Oct 27, 2005 at 07:01:35 AM PDT

        [ Parent ]

      •  I don't remember where I heard this, (none)
        but I thought if you loaned someone an amount above a certain amount, the government wants to tax you on it as though you earned interest, even if interest wasn't part of the agreement.

        I think I either read it or saw it on one of those small-claims court shows, so I'm not sure if it applies here.  [Even if it did, I can't imagine this is one of the IRS's biggest priorities]

        Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

        by someone else on Thu Oct 27, 2005 at 08:33:20 AM PDT

        [ Parent ]

    •  If you want to make a donation (none)
      The Kiva site is no longer taking loans (dKos folk covered them all!) so they are recommending a tax-deductable donation to a group that works in the same area building infrastructure. That could be a wonderful complimentary action to the Kiva loans. Maybe you want to do that?
  •  great (4.00)
    link.  I've done this before, but it was through another organization, I don't recall the name.  For like $200, my family gave the gift of two sheep to a family somewhere in northern africa, I don't recall the was when I was maybe 16, so about 13 years ago.
  •  Great diary (4.00)

    the meek shall inherit the earth

    by Howaboutthetruth on Thu Oct 27, 2005 at 06:02:40 AM PDT

  •  My dad, RIP, made microloans for years. (4.00)
    My dad, who died 7 months ago, came from the Philippines in the early-1930s and served in the Coast Guard. He retired in 1958 and chose to return to the Philippines after he retired. Although his retirement pay would have been a pittance here, there it was a small fortune - no way he could spend it all if he lived sensibly.

    Over the years, he loaned lot's of people money to start small businesses - fish farms, buy fishing boats, start small neighborhood in home stores, buy pedal powered cabs, sewing machines, tools, etc. The loans were in the $5-1000 range (pre-inflation)

    Never charged any interest. (But fisherman used to drop off fish after netting them, seamstresses would sew us costumes for school plays, pedi-cabs would pick us up as we were walking to school and give us free rides, etc.)

    Always got paid back (some took longer than others to pay him back).

    At his funeral in April, the main street of the small town he lived in was closed down and the line of people who walked from the church to the cemetary was over a mile long.

    I cried a lot - not out of sadness, but because so many people who I did not know came up to offer their condolences and every one said that he had helped them. Many asked if they should make their payments to me now. I was so proud.

    Now, I go to the Philippines at least 4 times a year (I made some investments there that I need to look after). Each trip, someone always comes to talk to me and ask for a loan. If they make sense, I always give it. When I get payments, I put them aside to use again. My total portfolio to date is less than $4000 and there are currently 26 people on my creditor's list.

    Give a man a fish, he dines today, teach him how to fish, he dines tomorrow, teach him how to sell fish and he eats steak! Anon.

    by Serendipity on Thu Oct 27, 2005 at 06:05:15 AM PDT

  •  I didn't even know... (4.00)
    ...such a thing existed.

    I'm sure there are many like me, who have always wished that there was something I could do to address the issue of global poverty, but who thought that the issue could only really be addressed on a macro level by governments and worldwide organizations.

    I've also been generally distrustful of organizations that put infomercials on TV asking for 79 cents a day to feed a child in need. I don't know that the money is realy going where they say it will, and it does little to address the underlying problems that caused that child to live in desperate poverty in the first place.

    Kiva presents ordinary people with an opportunity to actually make an impact on improving the root causes of third-world poverty.

    I can't thank you enough for posting this diary. I can't wait to make my first microloan.

  •  I don't know anything about Kiva, (4.00)
    Kiva is apparently a new organization, since they say on their website that their tax-exempt application is still pending.  That doesn't mean it's not a very good one, but a more established one is Oikocredit, the U.S. affiliate of which has board members representing religious organizations including the National Council of Churches, Presbyterian Church (USA), and United Church of Christ.  For more information, see: and

    Heifer International is also a great organization that does similar things focused especially on livestock for rural families.  My wife and I went on a study tour of some of their projects in Mexico several years ago, and they make a real difference in people's lives.

    •  what was the study tour like? (none)
      how many places did you visit?  I've been curious about those.

      although it's getting late, you still have plenty of time

      by maracuja on Thu Oct 27, 2005 at 06:39:12 AM PDT

      [ Parent ]

      •  Study tour (4.00)
        We visited about a half dozen projects, from Durango State in the north to Puebla State in the south.  At just about every village we visited, they fed us (and no, nobody got sick), and at two of them, there was a big fiesta (although the fiesta was planned for one of them, since it was what's called Three Kings Day in Mexico (Epiphany here, or the 12th day of Christmas), which is when children in Latin America traditionally get gifts.  We were the first North Americans who had ever visited most of the villages.

        We saw everything from very new projects, to long-established ones, to a large orphanage that had become largely self-supporting through the manufacture and sale of goat cheese that resulted from a gift of goats many years ago.  You learn a lot about how the various communities organize themselves.  In one of them, the women had a co-op that made cheese, most of which they sold at a small restaurant operated in the village (which was patronized largely by truckers hauling logs down from the mountains).

        In addition, as is typical of many of their study tours, there was a day or so given over to more typical "tourist" things, including a visit to the anthropology museum and other sites in Mexico City.  Hotels tend to be basic, but clean and safe.

        The main attraction of one of these tours is the people, who were so generous with feeding us, giving us gifts (cheeses and local produce), and thanking us, that we all ended up feeling very inadequate in expressing our thanks.  You also learn about how important the concept of "passing on the gift" is in helping people feel that they aren't simply charity recipients, but are being enabled to help their neighbors just as they've been helped.  As one man said, whose cow hadn't yet had a heifer calf and whose turn to pass on the gift hadn't yet arrived, "I just wish I could split my cow in two, so that I could pass on the gift right now."

        At least in the villages we visited, there was a big desire to develop economic opportunities in the village, so that young people (especially young men) wouldn't have to go to the big cities in Mexico (or the United States) in order to find work.  One wish that I've had ever since he got on his big kick about immigration is that Lou Dobbs could have been on the tour, since it might have opened his eyes to what drives undocumented workers to come here.

        I don't know anybody who has ever been on one of the study tours who hasn't described it as a truly life-changing experience.

