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If you're in the market for investments that can make you money and make a difference, a new online broker thinks it's got just what you're looking for.

MicroPlace.com wants to make it easier for people to invest in microfinance. Microfinance means small loans; a loan, for example, to a woman in the Third World to start a business.

Dan Bobkoff of member station WCPN in Cleveland explains this investment concept.

DAN BOBKOFF: After reading a book by microfinance pioneer Muhammad Yunus, Paul Metzloff was inspired by the ability of small loans to help raise people out of poverty. The fourth year seminary student from Columbus wanted to find a way to put some of his money into microloans.

Mr. PAUL METZLOFF (Microfinance Investor): If I can use my little bits of money to help people who are truly poor, then I think that's a good thing, even if I'm not making massive interest on it.

BOBKOFF: So, Metzloff started investing at MicroPlace.com. The site, which is a for-profit arm of eBay, acts as an online broker for microfinance securities. They're similar to bonds, and most pay a return between one and three percent, but with the financial crisis driving down rates on traditional savings accounts and money market funds, MicroPlace hopes more Americans will look to its site as an investment alternative.

Mr. ASHWINI NARAYANAN (General Manager, MicroPlace): We've launched recently a five- and six-percent rate of return, which is very, very interesting to people in the current economy.

BOBKOFF: Ashwini Narayanan is MicroPlace's general manager, and she's making the pitch that investing in these microfinance securities is a fairly safe alternative to traditional investments.

They are not FDIC-insured, rock-solid savings accounts, but so far, she says, no one has lost any money. Microfinance has been largely immune to the global recession. And Narayanan says about 97 percent of borrowers, even the poorest, pay back their loans.

Ms. NARAYANAN: The whole microfinance industry works on the basis of trust. The loan officer knows the borrower, has to make sure that the borrower can actually make that interest payment.

BOBKOFF: Still, there are real risks here. The securities on MicroPlace are made up of bundled microloans. That's supposed to diversify the investments, lowering risk. But that's eerily similar to mortgage-backed securities, says Case Western Reserve University finance professor Scott Shane.

Mr. SCOTT SHANE (Finance Professor, Case Western Reserve University): The problem that we saw with mortgage-backed securities is what if there's an effect that hurts absolutely everybody in that economy? You know, you have an earthquake somewhere, or you have a financial crisis in that home country.

BOBKOFF: Perhaps it's that fear that's keeping people from putting more of their money into these microfinance securities. While the company says its users are investing far more money this year than last, there are fewer than 5,000 investors so far on the site.

By comparison, Kiva, a nonprofit competitor that's been around a few years longer, has nearly half-a-million users, even though they earn no interest.

MicroPlace's average account size is about $350. Paul Metzloff, the investor from Columbus, has invested over $2,000 so far, and while the interest rates are an incentive to put more money in, he says it's the moral attraction that keeps him hooked.

Mr. METZLOFF: You can choose to help some poor woman in Guatemala run a grocery store to feed her children, and you know, I'm not very knowledgeable about financial things, but I would rather do that than help some wealthy businessman fly on a private jet to get a facial at a spa.

BOBKOFF: MicroPlace is finding that despite the rising interest rates, most of its users are like Metzloff: They see it more as charity than an investment tool. So the company is re-evaluating its sales pitch, trying to present itself not as the next great investment but as the face of modern philanthropy. For NPR News, I'm Dan Bobkoff in Cleveland.

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