Proving that microloans can help to change the world one little bit at a time, Kiva.org hit a major milestone today. Since it’s founding four years ago, it has now made possible $100 million in microloans between individual lenders and entrepreneurs all around the world. The company has brought together 573,000 lenders (people like you and me putting in $25 or more towards a specific project), and 239,000 entrepreneurs.

Most of the entrepreneurs who benefit are in developing countries, but Kiva opened up its service to needy U.S. entrepreneurs last summer (which caused some controversy, but was the right decision). It also has APIs for other developers to build on its data set.

Kiva creates a personal connection between lenders and recipients. Each entrepreneur has a profile page with a picture and description of what they plan to do with the loan. Then every month you get an update on how much of the loan has been repaid. For instance, I joined other Kiva donors to give this furniture maker in Afghanistan a $1,075 loan a year ago. So far, he’s paid back 61% of the loan without ever missing a payment.

You can also create lending teams on Kiva. So far the 40 people on the TechCrunch team (join here) have loaned out $5,225 spread across 183 loans.

Once a loan is repaid, you can plow it back into another loan. I think of it as charitable giving, although it is not technically a charity. But the best form of charity is to help people help themselves . . . teach a man to fish and all that.

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I don’t have comparable data to back it up, but anecdotally it seems the Web 2.0 generation is doing a better job at giving. Or at least Bebo founder Michael Birch is.

Birch has spent the last six months working with a team of two other people to build a social giving site for the popular organization, Charity:Water. It launched its beta site today, and with just a Tweet announcing it nearly 400 members have already raised some $3,000.

Charity:Water’s accountability and simplicity of purpose has made it a popular charity in New York, Hollywood and increasingly the Valley.  Here’s the value proposition: One-out-of-six-people on the planet doesn’t have access to clean drinking water. $5,000 buys an African village a well. Every dime you donate, goes to these wells. You can even watch the wells being tapped for the first time via Web video. The non-profit is turning three in a few weeks, and it’s raised more than $10 million over that time—much of it in $20 increments from a base of some 60,000 donors. It was Obama-fundraising-math before that was invented. As a result some 700,000 people in the world now have access to clean drinking water.

It was all started three years ago when Scott Harrison, reformed bad boy and Charity:Water founder, asked people to come to a huge New York party for his September birthday and donate $20 at the door instead of giving him a gift. He raised $15,000 and built six wells in Uganda. (They were cheaper than the wells Charity:Water usually builds because three were shallow wells and three were rehabs of existing wells.) Like any great accidental entrepreneur, Harrison knew he was on to something.

In addition to all kinds of creative fund raising, detailed in the video below, the following year, Harrison opened his birthday to everyone via the Web, asking them to donate $32 dollars, since it was his 32 birthday. That year, he raised $59,000 and other September birthday babies brought the total to $150,000, which went to wells in Kenya. Not bad, but they had to HTML hand-code each participant’s site. Pretty laborious work for a small non-profit.

The next year he got more September babies to “give up” their birthdays, and a company called InspEnv.com built them a site, but it wasn’t hugely social or scalable. Still 800 people “gave up” their birthdays and raised some $965,000 dollars to bring some 50,000 people clean water in Ethiopia.

But Harrison knew that the value of a lot of micro-giving campaigns like Kiva and the popular Facebook application, Causes, is rooted in the ability to make small donations super-easy to solicit and to make via existing online social graphs. He was trying to figure out sites that knew when a huge number of people’s birthdays were and after MySpace and Facebook, he came across Bebo. Early last year, he cold-emailed Bebo founder Michael Birch to ask if he’d be willing to send a note out to his September born users and Birch wrote back that it was “a bad time.” It was actually a great time for Birch—he was selling the company to AOL for $850 million.

Once the deal was done, Birch called Harrison and suggested he build him a site that could help people born in any month instantly “give up their birthdays” for Charity:Water’s mission. It was fitting since Birch’s next project was his pre-Bebo project, a site called Birthday Alarm. Nine months later, Harrison is about to turn 34, Charity:Water is turning three, and Birch has finished the site. For a free project, it’s a pretty nice looking site.