  •  Microcredit a major focus of Dick Gephardt's ... (4.00)
    ... formative Institute for Public Service, which will capitalize on two underutilized resource groups:

    1. Students at US (and eventually global) universtities, beginning at Washington U. in St. Louis.

    2. Early/affluent/averge boomer retirees.

    None Dare Call It Stupid!

    by RonK Seattle on Thu Oct 27, 2005 at 06:31:30 AM PDT

  •  Great diary Chris! (none)
    Thank you for this information.  Most of us here didn't know this existed.  I will be passing this info along to all my friends.
  •  Very exciting (none)
    Thanks for posting!

    The Christian Right is neither Witness Every Day

    by TXsharon on Thu Oct 27, 2005 at 06:36:56 AM PDT

  •  Teach a man to fish (none)
    This seems like a great way to reach many people with the same $100. Lend it, it's paid back. lend it again, it's paid back. lend it again....

    It's money that doesn't disappear into an institution and doesn't have to be replaced to help someone else.

    It also leaves the lendee with dignity.

    Mythology is what we call other people's religion-Joseph Campbell

    by Sherri in TX on Thu Oct 27, 2005 at 06:43:35 AM PDT

  •  Sports Illustrated (none)
    did an article on this years and years ago because some baseball players had engaged in making micro loans... I have often wondered if this type of practice was still going on... I'm so happy to hear that it does... I would like to be involved... I'll check out your link...thanks

    America is so much better than Bush.-Kid Oakland

    by crkrjx on Thu Oct 27, 2005 at 06:43:46 AM PDT

  •  basic technologies (4.00)
    Quite a while ago I read a Wired magazine article about a company who'd come up with a small, pedal-powered irrigation pump that cost $38 and allowed a family to irrigate 1.5 acres per day.  The pump is credited for increasing Kenya's GDP by 0.5% and increasing family income by $1,400/year on average.

    The same company (now called KickStart) came up with a large drum with a handle that allowed it to be pushed along, rolling on its side.  This is used to transport large quantities of water, and often increases female school attendance because mothers no longer need their daughters to help carry water.

    These things are manufactured in Africa by local workers, and are often given to families on credit, since retailers know the money will easily come back to them.  Governments have little to no role in any of this, which means nothing is sacrificed to bureaucracy or corruption.

    And here is another excellent way to help individuals directly-- bravo!  Thanks so much for the diary.  I'm heading off to the Kiva site now.

    I have never let my schooling interfere with my education. -- Mark Twain

    by vinifera on Thu Oct 27, 2005 at 06:44:49 AM PDT

  •  thanks for the info (none)
    I didn't know stuff like this existed either. I signed up as well, but it looks like everyone else beat me to the few remaining in-need businesses. :-) I will have to wait for the next round.

    I very much like the idea of people helping people like this. And when the money comes back in, it's easy to just turn it around for another loan! I think they're absolutely right that it will keep people in the loop and make each single "donation" turn into several. Very cool idea, and I love the person-to-person concept behind it.

    •  Click "businesses" (none)
      and then "In Need" along the left side of the page. There are about four available. I chose the woman who is starting a restaurant because my husband's family has been in the restaurant business...and because I love to eat! What a fun way to "invest".

      Nobody likes big government until they need something. -5.88, -6.82

      by Debby on Thu Oct 27, 2005 at 09:34:25 AM PDT

      [ Parent ]

      •  they seem to be changing (none)
        They were all gone when I looked, but then I looked again and some new ones were up. Perhaps they noticed an influx of new traffic from DKos and have been busy working on promoting investment opportunities from their pool of potentials? That'd be pretty cool if so. As 2004 showed, we do have a lot of weight to throw around for good causes...
        •  I just got an e-mail from Matt at Kiva (4.00)
          He seems amazed at the number of dKOS folks who are contributing and is "stressed out" trying to put up new businesses needing loans fast enough.

          "The bicycle, the bicycle surely, should always be the vehicle of novelists and poets" , Christopher Morley

          by Chris Kulczycki on Thu Oct 27, 2005 at 11:01:37 AM PDT

          [ Parent ]

          •  good! (none)
            Of all the kinds of stress, having a lot of people signing up for your service all at once has to be one of the nicest. :-)

            Three cheers to Kiva for rising to the challenge! As I write this, there are now four businesses in the "in need" section:

            • Mot Mot - has $425 of $500 needed
            • Kuro Chiki Hotel - has $500 of $500 needed
            • Fur Ber Fish - has $150 of $300 needed
            • Awasi Goat Keepers - has $350 of $500 needed

            I'm pretty sure all of them were added within the last eight hours or so, after this diary hit the recommended list. They weren't there when I looked earlier.
            •  Hurray! (none)
              My restaurant lady has gone through! I wanted to donate to the goat people as well, because I love goats, but it looks like everyone has been covered!

              Maybe the diary could be updated with links to some of the other businesses like this that folks have posted about. And there's always Heifer!

              Nobody likes big government until they need something. -5.88, -6.82

              by Debby on Thu Oct 27, 2005 at 08:03:26 PM PDT

              [ Parent ]

  •  yes yes yes yes!!!!!!!!!!!!!! (4.00)
    This is exactly the type of thing progressives should be doing.  You can change the world even if you're not running the government. I'm not saying to not try and do that, just saying that this is real change that can happen anywhere in the world.
  •  Thanks Chris (none)
    Great diary- I wish there was a new one like this every day on the rec' list.  It's practical, active, affordable, features close contact between the person taking action and the person being helped.  Great stuff.  

    One note -  my office's web filter blocked the kiva site.  Not sure what that's all about, but just so folks are duly warned.

    Chris - you've been hotlisted for a week or two now.  Great stuff.

  •  This is the most helpful diary (4.00)
    I've read here. Now, I read everyone of Jerome's or bonddad's and have considered their diaries must reads and pass on information. But just great info.

    Info for me to use and become involved. Count me in. And I'll be getting other folks involved, too.

    "Im not afraid of storms, for I'm learning to sail my ship." - Louisa May Alcott

    by smugbug on Thu Oct 27, 2005 at 06:53:41 AM PDT

  •  Microcredit in the USA (4.00)
    ShoreBank, a bank on the South Side of Chicago, was modeled in part on the Grameen bank and got a lot of acclaim for successful microcredit programs in the eighties and nineties.  I just took a job with a development bank in Arkansas called Southern Bancorp, which was started at the request of Gov. Bill Clinton (Hillary was on the first board of directors) by ShoreBank executives.  The Southern Good Faith Fund is an affiliated nonprofit that operates a microcredit program.  

