Socially Responsible Investing:

Socially responsible investing is much the same as peer-to-peer lending, but there is one added component; the investment made by a "lender" is to an individual or business that makes it their business to provide products and/or services that are not harmful to the environment or promote health and well-being of all living things. In other words, it is a way for an investor to earn a yield while making morally acceptable investments.

A large portion of socially responsible investors avoid "sin" investments in companies that manufacture alcohol, tobacco, and gambling and other investors add to their list of morally unacceptable investments, the military, weapons, ammunition, and abortion. It is important to remember that the company investors choose not to invest in is a personal choice based upon the individual's moral beliefs.

More and more investors are turning to these types of investments in order to not only earn that yield that they are seeking, but to feel good about what they are investing in, but how do investors find these loans or investments?

There are several places on the internet where investors can go to find precisely the investment that they are looking for. Kiva.org, is one of the highest rated social responsible investment websites and is the first micro-lending site that helps to connect investors to unique entrepreneurs around the globe. Here is how Kiva.org works:

Micro-lending institutions from around the world, also called "field partners", make a micro-loan to entrepreneurs to help either get their business started or help them with business operating costs. The field partner then uploads the entrepreneur's picture and story onto the Kiva.org lending site. Investors or "lenders" then browse through the site and choose the business or businesses that they wish to invest in.

With as little as $25, the investor joins other lenders to help fund the loan; essentially it is a type of loan guarantee to the field partners. Kiva.org then requires the field partner to report, once a month, all funds that they have received from the entrepreneur for loan repayment. If the amount is less than what lenders have invested, the field partner is then billed for the difference and has 30 days to repay the amount due for that particular payment cycle. Once received, the money is credited to the investor's account. If the amount is more than what lenders have invested, the money is immediately distributed to the investors.

One of the main questions that new investor have is "What will the return on my investment amount to"? Unlike many high risk investments, it is easier to ascertain what the market will bring with it to the peer-to-peer view. According to the Micro Banking Bulletin, the average return on this type of investment is 5.5%, which compares favorably to the commercial lending institution's returns.

These types of investments can be narrowed down to three excellent reasons why anyone could and should choose to get involved:

1. Investors choose their investments based on the knowledge given to them by the micro-lending institutions that have the most to lose. These lending institutions give the pertinent information to investors via an information website that acts as the go-between for the interested parties.

2. Investors can choose their investments based upon factors that they see as geared to their values and beliefs. For instance; an investor may see taking a dent out of world poverty as a morally defining issue. The investor can then choose an entrepreneur to invest in based upon their goals.

3. Investors can see a day-to-day report of how the funding is being used as well as when the entrepreneur makes their scheduled payments. Investors will also see, on a daily basis, reports on their returns.

Socially responsible investing via the micro-lending world opened up by the internet, makes this type of investing a more stable and lower risk avenue. There are several of these organizations that can match up investors with entrepreneurs. Please check out these websites thoroughly before making the decision to invest with any of them:

www.kiva.org

www.prosper.com

www.lendingclub.com

As of the creation of this article, it has been brought to our attention that a large number of Kiva.org entrepreneurial borrowers were affected by the 8.3 magnitude earthquake and following tsunami in Samoa, American Samoa, and Tonga. Many of these borrowers lost their businesses, homes and personal effects. Please log on to www.kiva.org to learn more about how you can do your part to help these entrepreneurs that are so desperately in need of help.