The recession makes this perfect timing. If you’re panicked about money and job loss, giving up your birthday is an easy way to give to those less-fortunate without having to spend a dime yourself. My husband has a September birthday and has already signed up. I plan to sign up for my birthday in December. You can create your own campaign in a matter of moments and with a few clicks, share it via all your existing social networks.

I’m sure the coders who were up until 4 a.m. last night will have mixed feelings about this, but this is one time I really want to see TechCrunch users break a beta site.

[Photo credit: Scott Harrison]

The story of charity: water – The 2009 September Campaign Trailer from charity: water on Vimeo.

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When we reported on Kiva.org’s decision to open up its micro-lending platform to U.S. entrepreneurs, Kiva CEO Premal Shah told us he was concerned about backlash in the community. Shah acknowledged that the decision to open lending to U.S. recipients may draw criticism because it goes against the idea on which Kiva was founded—lending to help development in third world countries where credit options are limited.

It looks like Shah’s prediction was correct. There is now a lending team on Kiva’s community platform titled “Unhappy Kiva Lenders.” The members, which total 375 lenders from around the world, are angry that Kiva is extending loans to U.S. entrepreneurs. The team’s page states that “including borrowers from the USA has undermined the very core of what made [Kiva] so unique and special; small, impactful contributions to entrepreneurs in impoverished situations in developing countries.”

The tirade on the page is harsh, calling the decision “shameful and disgraceful” and a deviation from Kiva’s core mission. The group cites an example of a recent Kiva loan request from a U.S. entrepreneur who had a college degree and a career in architecture who wanted to start a business in website design. The loan he requested was for $7000 to start the business, an amount the lenders suggest could help 7 to 10 different borrowers in other parts of the world.

Kiva’s stated mission is “to connect people through lending for the sake of alleviating poverty.” The anti-U.S. lenders claim that lending to U.S. entrepreneurs doesn’t alleviate poverty because Americans aren’t living in true poverty, compared to people in underdeveloped countries.

**US borrowers do not have to pay to send their kids to elementary school. **They don’t have to build their own house. **They don’t have to walk miles to get the bare minimum of medical care….if needed they can access FREE, generally high quality medical care. **They have a system of laws and courts in place that work. **They enjoy police and fire protection. **They generally have access to inexpensive and dependable public transportation. **They take for granted electricity, clean water, inspected food and indoor toilets. **

Some of that may be true. On the other hand, Shah makes a compelling case for the need for a micro-lending platform in the U.S. He says more than 10 million U.S. business owners face difficulty obtaining capital—even before the credit crisis and economic slowdown which made lending tight. And there’s no doubt that with the credit crunch creating a drought of lending, small businesses in the U.S. are finding it tough to find funds, especially if their financial history isn’t stellar. Finally, there is nothing wrong with giving U.S. lenders the opportunity to boost entrepreneurship at home, especially at a time where jobs created by small businesses can help lift the economy out of a recession.

It seems to me like the angry protests are misdirected. Kiva’s lending program has long been hailed as one of the more innovative platforms on the web and its ambitions have always been towards helping foster entrepreneurship (as well as alleviating poverty) in various areas of the world. Kiva’s decision to offer microlending to U.S. entrepreneurs reflects a genuine need for additional lending in the U.S. economy. And who knows? Kiva’s policy may attract a new crop of lenders who want to help at home first, and once they get hooked, spread capital overseas as well. The more capital that goes into the Kiva system, the more chance borrowers everywhere will have to eventually tap into it because many Kiva lenders simply recycle their loans as they are paid back.

We’ve contacted Kiva.org for a formal response.

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The financial crisis has made a lasting impact on small businesses around the world and here at home in the United States. With the credit crunch creating a virtual standstill of lending, small businesses in the U.S. are facing an uphill battle to find funds, especially if their financial history isn’t stellar. Kiva.org, one of the web’s most interesting innovators in the micro-lending space, is hoping to come to the aid of U.S. entrepreneurs and small businesses by launching a pilot expansion that would allow individuals anywhere to make small loans to low-income U.S. entrepreneurs through Kiva’s platform.

Kiva is a peer-to-peer lending site that facilitates micropayment loans between citizen lenders and extremely low-income entrepreneurs in developing countries. Through Kiva’s platform, anyone can loan $25 or more to support an entrepreneur and the specific progress of the loan can be tracked from initial funding to repayment. Upon receiving repayment, lenders can withdraw their funds from Kiva or lend again to another entrepreneur, thereby continuing the lending cycle.