    A book was written by a sociologist about the first ten years of Southern's operation.  It shows how the Grameen-style microcredit program operated by the Good Faith Fund was largely unsuccessful for two reasons.  One, much higher overhead is involved in starting a business in the United States.  Two, the Good Faith Fund had trouble recruiting stable peer lending groups.  The Grameen program worked so well because groups of friends would join the program together, would meet regularly to learn business skills and share experiences, and, crucially, would encourage loan payments by peer pressure.  In Arkansas, by contrast, the "peer groups" typically were collections of strangers, and the tolerance for business skills classes was very low.

    Since this book was written, Southern has changed a lot of its operations in order to adapt this program and others to the peculiarities of life in the American South.  I just thought I would share this for what it's worth.  I start working for them in January!

    In Iraq, it's a dry heat. And the language that none of our troops or diplomats speak is Arabic rather than Vietnamese.--Daniel Ellsburg

    by ankylosaurus on Thu Oct 27, 2005 at 06:54:53 AM PDT

    •  Good Points - We have 3rd World Enclaves in the US (4.00)
      People might also want to go to:


      Food independence in the US is something that we have lost, and need to recover.

      I am acting to provide technical assistance through my 501-c-3, and a Line of Credit through my for-profit corp, ($3,000 limit, to ready them for commercial credit) to a cooperative start-up that aims to encourage a robust market for locally grown foods in my valley.

      And it is not so much that we have pockets of extreme poverty in the US, it is also that we are totally dependent on the corporate supply chain.

      I can't get into the long story of why that is bad here, but community self-reliance is worth rebuilding.

      Good men through the ages, tryin' to find the sun, still I wonder, still I wonder, who'll stop the rain? -J. Fogerty

      by RichRandal on Thu Oct 27, 2005 at 08:11:42 AM PDT

      [ Parent ]

    •  Shorebank (4.00)
      I used to invest with them. Stopped when I needed higher interest stuff once I bought a home. But always liked them. My main bank for day-to-day use is Community Capital Bank in Brooklyn. They were founded on the same ideas as South Shore Bank. I was an initial investor in CCB (small potatoes investor, but still...) and I bank there. I think there is also a similar bank in San Francisco, though I don't remember it's name. Finally, there is also a Native American Bank that looks good.
  •  I haven't heard of Kiva before (4.00)
    but if people want other examples to get a sampling of what is out there check out Fonkoze which does this in Haiti and Grameen Bank which is the great grandmother institution of this movement.

    "The more they spoke of honor, the more I checked my wallet."

    by bankbane on Thu Oct 27, 2005 at 06:55:50 AM PDT

  •  Microcredit is a useful tool everywhere... (4.00)
    ...there is a shantytown, even in the US.; an oasis of truth. -1.75 -7.23

    by Shockwave on Thu Oct 27, 2005 at 07:09:17 AM PDT

  •  I like Kiva! (none)
    I've always liked the concept of microloans, and this is a fantastic way to implement it.

    But I have a feeling they're going to have to expand their Ugandan operation -- there's only one applicant  still "in need" on the website, and with all this attention, she's bound to go fast.

  •  Incredible. (4.00)
    I spent a long time this morning explaining microcredit to my daughter because...I would dearly love to start a nonprofit business that uses textiles and beads that are made by women's microcredit-financed businesses.

    I think I'm going to call it "My Sister's Loom", or something similar.

    This week I bought two saris, and I'm going to make skirts out of them to see if they will go over. If they do, I will make arrangements to buy handloomed (by women) materials from different countries and expand.

    Microcredit is revolutionizing humanitarian assistance. Please contribute if you can.

    Thank you for posting this.

    Tarheel born, tarheel bred! And when I die, I'll be tarheel dead.

    by NCYellowDog on Thu Oct 27, 2005 at 07:29:02 AM PDT

  •  More Micro Credit/Community Investing resources (4.00)
    Co-op America, is a national nonprofit focusing on economic actions for a just planet. The current issue of the Co-op America Quarterly is about Micro Credit Lending and international community investing. It is filled with more success stories and how individuals can put their money to work to solve real problems.

    The same lending strategy in the United States is called Community Investing

    A list of Community Investing and Micro-Credit Lending organizations/institutions can be found at National Green Pages Online.

    Co-op America and the Social Investment Forum have organized the 1% or More in Community Campaign, to urge investors (individuals and institutions) to move 1% of their investments into community investments.

    To date individuals and members of the Social Investment Forum have used the 1% Campaign to move over $1.8 billion into Community Investing.

    Imagine if this was where all progressive invested just 1% of their assets.

    The Community Investing web site offers a calculator to help you calculate the social impact of your investment.

    And the Community Investing community is responding to Katrina. Here is a PDFof a SIF press release on ways community investing is working to rebuild the Gulf.

  •  Liberal Opening: Domestic Ghettos / Minorities (4.00)
    The Black community has been screaming for generations about being redlined and otherwise squeezed and gouged by the conventional credit industry, especially in ghetto or even reasonably good quality minority-dominated places. I can't recall hearing as much from latinos but it'd certainly be worth aggressive inquiring by Democrats.

    Democrats have a big opening here in the small business / neighborhood improvement area for some kind of government and/or government underwritten low interest quasi savings-&-loan program, where modest amounts of dollars could accomplish ten times what a straight subsidy could do because of the repayment.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

    by Gooserock on Thu Oct 27, 2005 at 07:41:12 AM PDT

    •  Microlending in these areas (none)
      is often handled by "payroll advance" places, where you write them a check for $X+Y and are given $X, then they cash the check in 2 weeks, basically allowing people to live next paycheck to next paycheck.

      It has become extremely profitable for the corporations doing it; IIRC they even have their own lobbyists now.  I remember reading in WSJ a year or two ago that these places have rates of return that make even credit card company APRs look tame, but defend them by talking about margins ($50 isn't a huge amount of money, but it's something, and it's a lot to ask for a 2-week loan of $800 or less).

