Brain Handles

Recently, I was catching up on Aaron Dragushan's blog, Ice Cream For Everyone and read his post about kiva.org.

Kiva is a micro-lending collective where you can invest small amounts in interest free loans given to people in developing economies to help start or expand a business. They're usually just a few hundred dollars and have a very high pay-back rate. So the risk of losing your money is low, and the charitable sacrifice is not the money itself, but the interest you might have otherwise earned with it.

It's a very cool premise, but one point Aaron brought up sparked a memory in my head. He was talking about a borrower who needed $800 for two cows. "While I’m happy to help Juma Rahimov towards the purchase of two cows, lending him the entire $800 he needs would require more serious research. "

"I’d want to meet him, but he’s in Tajikistan. I’d want to talk to him, but he probably doesn’t [speak] English…"

That made me think of prosper.com. If you haven't heard of prosper.com, it's sort of cool. People in the U.S. (and elsewhere) basically fill out a loan application for a small loan (few hundred to few thousand) for a variety of purposes. Then individuals like you and me can invest in funding a portion of the loan, much like Kiva.org.

The difference between prosper.com and Kiva.org is that prosper.com charges interest on the loans and pays you a portion of it, so you'll get a return on your money. Additionally the borrowers are more "local" (you could, conceivably, only invest in loans in your community/city/state), and not all loans are for small businesses or education. Some are for debt consolidation, home improvement, etc. And while someone may need $20,000 instead of $200, you can buy a $200 chunk of that loan, so it can be considered micro-lending of a sort, plus there are smaller loans available.

Okay, so Prosper isn't charitable and the need is greater in the third world, but for people looking for an investment vehicle that lets them do good in their own communities, Prosper.com provides an interesting option to investigate.