The financial crisis in world markets over the past few weeks has been a real eye-opener, but even those of us who have seen our stock portfolios decline by 30 percent or more don’t have much to complain about. It could be worse. It could be a lot worse. A third of the world’s population lives in poverty, and 20 percent lives in extreme poverty, meaning they are always hungry.
What can you do? How about making a microloan of a $20, $50, or $100 to an entrepreneur in a poor country? Today is Blog Action Day, with blogs around the world making a concerted effort to raise awareness about global poverty and ways to fight it. What we’ve decided to do is to start a TechCrunch lending team at Kiva.org. Anyone can join.
Kiva matches entrepreneurs in poor countries with lenders in rich ones. You can choose whichever project/business you want to fund (much like DonorsChoose, another charity we encourage you to support, lets you fund specific school projects here in the U.S.). For instance, this grocery owner in Kabul needs only $50 to complete a $1,075 loan to buy inventory for a year or this furniture maker who needs $350 to complete his loan. Little actions can build up quickly through sites like Kiva.
You might also want to check out MicroPlace (another microloan site) and aGoodCause (which lets you raise money for charity while you shop). For those who want to spread the message about their own cause through their social networks, Change.org and Causecast are great places to start.
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Tips are down. Charities are down. I’m not sure microloan is effective in this tiring economy as people are more interested in hoarding cash to weather the financial storm. Due to the credit crisis, people won’t have much to save either because they have to pay back their bills. The government can’t help much either because the debt is too high.
What to do? The free market states clearly that there will be casualty as it makes its transition to economic growth and equality. The self-interest of man will take precedent.
I think we ought to keep things in perspective. The world is not going under, and unless you lost your money on the stock market, I am sure everyone has enough cash to lend someone $25 (e.g. on Kiva). It is less then dinning out once a month, so just by staying in and saving the money, you can help change someone’s life. Also, knowing you are helping someone is a fantastic feeling.
I’ve always been interested in helping out Kiva (which seems like such a great organization) and will commit today to make it happen. True about how little $25 ultimately is…and important to remember that cash works best when it flows THROUGH the system…and around the world in this case.
Bravo to TC for using your authority to support charities & worthwhile organizations.
Thanks for taking time to encourage giving, some of your past sins are forgiven.
One note: Kiva is a non-profit.
Microplace is owned by eBay.
I use Kiva and like it alot; I distrust anything ebay.
If Microplace gets popular, eBay probably start charging high fees
We mentioned Kiva for our Blog Action Day post as well. We didn’t include MicroPlace as they support interest, which is forbidden in Islam.
http://islamcrunch.com/archive.....ctober-15/
I have been using KIVA for some time now, great idea, great service. All of my money goes directly to the end user, and assuming they repay, it all comes back to me, and I can lend it out again.
Make one quick loan today, you will be hooked.
Keith,
You are abseloutly right. This is not about charity, it is about helping someone make a living or help develop his business. My hope is that he can grow a sustainable business, and in the best case, even create jobs. Best of all, these people don’t feel like charity cases, they know they have to work hard to pay back the money. Having started several companies, I know what a difference that can make, not only to your self-esteem, but also to your work effort. Plus, knowing that others believe in you is a fantastic feeling. If lending money for such a case is not worth it, I don’t know what is. So to anyone: next time you sit in that fancy bar, why not have one less cocktail, and use that money to fund a project or donate to a charity.
@liem — you’re right that it’s bad, and *many* people will panic and stop doing anything charitable at all.
But not all! And that’s why any chance to inform people that sites like Kiva et al. exist is a good one. Some people will still do The Right Thing(TM).
rang de (http://www.rangde.org) is another great social startup which contributes to causes in India - very similar to Kiva.
Check out their video here: http://vimeo.com/1860316
I have been using Kiva for some time now. And it is a different feeling when you see the entrepreneur actually make something of that loan and then return the money back to you.