      Having said all that, if microlending could get started and keep itself going, it would definitely improve the lives of many lower-income Americans.

      Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

      by someone else on Thu Oct 27, 2005 at 08:41:59 AM PDT

      [ Parent ]

      •  why microcredit works (none)

        There is a huge difference between the payday loan places and microcredit. Payday loan places basically exploit people who already can't make ends meet. They often end up needing to take out more payday loans to pay for the interest on the previous ones.

        I first heard about microcredit on a 60 minutes show many years ago. In many cases, the loans were made to allow workers to purchase the tools and initial materials they needed to do their existing jobs working for themselves instead of being exploited. The employers were providing the tools but charging inflated rents on those tools or just paying so little per piece that the workers could never afford to buy tools. Very similar to being charged inflated rent to live in the company provided tar paper shack and having to buy your food at the company store and being paid a wage that is so low that you can never afford the transportation expenses to leave. When people are being exploited, it is very easy for microcredit to work. In some cases, a single days work brought in enough income to pay for the tools needed. The resale value of the goods produced in a day might be a years wages (don't remember the actual ratio). This applies to the original microcredit loans in Bangladesh where the people were extremely poor and extremely exploited. Microcredit has expanded into giving loans where the returns may not be as dramatic.

        Microcredit loans typically only go to buying resources that can provide income. Not luxuries, not filling in for cash flow problems. Part of the problem in the US is that people have been encouraged to borrow money for unnecessary items. It is also much harder to start a business in the US. And the degree of exploitation is lower so payback times are longer.

        An interesting twist that might make sense in the current US economy would be to fix the loans in the currency of the other nation. No interest would be paid but if the dollar weakens it could be an actual investment or at least hedge for people in the US who are thinking about hedging by investing in foreign currencies. Underdeveloped nations, less dependent on petroleum, might be less affected by the energy crisis (or they might be affected because export markets dry up). But it might work out that from the borrowers and lenders perspective that the loan is repaid at constant value. If the dollar drops, tieing the loan to US currency might be a windfall for the borrower, and thus more charitable, but on the other hand this might be a way to make more loans availible. And it might be a way around SEC regulations since there is no actual interest, you have just changed the denomination of the loan.

        Here is a small credit idea for the US - a relatively inexpensive side business, by US standards, with significant potential for leveraged social returns. I think it could work in a lot of communities but those affected by the hurricanes would be an excellent place to start. Spend $5000 to buy a trailer with power and hand tools. Using a concession trailer with windows might be good since bench power tools could be set up in a fixed location and lumber could extend outside the trailer (must lock securely, though. Rent it for $100 per week or $25/day. Organize the tool drawers so you can very quickly tell if any tools are missing. People could rent it instead of buying tools and equipment for purposes like making furnature, build houses or additions, etc. More than one family could even share the use of the trailer at the same time. No real estate is needed except a place to park the trailer when it isn't rented and in many cases that is free. If there was sufficient money to invest, one could send a large number of these into hurricane areas and then after the area was rebuilt they could be redeployed to other communities. Community local shop trailers could be loaned to disaster areas. The biggest variable is the cost of theft or loss. Typical tool rental businesses seem to charge about 1/3 of the purchase price for a tool. This is one variation on the community shop idea. I remember having access to community shops when I was an army brat. On a larger scale, basically imagine rougly duplicating a high school shop and selling memberships (compare to a fitness club). This is efficient because it eliminates waste (both money and natural resources) spent on tools that are rarely used. And it has high leverage in terms of doing social good. Many small houses could be built using the labor of the occupants and their friends and neighbors (still need land and materials). Many home improvement projects (including energy related ones such as insulation, solar, etc.) could be facilitated.

        •  fixing loans in other currencies (none)
          An interesting twist that might make sense in the current US economy would be to fix the loans in the currency of the other nation.

          What you're describing is essentially a form of currency trading. Take the loan out of it for a second, and imagine that you just converted USD (US dollars) into UGX (Ugandan shillings) and held it there. After a while the dollar dropped and you converted back. You wind up with more dollars than you had before.

          Unfortunately for that scheme, though, we report income and pay taxes in US dollars.

          The IRS doesn't care that you started with 1000 UGX and ended with 1000 UGX. It cares about the value in USD. When you wind up with more dollars than you had before, that's a profit that must be reported. (And as a corollary, it means Kiva would be trading securities and would have to report to the SEC, etc).

          A for-profit-microloan system that is already reporting to the SEC would be able to do that, but that's not what Kiva is...

      •  Payroll Advance = Loan Sharking (none)
        It's one of the doom & gloom signs of economic downturn.

        We need to get this going in a positive way so that money's not being sucked out of these people. Payroll advance I think is largely to help people tread water, not climb a ladder.

        We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

        by Gooserock on Thu Oct 27, 2005 at 04:31:35 PM PDT

        [ Parent ]

      •  There are some interesting... (none)
        ...ideas that have been tried along these lines -- "Community Currency" is an interesting area that, unfortunately, I can't really think of a good quick general explanation of, but the systems usually combine an alternative currency/payment system with some form of microcredit for local development.

        "Barter Credit" systems (though that term is sometimes used for B2B programs that aren't really related to economic development) and "Local Employment and Trading Systems" (LETS) are related...Googling any of these could be revealing.

        I feel like a bit of a jerk telling people to Google something and providing so little useful information directly, but I don't have particularly good sources bookmarked, though I know there out there.

  •  Wonderful concept, but raises a troubling question (none)
    The post says that workers are organized into groups of 5, and if someone defaults, all five persons are cut off.

    To what lengths might these desperately poor people go to in order to meet their repayment obligations?  

    Might they deny their children the chance to go to school in order to work the business?  Might they sell their children into prostitution?  

    Personally, I have no need to loan someone $100 to have it repaid.  To my way of thinking, this is a traditional Republican concept.  I would still prefer to give the $100 a gift.

    Those who spend thousands of dollars on Christmas presents can afford to make some of those "presents" in the form of these gifts, thereby eliminating the need to wait for god-knows-how-long before sending out the same micro-amount to another deserving soul.

    If you build a house of cards, people will move in.

    by diamondpen on Thu Oct 27, 2005 at 07:50:51 AM PDT

    •  These objections have all been raised... (4.00)
      In some form or another. But micro credit simply works. There are alot of other microcredit organizaitons that automatically reinvest your donation over and over if you're more comfortable with that.