In April alone, Kiva members loaned $4.5 million to entrepreneurs, a 56 percent year-over-year increase and a record month for Kiva. Since the microfinance platform’s birth in 2005, over $75 million has been loaned through Kiva.org to support more than 180,000 individuals from 44 developing countries. Kiva’s president, Premal Shah, says this new initiative to include U.S. businesses increasingly made sense as the financial markets deteriorated and traditional lending began to dry up even in the U.S.

According to Kiva, small businesses represent more than 87 percent of all businesses in the United States, and, on average, these micro-enterprises are responsible for 900,000 new jobs created per year according to the Association for Enterprise Opportunity. This number seems small to me but the impact of small businesses on job creation is clear. To make matters worse, Kiva says more than 10 million business owners faced difficulty obtaining capital—even before the credit crisis and economic slowdown.

Kiva will launch today with the ability to for anyone to make loans to 45 small businesses and entrepreneurs seeking funding from the areas of New York, San Francisco, Boston, Atlanta and Miami. The businesses range in purpose and services, from salons to landscaping to day care facilities. For example, a Queens, NY-based entrepreneur delivers baked goods to bodegas in New York. He is looking to raise $6000 to fund insulation technology for his trucks.

Shah tells us that the idea was first introduced by California’s first lady and journalist, Maria Shriver, when she visited Kiva’s office last year. She asked if Kiva’s model could be replicated domestically to support low-income entrepreneurs in the United States. Shah said that initially he wasn’t sure if lending within the U.S. fit into Kiva’s model of international development. But following the recession, the organization realized the opportunity and need to provide community driven, low-cost capital for the everyday small business owner in the U.S.

Traditionally, Kiva uses partner microfinance programs, called a “Field Partners,” to evaluate whether businesses and entrepreneurs are eligible for Kiva’s platform. Field partners looks at a variety of factors in businesses, including past loan history, village or group reputation, and feasibility of business idea and then facilitates the loan transactions between Kiva and the microenterprise. In the US, Kiva will be partnering with ACCION USA, microfinance institution that lends to 48 states across the U.S., and Opportunity Fund, a community development financial institution based in San Jose, CA.

But P2P lending to U.S. businesses has proven to be controversial in the past. Prosper, a US peer-to-peer lender stopped all new lending on its site because of scrutiny by the SEC. Prosper, which is currently back online, agreed to register under the Securities Act, a process which took months. Since Prosper is a seller of investment, the organization had to be registered with the SEC, according to securities laws in the U.S. Loanio and Lending Club also faced similar problems in P2P lending initiatives.

Shah says that Kiva differs from P2P lending sites like with Kiva, you can’t earn a rate of return. The best you can do is get your money back at 0% interest – like lending to a friend. Shah maintains that a key factor for the SEC to determine is whether the organization is offering a ’security’ — where there is an opportunity to earn a rate of return. Since Kiva’s loans to the working poor at 0% interest are clearly charitable in nature, Shah says that registration with the SEC is not required.

One of the compelling parts of the new program is the ability for lenders in other countries to lend entrepreneurs in the U.S., making Kiva the enabler of economic development throughout in both developed and underdeveloped countries. Kiva has also signed up celebs to take part in the new initiative. Apparently, actor Tom Hanks will be lending to a U.S micro business and investor Warren Buffet has been asked to contribute to the new project as well.

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Last night we released the finalist names for the Crunchies Awards. Vote here for who you think should win. We’ve set up a site that is pretty self-explanatory, with all of the names of each finalist for every category, along with links to their Websites and Crunchbase profiles where you can learn more about each one before voting. The Crunchies represents the best the Web had to offer in 2008, and you get to help choose who will win. Below is a voter’s guide for two of the major categories to get you started.

Best Overall
Amazon Web Services
Facebook
Android
hulu
Twitter

Best Overall is the big prize. Amazon Web Services makes it as a finalist this year because of the sheer number of startups that are built on top of its cloud computing infrastructure. Facebook won last year, but makes a return as a nominee due to popular demand. Facebook continued to gain massive mainstream adoption in 2008 (with 140 million members now) and launched some major initiatives to extend its social computing platform beyond its site, most notably Facebook Connect (which by itself is a finalist for Best Technology Innovation, going up against Google Friend Connect). But does Facebook deserve to win again?