Kiva looks good, i might try it myself. although eliminating poverty is way beyond my dreams but in my small contribution i might be able to help it reduced
Haha, yeah, thats exactly what the struggling third world needs - a fast-track route to having a boom-bust credit-driven economy Just Like Ours. How massively patronising.
We’re on the same page: http://www.maxgladwell.com/200.....f-poverty/
The Kiva B4B credit card helps you to leverage those loans: http://www.b4bcommunity.org.
Peer to peer funding is definitely the future.
The Internet allows to get rid of a world way too stuck with massive institutions which are disconnected from their initial purpose.
It stands for the music industry, software providers, media, and now investment banks.
On the same trend:
http://GetYourMoneyBackInvestInAStartup.com
http://MakeOrFund.com
@liem. We’re talking about micro-loans, not angel investing. Micro. Donating $25, ie the cost of a meal, or $50 isn’t too much to sacrifice. Considering these are loans that are usually paid back, that meal would cause you more heartburn than the thought of temporarily losing $25. Not to mention that terrible thought of knowing you may have just saved a families life. Kiva is awesome. Everyone should try it at least once.
We’re not that bad off, even in this tiring economy. If we were, everyone would be trying to figure out how they could eat their iPhones. In times like this, it would be good for Americans to turn to the needs of others. To realize how much we do have, how much we waste, and realize we have a lot to give. It literally saves lives.
Many of those who cry now that the economy is bad did not donate money when time was good as well.
Also, Kiva is not charity. It is micro loans.
And people that get the loans do pay back.
And when they pay back you can re-loan it immediately and help more people.
With $350 I gave loans in about $600 this far and I know hard working people are making much better use of it than I would do.
Kiva.org is the most exciting idea I saw this far on the web.
Glad to see your article about poverty. I also did one. See http://spiritualbeing.wordpres.....an-rights/. There are many ways to help those in the poverty band and no matter how it gets done, I think we all share a responsibility and must do something within our means to help our fellow man.
Good cause, we here in America have good compared to some in the Third world countries.
http://gatesandjobs.blogspot.com/
Small gestures are sometimes the most rewarding. I’ve been grumbling about the government bailing out banks. But, when Bank of America was included, i remembered that its founder started out making 20 dollar loans from his small savings during the depression when all of the banks closed. He never lost a dime of it.
I’ve been lending through and promoting KIVA.org for over a year. This is an AWESOME gift to give a kid for the holidays. They experience the reward of giving. A good opportunity to make a difference… not only today (in the life of the recipient) but ALSO in the life of a member of the next generation! Be the change.
First, i contribute to kiva.
Second,
I have a question. Do these people are below poverty line? I doubt it.
Because people below poverty line have hard time getting money to eat.
These are entrepreneurs.
What i can think is, they are little above poverty line, if they don’t give this chance they will be dumped into poverty. And another aspect is, they may give
work to others.
It’s great to see TC supporting Kiva. Just gave another loan.
Smile! Gerrit - We speak Online.
MaxGladwell refers to it above, but it’s worth another mention. The KivaB4B Project empowers Kiva lenders to double the impact of Kiva loans. They also have a unique affiliate program (http://b4bcommunity.org/2008/08/the-kiva-affiliate-program-hel.html). Kiva gets a donation and bloggers can make some money while promoting a very cool program.
Kiva is a great organization, but it also raises a deeper issue. For people interested in how major social problems like healthcare, education, poverty can ultimately be addressed, contributing directly financially is only a part of what people can do. Finding ways to recycle wasted resources is another– but the number of different kinds of resources we waste is consistently under-estimated. Volunteers can help do many ways for the world, but while a lawyer may work pro bono on a case, most other professions most of the time don’t currently broadly engage in voluntary operations that make full use of their training, skills and capacities. As a result, there is absolutely massive “under-employment” in the voluntary sector (”so your an engineer, here is a soup spoon if you want to help”). Joe Stiglitz confirmed to me in person that under-employment in the voluntary sector has never been measured. This is the great “dark matter” of the volunteer economy. Kiva is a terrific first step, but we have much further to go if we are to draw upon the full talents of folks in developed countries to help folks in developing nations.