      Republicans worship unconstrained capitalism to an obscene degree. That doesn't change the fact that giving people hope and oppurtunity then setting goals for them to achieve is a time tested way of helping people help themselves as the saying goes. If they repay the loan on time and the venture grows it usually makes them eligible for a larger loan should they need it in the future.

      I read some research on this a few years ago, no links or even names of what the journals were. But in some societies (I think they were studying central asia) money loaned to women was much more likely to actually stay in their possession than money given to them. When it is a donation or a gift there is a strong pressure for the woman to share the majority of it across her extended family or else she is labeled selfish or a bad wife/mother/daughter etc.

      When the money is loaned and must be repayed then it gives the woman justification to keep it and use it for the purpose it was intended. Money lending is understood most of the world over and defaulting is shameful or even perilous in most countries.

      Again I'm writing from memory but that was the gist of their findings.

      Lifting people out of poverty is a complex issue with more than enough room for both micro-credit and straight donations. But I don't think there is anything insidious in having the money repayed, especially since I'd wager the majority of people will roll it over into another loan.

      To lodge all power in one party and keep it there is to insure bad government and the sure and gradual deterioration of the public morals. - Mark Twain

      by Windowdog on Thu Oct 27, 2005 at 08:08:23 AM PDT

      [ Parent ]

      •  Excellent points! (none)
        In addition, the discipline imposed by having to develop a plan to pay back a loan makes it much more likely that the business will be successful than if the initial capital was simply a gift.  Finally, and perhaps even more importantly, people have a more pride in themselves if they have successfully paid back a loan, rather than simply been the recipients of charity.
    •  Consider the alternative (4.00)

      The Kiva site implies that the only other places these people can go to get cash is through local loan sharks.   I have a hunch that worse things are going to happen to these people if they default on those loans rather than a Kiva loan.

    •  They don't face that level of pressure (4.00)
      These loan organizations are not run like ordinary banks.  They provide training and support along with the loans, and don't demand collateral.  If you look at Kiva's FAQ, they don't even guarantee that you'll get your money back, and you won't get any interest either.  They are very much geared to the needs of the populations they were created to serve.  If the people default, the bank is not going to come after them and destroy their lives, and neither is a support group.  Children are being sent to school because of microcredit, by people who would never have been able to send them otherwise.  

      I'm no Republican!  But I spent two years in a very poor country, seeing firsthand the serious limitations and drawbacks of charity, the frustrations it can create for people who can't get credit, to see money thrown at big projects by foreigners that don't really address the chronic local problems.

      Charity is a bandaid.  In an emergency it can be a lifesaver, and I give to my local food bank every month because I know there is immediate need, but it's not the answer to chronic poverty.  Republicans love charity, they much prefer it to the institutional changes that create less need for charity!  

      Microcredit banks were created as such an institutional change.  Banks are always there for those with collateral who want to invest in a new venture.  Microcredit banks make that model available to  the poor and destitute.  Grameen was founded in India by Indians who were face to face with real daily problems of poverty and indentured servitude and it has worked wonders.

      The Grameen Bank site has a lot of information on how people are expected to pay back loans.  Destitute people (as opposed to the merely poor) are not even expected to join a group, make weekly payments or conform with many of the other regular rules, although women from a group may mentor that person to help them get off the ground.

      "Virginia Woolf's idea of a room of one's own has never been the place for middle- and working-class women. We work with interruptions." - Ananya Chatterjea

      by sarac on Thu Oct 27, 2005 at 08:47:26 AM PDT

      [ Parent ]

    •  Repayment is what keeps it (4.00)
      self-sustaining.  If you put in $100 and ask for nothing in return, you've helped one person.  If that person has to repay the $100 at some point, you can use that $100 to help another person, and so on.

      If you want to put more into the system as you describe in your last paragraph, more power to you.  You're helping that many more people help themselves.

      Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

      by someone else on Thu Oct 27, 2005 at 08:56:47 AM PDT

      [ Parent ]

    •  psychology of reciprocity (none)

      Where it is feasable to pay the money back, it can be psychologically beneficial to the recipient to do so. Psychologically, it is better for people to feel self reliant than dependent. A lot of aid programs encourage cycles of dependency or even co-dependency (where the aid giver is psychologically addicted to having the recipient dependent). Some of the US safety net "entitlement" programs are constructed in such a way that it is difficult for people to climb out of them. Making it a loan encourages some business sense. There are times when a grant or overlooking a default may be appropriate. But it can help self-esteem if people are allowed to repay in some way. Do you want to give someone a fish or teach them to fish? Loan them a fishing reel, let them catch fish, sell them, and buy their own reel or pay you for the one borrowed. In underdeveloped countries it is often much easier to strike out on your own, if you just have access to a little capital, than it is here in the US. Another form of repayment is that you give someone money and then when they get back on their feet they are expected to do the same for someone else in need. Ultimately, repayments are usually likely to go into helping the next person out of poverty. Also, because it is a thought of as a loan the aid organizations are more likely to provide the necessary education to go with it rather than just throwing money at the problem.

      Another example of this is time banking. This is a system where one hour of time is repaid with an hour of time. So, if you provide 4 hours of legal service to someone, they repay you with, perhaps, 4 hours of house cleaning. But to make things more efficient, the hours are banked so the services you need don't need to be the same as those they can provide. This system is exempt from taxes. "Stop creating dependencies; stop devaluing those whom you help while you profit from their troubles."

      Banking and loans aren't bad. What is destructive in commercial banks is the management culture that says it is only about profit. What is bad is that people have to borrow with little chance of repayment because they are exploited just to provide temporary relief from permanent cashflow problems. What is bad is that people are encouraged to borrow and spend to create a facade of affluence to have any reasonable social standing.

    •  You might want to do this instead (none)
      The Kiva site is no longer taking loans (dKos folk covered them all!) so they are recommending a tax-deductable donation to a group that works in the same area building infrastructure. That could be a wonderful complimentary action to the Kiva loans. Maybe you want to do that? $100 for infrastructure would be a nice gift.
  •  Wow, thank you! (none)
    I've been interested in the Grameen Bank's work for many years, but I'd never heard of Kiva or of some of the other groups mentioned in the comments.  I'm so glad to find this.