This was also the year that Google launched its Android phone, bringing the unadulterated Web to mobile devices beyond the iPhone (which won Best Gadget last year for its 2G version). Hulu emerged as a rarity in the Web video world, a popular site with a serious revenue model. And Twitter broke out as the service everyone can’t stop talking (or Tweeting) about. As with any new communication technology, people keep finding novel ways to use Twitter’s public instant-messaging service.

Best New Startup of 2008
Dropbox
FriendFeed
GoodGuide
Tapulous
Topspin Media
Yammer

This category recognizes the best startup to launch publicly in 2008. Dropbox makes it dead-simple to transfer files between computers. It creates a Dropbox folder on your computer that you just drag files into, and then they become available to anyone else with access to that folder. FriendFeed sparked the whole lifestreaming movement this year, and kept adding improvements that makes it easier to filter the Web through the actions of everyone in your various social networks. GoodGuide has created an impressive product database (and iPhone app) that tells you at a glance how green or safe that baby cream or toy is that you just put in your shopping cart.

Tapulous created some of the most popular iPhone apps with Tap Tap Revenge, Tap Tap Dance, and Twinkle (a Twitter client, of course), despite some internal turmoil. Topspin Media, founded by former Yahoo Music chief Ian Rogers, is trying to help bring the music industry into the 21st Century by embracing the Internet as a marketing vehicle instead of a necessary evil. And Yammer is an enterprise version of Twitter which won the top prize at this year’s TechCrunch50.

Here are the finalists for some of the other categories. To see a complete list, go to the Crunchies site and vote for who you think should win. Voting ends January 5.

Best Technology Innovation
Facebook Connect
Google Friend Connect
Google Chrome
Windows Live Mesh
Swype
Yahoo BOSS

Best New Gadget
Android G1
Asus 1000 Netbook Computer
Flip MinoHD video camera
iPhone 3G
SlingCatcher

Best App
Get Satisfaction
Google Reader
Minted
meebo
MySpace Music
Yelp

Best Mobile App
Google Mobile (for iPhone)
Imeem Mobile (for Android)
Pandora Radio (for iPhone)
rolando (for iPhone)
ShopSavvy (for Android)
Ocarina (for iPhone)

Most Likely To Make the World a Better Place
Akoha
Better Place
Causes
CO2Stats
GoodGuide
Kiva

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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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Prosper is about to get a lot more competition. After more than a year of waiting, UK-based Zopa got the go-ahead from regulators to launch its U.S. Website last week. Zopa, which doesn’t allow sub-prime loans at all, has a 0.1% default rate, whereas Prosper has a 3 percent default rate.

And Lending Club, which started as a Facebook-only application, just got clearance today to operate nationwide. (It had been awaiting approval from half a dozen states, including big ones like California, Michigan, Illinois, and Pennsylvania). Lending Club launched six months ago on Facebook, and opened up its own Website three months ago. In that time, its members have issued 489 loans worth $3.5 million. Of that amount, only $16,000 worth are between 16 and 30 days late on payments (see stats here). It also does not allow sub-prime loans.

Lending Club’s loan portfolio is too small and its loans have been out too short a time to really know what its average default rate will be. But if it can match its larger competitors, it should do fine. Social lending is here to stay.

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Similar to other P2P lending sites (Prosper, Zopa, Kiva), LendingClub matches borrowers and lenders. However, LendingClub doesn’t work through their own website, but solely through Facebook on the application they launched at the F8 platform launch conference. Borrows and lenders a linked up using their “LendingMatch” system, which recommends loans based on credit and their social relationships to each other. The idea being that trusted relationships make lending more likely and defaults less likely. The application currently has over 13,000 installs.

Unlike Prosper, interest rates aren’t determined through bidding, but calculated based on the borrowers credit score, debt to income ratio, and amount of the loan. There are no hidden fees, and the interest rate is fixed for three years. In July the service surpassed $500K in loans. They recently claimed a little more than 4 out of 5 loans get funded and haven’t reported any defaults or late payments.

It’s still the early days for this industry, and as TC commenters point out, it’s very much a case of Caveat Emptor.

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