-Bobby Fishkin
CEO reframeit.com
Thanks for helping bring attention in the right context– what we can do to change the nature of the game. Rather than handouts, which support the current cycle and do not offer platforms for change, opportunities to make a difference and fundamentally change the game can help fight poverty at its roots. I will be blogging more about this, and other aspects of poverty at 2:00 pm CST today (http://nitkapedia.blogspot.com) as part of my contribution to this important topic.
I used them all but I find Microplace to be best for me. I like the fact that they are an eBay company and actually issue security with real yet modest returns. I do like Kiva’s community feel and the fact that it gives me the impression that I am connecting directly to the lender amd I can invest with very small amounts. You can’t go wrong with microlending. It is all for a great cause.
go Kiva! go TechCrunch!
great post Erick… thanks for helping out Kiva
for more about Kiva, also check out the Kiva Chronicles on Social Edge:
http://www.socialedge.org/blogs/kiva-chronicles
also, here’s a presentation on Kiva from Premal Shah’s presentation (also on SlideShare) at the Silicon Valley Microfinance Network last year:
http://svmn.net/2007/09/12/kiva-prosper-recap/
We at TechnoServe share the same belief. Empowering entrepreneurs in the world’s poorest regions during this financial crisis will help establish, grow and maintain their local economies. A hand up rather than a handout will break the cycle of poverty and create a long-lasting positive impact on people’s lives.
-Bruce McNamer, CEO, TechnoServe
A great organization who Pioneered micro-finance, and thus have the longest track record, are Opportunity International: http://opportunity.org
They do great work in many developing countries.
Microcredit is absolutely changing lives and providing options for the poor where few options previously existed. Kiva made an important first step in bringing the idea/practice of microfinance to the general public and generating a personal connection via philanthropic giving.
However, microcredit’s primary metric is too often focused on ‘loan repayment rates,’ rather than ‘are the poor truly lifting themselves, their families and communities out of poverty?” (many microcredit recipients pay off loans, yet can’t afford medical care or the fees for sending their kids to school, which is vital for breaking the cycle of poverty)
It’s important to remember that nobody is inherently knowledgeble about running a business–either in the US or abroad. Nor is everyone ‘meant’ to be an entrepreneur. Many poor people would rather have a steady, well-paying job but opt for microenterprise as a default choice. It’s important to keep a full spectrum perspective and to see microcredit as an important tool for poverty alleviation, which requires a complex and multifaceted approach.
The next wave of innovation in poverty alleviation should include entrepreneurship/business training tailored to poor entrepreneurs that enable them to boost profits, scale their businesses, create jobs and help poor communities grow their local economies. The poor also need financial literacy training, affordable health insurance, and business mentoring — much like their first world counterparts — if the promise of poverty alleviation via microcredit is to reach it’s full potential.
i love kiva.
am currently unable to make a donation though, so i put up its banner on my blog, as well as that of freerice (rice donation via gameplay) and goodsearch (donation per search).
saw this post via the blog action day site. it’s great that you’re participating.
It’s fantastic to talk about poverty for a day, but it’s even better to think about it every day. Every time you enjoy a $3 coffee drink, realize that a $25 loan to an entrepreneur in a country where the average daily wage is $1 is a wonderful thing.
Kudos to http://kiva.org for making it so easy to help people all over the planet you share with them. Dignity is a wonderful gift. Our loans bring multiple benefits to entire families and their communities.
I have made it a point to continue my kiva.org support for nearly two years, adding a loan for every $25 that comes in through my online conferences. There is a great site that shows the Kiva spirit, http://kivafriends.org
Keep these thoughts with you daily, not just on a single blog post.