    I was a Peace Corps volunteer in Senegal, in the dust bowl center of the country.  There are probably few places in the world with fewer resources and opportunities for the inhabitants.  I met one man there in particular who was heartbreaking, he was so short on opportunity and so long on brains, creativity, drive, ambition, and thirst for knowledge and new skills of every kind.  

    He desperately wanted to break out of his fate as a less than subsistance farmer and had tried everything possible and impossible (including joining the army, emigrating, seasonal work in neighboring countries), to no avail.  No bank would loan him money because he had no collateral or status whatsoever.  

    What he could have done with a $200 microloan and some business classes (for which I know he would have been showing up in his best clothes, and focusing on the instructor like a laser) would probably astonish us all.

    "Virginia Woolf's idea of a room of one's own has never been the place for middle- and working-class women. We work with interruptions." - Ananya Chatterjea

    by sarac on Thu Oct 27, 2005 at 07:57:34 AM PDT

  •  It'a a great idea but (none)
    There is no one on their site who needs money right now. Perhaps that is a consequence of being posted on the Kos! In any event I registered, and hope to be able to give as soon as there is someone who applies for a loan.
    Meanwhile, I'll check some of those other micro-loan sites!
    Thansk for this idea and the info!
  •  I'll have to wait to check it out from home... (4.00)
    KIVA is a banned site here at work.

    Funny, I work for a Catholic based Health Care Organization.

  •  This sounds like a great idea (none)
    But has anyone done any independent verification that the money is going where its intended? Does anyone have personal experience of the loan being repaid?  For the moment I'll assume they don't send out spam e-mail looking for investors, which would provide some comfort.  

    Sorry, but I've spent almost 30 years being paid to be a cynic. If this program is legitimate, its great, altho its a bit Sally Struthers for me. Despite it being called a loan, its charity. I would have no expectation of being repaid, and thats fine. But by the same token, I have no interest in the specifics of where my money is going, I don't need a feel good story at the end, the feel good story up front is convincing enough that its a good cause.

    •  Both Agree and Disagree w/Kane in CA (4.00)
      Kane in CA is incorrect about microcredit being charity obviously, as microfinancing is a well documented endeavor.  However, he/she does raise a very valid concern about accountability for the money.  

      I've got a group of about 15-20 people ready to donate on another site, but I have no way of verifying A) that Kiva are who they say they are and B) that the money gets to where it is supposed to go.  They said they're partnered with a few orgs who do have longstanding reputations, so I'll contact those and ask about Kiva.  That's all I can think of to do.  If the organizations listed as affiliates on its about page vouch for them, then it's a pretty good guess that they're for real.  

      If anyone has any way of independently validating these people I'd be interested to hear it - save me some legwork.  I'll post the results of my attempts.

    •  Already emailing with Kiva's founder about this (none)
      I NEVER give money to a charity unless I can independently verify it's 501(c)3 status, the designation given to IRS approved tax-exempt non-profits. Nor do I give unless they are also favorably listed with GuideStar, an independent watchdog organization that rates charities based on performance, ethics, correct / timely financial statements / reporting, overhead percentage, etc.

      Kiva's website (in the FAQ) says they are still in the process of incorporating and expect their 501(c)3 approval by November / December of this year. Once they have that, they can apply to GuideStar. If GuideStar rates them favorably, they will immediately have my charitable dollars because the entire micro-lending concept is brilliant, IMHO.

      "Separate ... (is) inherently unequal." Brown v. Board of Education, 5/17/54

      by WereBear Walker on Thu Oct 27, 2005 at 01:06:38 PM PDT

      [ Parent ]

      •  Let us know what you hear (none)
        I always have the same kinds of concerns about an organization that I only know of through the web.  This may be entirely legitimate (and if it is, it sounds like a really great idea), but for all most of us personally know, the money might not get any farther than the organizers of themselves.  I always feel terrible being a cynic, but it's an occupational hazard of having practiced law for nearly 30 years.

        If the diary has scrolled off by the time you hear back from them, please post another one on what you find out.

  •  Small correction (4.00)
    Moses is the Partner's Rep.

    The entrepreneur borrowing and repaying the money in the story above is Geoffrey Obanja Jasu

    My country, right or wrong; if right, to be kept right; and if wrong, to be set right. Sen Carl Schurz

    by Bill Rehm on Thu Oct 27, 2005 at 08:54:36 AM PDT

  •  More information on microcredit around the world (4.00)

    "Virginia Woolf's idea of a room of one's own has never been the place for middle- and working-class women. We work with interruptions." - Ananya Chatterjea

    by sarac on Thu Oct 27, 2005 at 08:57:30 AM PDT

  •  counterparts (none)
    that you thought of them as your counterparts makes all the difference.

    "You better get politics or politics will get you!" - My grandmother Visit!

    by ves man on Thu Oct 27, 2005 at 09:08:55 AM PDT

  •  Best Diary (4.00)
    This is the best diary I think I've read all month.

    It makes me feel damn good to think that even though  I don't have shit, the little tiny bit I can spare will still actually make a real difference in someone's quality of life!

    HIGHLY recommended.

    The problem with America Today: There's a difference between The American Dream, and The American Way.

    by Disillusioned on Thu Oct 27, 2005 at 09:14:11 AM PDT

  •  WOW! (none)
    What a brilliant idea!
    I am inspired, thank you!

    Here are some more links I found:

    At Grameen Foundation USA, we give the poor the tools they need to lift themselves out of poverty, providing opportunity through microfinance -- tiny loans and financial services that help "micro-entrepreneurs" reap the rewards of their own labor.
    The Power of Your Gift . . .

    $15 helps a woman in Rwanda start her own savings account. These funds will help a woman start her own business, or will provide collateral for her to receive a microcredit loan, following her participation in the program.

    Women for Women International's Sponsorship Program in a direct, personal and hands-on way for you to help women survivors of war, conflict and civil strife. As a sponsor you will be matched with a woman in great need.

