Any Experience Doing "Micro-loans"?

[Ken H.]

I kind of like the concept, lending small amounts of money to specific 3rd-world persons, as a small way to improve their lot in life. OTOH, in that the concept is growing, there are more and more groups popping up saying they are doing it, and among them there is almost certainly those that are, at best, shall we say 'less efficient' and at worst; scams. How does one figure out which facilitator to go with?

 

Anyone dealt with any of the organizations facilitating micro-loans and if so what was your experience? Good or bad.

[David]

Ken, I don't have any experience of the third-world variety, so this may not be much help to you, but I did throw some seed money at http://www.prosper.com, and it wasn't a good experience.

 

Largely, I think, because of the anonymity of the medium. My guess is that micro-loans in third world environments will be most effective if they are more local to THAT environment, where community influences can keep people on track. That would help filter the requests and encourage payback.

 

The idea is intriguing to me. I'll be interested to see what you find. In Guatemala, I've seen the direct results (not back office operations) of these things, and everything I've seen is good. For instance, helping a farmer be more productive. A lot of that is happening in and around Quetzaltenango.

[Ken H.]

Well after some research we’ve decided to invest in kiva.org. They seem to have a good list of supporters, appear well organized, are forthright about the risk, and seem to have a good rating & tracking system of their field partners ( the organizations in the developing countries).

 

They were recently profiled positively at INC.com, The Christian Science Monitor, are listed with the UNCDF, and I couldn’t really find any bad publicity about them.

 

I think we will start out small, maybe $250 or so, and see what happens for a year. This should be interesting and fun!