I think that assisting 3rd world entrepreneurs, but what about microloans to entrepreneurs here in the USA? Loans for $10,000 to $50,000 granted, it is the USA and chances are people will NOT get paid back, but I really think that all efforts for fund raising should be allocated here for companies like mine that could greatly benefit from them. Just a thought. Because small businesses are hurting here. Please understand that I am not an isolationist, but I do thinkwe need to focus here.
Let me start out by stating, that I truly fancy both Kiva and Microplace!
Below is my viewpoint on Meso-finance and how we (I am Co-founder of MYC4*) deal with this crucial lever in development, here goes:
“Market gap: the missing middle”
Despite its limitations, microfinance in Africa is growing rapidly and offers significant potential for the poorest of the working poor. As is the case with entrepreneurship, most businesses in Africa are initially funded by money from friends and family. Once they start to show some success, microfinance institutions may be an option for some growth capital, typically to finance working capital such as stock. For those who do not have access to fair microfinance institutions, loan sharks are a common source of funding, often triggering a new cycle of poverty driven by perpetual debt. For those lucky few that are able to grow their businesses beyond the start-up phase, few – if any – real financing options exist to scale the business to the next level. Indeed, most microfinance institutions cap their maximum loan sizes to EUR 2,000 or less. Even the largest MFIs rarely lend more than EUR 10,000 leaving most established SMEs with no real market options for funds to grow their businesses further.
This is where MYC4 is already having the greatest impact. The primary reasons why MFIs do not make loans of these sizes have to do with regulatory or operational limitations, typically related to concentration of risk and limited share capital. However, because MYC4 loans represent a distributed risk to investors, and because the loans are made off balance sheet by the local MFIs or banks, these SMEs no longer need to be excluded from the financial sector, and their growth can thus be financed successfully through MYC4. The same financial institutions which were forced to turn them away previously can now act as a pass-through for MYC4 funds, and successful entrepreneurs need no longer be turned away.
As many of these are businesses with proven track records and a prior history of borrowing, credit risk may in fact be lower than with typical microfinance loans. What’s more, as this is a glaring gap in the market due to friction in financial sector regulations and capitalisation, MYC4 can operate comfortably in this space in all countries, working through existing leading financial institutions, without disrupting or distorting markets in a negative way. The unbanked, defined here as successful entrepreneurs “stuck in the middle”, too large for MFIs and too small for banks, can now be reached and financed through MYC4, earning investors a fair return, becoming the engine of growth they are known to be, creating jobs and generating profits and tax revenues for local governments.
See you on http://www.myc4.com
*) By focusing on the power of business as the driving force to end poverty, MYC4 provides investors with a dynamic platform to create and support new enterprise and commercial innovation in Africa. MYC4 sources financing for the ‘unfundable’, bringing people together in business deals at the best market price with the Internet acting as a catalyst for change.
MYC4 is striving to become a universal platform that unites capital, people and knowledge in a common pursuit of promoting sustainable businesses in Africa.
The goal of MYC4 is to become the first company in the world to be owned by the world. In essence this would mean 6.6 billion shareholders. By the end of 2008, MYC4 aims to reach 25,000 investors and facilitate investments of EUR 12.5 million in more than 5,000 African businesses. Goals for 2009 are 100,000 investors and EUR 100 million.
Your are great people!! this idea is incredible but I think that plus the money is important to give training, in that way the entrepreneurs from here will prosper trough the time, we will have a vision of invest the money with wisdom and understanding of the market. I think that Money plus knowledge it is a lasting helps. From Argentina.
Just wanted to say I’m really proud of everything you’re doing.
Here is the video I did for the young lions competition in hopes of encouraging people to add their names and help Oxfam by joining the movement to encourage world leaders to vote for change at the summit in Copenhagen in December.
Hope you enjoy!
http://www.youtube.com/watch?v=xJ0nlJ9Ythc