    The Social Value of $100,000

    The average microcredit loan is $100. The average payback period is six months and, once repaid, the $100 is available to be loaned again and again and again. Because of this multiplier effect, the social value of money invested in microcredit work is remarkable. For instance, when Unitus provides $100,000 in capital to an MFI partner, it creates 2,000 new loans each and every year. In just the first five years, the initial $100,000 is leveraged into $1,000,000 worth of loans, changing 10,000 lives directly. Indirectly, 50,000 lives have been changed considering the positively impacted family members. The donor-investor has received a 10:1 social return on the investment. And this social return does not end after five years - it keeps working in perpetuity.

  •  Thank You! (none)
    Actually, I have been very interested in this process, and you have made this all too easy for me.  
  •  Reading this made me feel so good... (none)
    That I gave everyone here a 4.  And I have the sore "mouse finger" to prove it.  I can't wait to make my first loan, haha, this is good stuff! is well known to me, they could really use the help to right now in light of all the poor families who are losing their chickens and ducks right now to bird flu concerns.

    Fringe is the new black. - Me

    by chillindame on Thu Oct 27, 2005 at 10:29:26 AM PDT

  •  What happens if the (none)
    business person defaults? I would not want Kiva to make his life even MORE difficult.

    Rather was fired because of fake memos...Bush took us to war with fake memos...?

    by mattes on Thu Oct 27, 2005 at 10:33:47 AM PDT

    •  Historically (none)
      Historically microloans are almost 100% paid back. I am sure occasionally something goes wrong, but this is a proven method of helping small businesses in poor areas.
      •  I guess I would want (none)
        some assurance that this would not hurt the poor even more if they could not pay back. Do they get charged much, what does the company itself make?

        Rather was fired because of fake memos...Bush took us to war with fake memos...?

        by mattes on Thu Oct 27, 2005 at 11:30:24 AM PDT

        [ Parent ]

        •  Varies (none)
          I participated in one microloan program that leant in Nicaragua. I made like 4% interest (at a time when interest rates were much higher than now, so it was a low rate, but still something) and the company was charging something like 8%, if I remember. The person taking the loan was thus paying far less than was norman within Nicaragua (20% or so) but both the company and the person putting up the money made some. They had a nearly 100% payback and always on time. They also kept track of the businesses they had helped and they businesses really did do well from the loans.

          Your concern is valid, but I think these things work well almost all the time. I have never heard a microloan horror story, but they may well be out there.

          By the way, most often the person taking the loan is a she and so it also helps give women more economic freedom.

        •  If you prefer, you could do this action (none)
          The Kiva site is no longer taking loans (dKos folk covered them all!) so they are recommending a tax-deductable donation to a group that works in the same area building infrastructure. That could be a wonderful complimentary action to the Kiva loans. Maybe you want to do that? It would help the same area and would not be subject to your same concerns.
  •  Three still left! (none)
    I sent them an email earlier urging them to post new ones which they've done - let's finish them off, shall we? Remember these aren't donations, they're loans so when this set pays back this money it can move on to the next project and continue to do some good in the world.

    Oh, and in case people missed Chris's update above:

    UPDATE: I just received an e-mail from Matt Flannery at Kiva, and another from one of his colleagues. They seem amazed at the number of dKOS folks who are contributing. Matt says he is "stressed out" trying to qualify and put up new businesses needing loans fast enough. Good work Kossacks.
  •  Person-to-person (none)
    Great diary!

    Apart from Kiva, are there other organizations that match donors directly to recipient groups?

  •  Love it! I'm in. N/T (none)

    Daily Kos is the worst form of liberal web-site, except for all the others that have been tried.-Roy Solomon(paraphrasing Winston Churchill)

    by roysol on Thu Oct 27, 2005 at 11:48:38 AM PDT

  •  Where besides else? (none)
    I checked the Kiva site, and while I think the work they're doing is great, other areas of the Third World besides Africa are also desperately in need of microcapital.  Are there any groups like Kiva serving Latin America?
    •  Look through the comments (none)
      Several have been mentioned. I mentioned Acction International which covers Latin America, Carribean and Africa. The process is a little more involved, though.
    •  Other organizations (none)
      I'm not personally familiar with others that match lenders directly to borrowers, or that accept investments of as little as $25, but there are several organizations that are active in the microcredit arena in Latin America (including some that also operate in Africa or other areas).  These include, in addition to Accion International, which has already been mentioned:

      Calvert Social Investment Foundation, (operated by the people who manage the Calvert socially responsible mutual funds, $1,000 minimum);

      FINCA International, (worldwide, $10,000 minimum);

      Fonkoze USA, (Haiti, $2,500 minimum);

      Nicaraguan Credit Alternatives Fund, (Nicaragua, $2,000 minimum);

      Oikocredit, (worldwide, $1,000 minimum);

      SERRV Community Investment Loan Fund, (worldwide, $1,000 minimum);

      Sostenica, (Nicaragua, $2,000 minimum)

      The above organizations all offer INVESTMENTS, and some will pay a below-market rate of interest if you wish (in the case of Oikocredit, its either 0%, 1% or 2%).  In addition, there are several other microcredit organizations that accept tax-deductible charitable donations, that then use the money from the repaid loans in order to make additional loans.

      By the way, I got the above from Co-op America Quarterly.  Co-op America is an organization "dedicated to creating a just and sustainable world by harnessing economic power for social change."

  •  People-Centered Economic Development (4.00)

    Microcredit is indeed one of the "must have" tools for poverty relief.  It's been around for about 30 years now, since Dr. Yunus made his first micro loans in Bangladesh.  Running approximately parallel, a new economics has developed and begun to emerge as a counterbalance to conventional US/Western economics.  Following a white paper to Clinton's re-election steering committee in 1996, things seemed to crystallize around the general concepts of "people-centered" economics and "social enterprise."  Since then, Yale, Stanford, Duke, Harvard (I think they're in), London School of Economics and Oxord University have established formal business programs along those lines.  Common denominator in those programs is enterprise for the purpose of social benefit rather than conventional monetary profit.  Making profit in an enterprise is a common strategy, with profits applied to social benefit under tight and transparent rules.

