Kiva.org: Change a Life for Only $25

It doesn't seem possible, but it's true. For less than the cost of a meal out, you can directly help an entrepreneur in a developing nation.

Here's how it works: On the homepage are descriptions of individuals who are seeking funding for their businesses. You can see how much money the person is asking for, what they plan to do with it, and the repayment rate of the loan. Each entrepreneur works through a Field Partner- essentially a microfinance institution. Field partners are rated from 1-5 stars based on the risks and repayment rates of their loans. Once you've selected an entrepreneur to help, the loan is made through Paypal using a credit card. Once a loan is fully funded, the field partners give the money to the entrepreneur. Over time, the entrepreneur repays the loan and the money is returned to the lender who can then withdraw the money or loan it out again.

Kiva.org is the brainchild of Matt and Jessica Flannery. They conceived the idea during a 2004 visit to Africa where they realized how much could be accomplished with relatively small amounts of money. After a time of research and resource gathering, Kiva launched in March 2005 with loans for seven small businesses in Uganda. Since then, Kiva has loaned out over $11 million and claims a 99% repayment rate. Currently, lenders do not earn interest on their loans, although Kiva is working on making this an option. The website has recently seen a major surge in popularity after appearances on The Today Show and Oprah, and they are working hard to get even more businesses on their website.

One of the qualities that has made Kiva so popular is dedication to transparency in their business workings. Potential lenders can research each field partner and learn about the organization's mission, history, delinquency rate, and interest charges. Each entrepreneur has a page with his or her story, business plan, and repayment history. Lenders receive updates on how the business is progressing. There is a detailed page on risk assessment and due diligence. Kiva is very proud of the fact that 100% of the money that is collected for loans goes directly to the entrepreneurs. Field partners are self-sufficient organizations who are free to charge interest, but they charge far below the going rates for their area. It is interesting to note that Kiva has the only fee-free Paypal account in existence, which helps to keep their operating costs down. The Kiva staff is paid mostly through donations and corporate sponsors, and is currently self-sufficient.

Overall, Kiva is a website that has its heart in the right place, and the connections to make things happen. I'm currently lending money to a Peruvian mother of three who wants to expand the local grocery store that she runs. So go ahead. Check it out and change a life.