    Microenterprise is one of the most popular applications for social benefit.  There is no question that it works.  Loan repayment rates are consistently very high, as are business survival rates.  In one program I proposed in Russia, loan repayment and business survival (beyond the first year) are both above 98%.  That's after four years, around 10,000 loans averaging around $700 each, lifting some 50,000 people out of poverty in a city of 600,00 people.  (Bill Clinton was a key factor in helping get the program in.  In eight years in office, he never once let me down on such things.)  One thing that most people who aren't poor don't understand about very poor people: generally, they're just poor.  They're not stupid, nor are they incapable of helping themselves given only an honest opportunity to do so.  Opinions to the contrary are legion, without merit, and constitute one of the most vicious forms of prejudice and hatred.  (Not to bring a downer here, but the Bush family and most of the Republicans in US Congress are prime examples of that hatred and prejudice towards the poor.)

    Like I said, maybe I'll work up a full diary later.  The newly-emerging economics paradigm should merit a little more than a comment in one diary -- albeit an excellent diary.  In the meantime, People-Centered Economic Development has some pretty good information.  Also, Jeff Skoll's (of e-bay) Skoll Foundation has a pretty good social enterprise forum called Social Edge.


    Ignorance can be cured. Stupidity is forever, like diamonds.

    by USexpat Ukraine on Thu Oct 27, 2005 at 02:34:05 PM PDT

  •  Opportunity (none)
    Just to add one more to the mix; the organisation Opportunity International ( has a well developed network of 'trust banks'. These are groups of 10-20 people, normally women, who act as co-guarantors for each others loans. OI provides start-up capital (donated by us in the west) and training to indigenous partners who actually distribute the funds. They have an amazing track record.
  •  just joined (none)
    and made a donation to Fur Ber Fish (fish mongering company).

    I love this idea!!!

  •  Wow, (none)
    what a great idea, so refreshing given the overwhelming greed prevalent in our country.  Pretty speechless right now that there is a way to help and see the results.  Great diary, I will be loaning money too...
  •  donation: made (none)
    I had heard about microfinancing before and loved the idea.  Your diary spurred me to visited Kiva to check it out.  I ended up loaning $50.  Financially, I'm struggling right now as I look for work that (unlike teaching) will allow me to pay my bills.  But I'm not struggling so much that I can't make a microloan.  

    Thanks for your diary.  I think many entrepreneurs in need will find funding because of your words.

  •  Just gave $50 (none)
    Very cool idea.  And fun and easy in implementation.
  •  Sounds very interesting (none)
    ...but for some reason my place of employment blocks access to the domain (it happens, sometimes for reasons I can't guess), so I will have to wait until I get home to review the "investment" opportunities.  

    I do hope that they do not let donation pressures force them to grow faster than they can efficiently manage.  There are scams out there, even in third world countries, and if Kiva started skipping the reference checking, our well meaning donations will end up in the hands of greedy warlords.

  •  FINCA -- women (none)
    I am a member of FINCA, which began as "village banking" in 1984 to give micro credits mostly to women-owned businesses.

    If anybody has any of the generous spirit left, or would like to learn more, please click below.


    Why does FINCA lend primarily to women?

    For several reasons. First, the feminization of poverty is a worldwide trend. Seventy percent of the world's poor are women, largely because of factors including limited access to education or to productive resources like land and credit. Another worldwide trend is an increase in woman-headed households, in which a mother provides the sole support for her children. Most victims of severe poverty are children. According to UNICEF, at least half of the 12 million children aged five or younger who die each year, die from malnutrition associated with severe poverty. The most direct way to improve childrens' survival and welfare is to strengthen their own mothers' ability to take care of them.
    Back to Top

    How do men react to village banking groups?

    In some cultures, men initially express fear of women becoming empowered from their participation in the groups. However, after a few loan cycles, most men realize that village banking activities benefit the family as a whole, and so they support the village banking effort. In some instances, men even become partners or employees in their wives' enterprises.

    •  FINCA is an excellent program (none)
      FINCA ended up managing the Russian (Tomsk) project I proposed (see my previous message just above.)  I had to pout a bit after the first selection by US gov., a Virginia outfit whose name I won't mention.  The latter required physical collateral for loans, meaning that most poor people would be shut out of the program.  FINCA was brought in after a few months, and did a fabulous job.  The program is being replicated in Georgia (the country) now.  Similar is heading into New Ukraine (new since the democratic revolution last year), but, alaa, FINCA doesn't have any opeartions here, and haven't indicated much interest as of last time I inquired six months ago.  Pity, since the US side already approved a $40 million dollar proposal over four years to get started.  :-)


      Ignorance can be cured. Stupidity is forever, like diamonds.

      by USexpat Ukraine on Thu Oct 27, 2005 at 07:26:18 PM PDT

      [ Parent ]

  •  Thanks! (none)
    This is a great org!  I signed up & sent the link to some friends.  I love this idea.

    The future ain't what it used to be. Yogi Bera

    by x on Thu Oct 27, 2005 at 05:44:25 PM PDT

  •  This is the coolest thing I've EVER seen... (none)
    I'm going to send this info around at work...and I'm going to tell everyone about it during the holidays!

    I'm totally excited about this!

  •  There is a U.S.-based NGO doing similar work (none)
    It is called Freedom from Hunger. It ties education with lending practices to village Credit Associations. It lends only to women and educates them in practices such as infant and child feeding; management of childhood illness; HIV/AIDS prevention as well as very basic business development skills to help them manage their money, plan for business, etc.

    It currently works in Mali, Uganda, Bolivia, Ecuador, to name a few areas.

  •  Very minor point, but: yes, get the Prius (none)
    Great car, really delivers on its promises, and very well made. My wife got one and loves it. One comment: at the time you are closing the deal, they trot out some extras: one is buying a book of coupons for future maintenance--if you buy the coupons, you in effect get the maintenance at half price. Well worth it. The second is an extended warranty that, given the innovative technology and the probable replacement price of the batteries, is well worth it. The warranty is bumper-to-bumper and is transferable if you sell the car (a big plus). The guy also suggested that, a couple of months before the warranty finally expires, bring in the car in and have everything brought up to spec. The third is a five-year paint and upholstery protection. You bring the car in once a year and they totally detail it and then reapply the protection. All three seem like a good deal, but you need to be ready to pay for them. Ask the price. BTW, in California, at least, you can't be asked to pay more than MSRP, so no "scarcity" surcharge.

    Against stupidity the gods themselves contend in vain - Goethe

    by montereyham on Thu Nov 03, 2005 at 10:19:45 AM PST

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