Young Donors Turn to Microloans A new kind of philanthropic giving — particularly among the young and web-savvy — is facilitated by a nonprofit organization called Kiva. Donors are encouraged to give microloans to entrepreneurs in the developing world.

Young Donors Turn to Microloans

Young Donors Turn to Microloans

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A new kind of philanthropic giving — particularly among the young and web-savvy — is facilitated by a nonprofit organization called Kiva. Donors are encouraged to give microloans to entrepreneurs in the developing world.


This is ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden.

Calling all procrastinators. You've got just one week to donate to charities if you want to take a deduction on this year's tax return. This has already been a landmark year for philanthropy. Of course, Warren Buffett's $31 billion gift to the Bill and Melinda Gates Foundation helped.

But Buffet wasn't alone, according to Stacey Palmer, editor of The Chronicle of Philanthropy.

Ms. STACEY PALMER (Editor, The Chronicle of Philanthropy): We're also seeing, really, a lot of other big gifts. We've seen a record number of gifts of $100 million or more, which is really a substantial donation.

LYDEN: Stacey Palmer reports that all kinds of organizations have benefited from donations. Cultural and arts institutions saw an uptick after suffering benign neglect during the previous two years when our hearts and wallets opened up to the victims of Hurricane Katrina and the Asian tsunami. And this year, a new kind of charity has emerged.

Mr. PREMAL SHAH (President, Kiva): You know, someone has described it as micro finance meets

LYDEN: That's Premal Shah, founder of a non-profit called Kiva. It was inspired by the micro financing work of Muhammad Yunus and the Grameen Bank, which won this year's Nobel Peace Prize.

If you go to, you see a photo gallery of milk sellers and rickshaw drivers. If you got even $25 to lend, you can point and click and become part of a global village promoting sustainable development.

We like to think of ourselves as an eBay for micro finance. So you know, one day a lender can come and weigh, do I want to lend to a goat herder in Uganda versus a seamstress in India, and what's the chance of repayment and one versus the other, what's the social impact of one versus the other? Much like how people weigh, you know, what they want to actually buy on eBay.

LYDEN: Unlike eBay, with Kiva, you get back exactly what you put in without any interest. The Ugandan goat herd or Indian seamstress, though, will have to pay 16 percent interest. If the word usury just popped into your head, consider this. Those who distribute and collect the loans must often trek across fields to remote hamlets with no mail service. And the borrowers are often illiterate.

So managing Kiva's loans is costly. And compared to village moneylenders, who charge up to 1000 percent, Kiva's 16 percent is a downright bargain. Premal Shah says since Kiva's launched a little over a year ago, no borrower has defaulted.

That's a plus for 30-year-old Matt Masinger(ph) of Madison, Wisconsin. He's a product manager at a software firm. Though he's donated to educational charities, he likes Kiva's system of providing low-cost capital to help an entrepreneur in a developing country pull out of poverty. Masinger has lent $100 to a timber salesman named Steven in Uganda.

Mr. MADISON MASINGER (Lender): It is a partnership through the Kiva site. Kiva lets me track the entrepreneur that I'm working with and read journal entries from the entrepreneur. And I can give feedback to the entrepreneur. So it's such a kind of a real interaction relationship. In a very real sense, Kiva is making the world smaller, using Internet to do so.

LYDEN: And perhaps it's not surprising in a year when Time magazine's Person of the Year is you - as in you online, social networking, MySpacers, building community on the blogosphere; nor it is surprising that Matt selected an entrepreneur in Uganda. Premal Shah has already spotted an early trend among Kiva lenders.

Mr. SHAH: Kenyans are funded 10.4 times faster than Bulgarians. Agriculture is the fastest industry to be funded. Transportation is the slowest, like taxis and rickshaws. And women are 2.7 times faster than men in terms of rate of funding on the Kiva Web site.

LYDEN: Which may point up one motivation that philanthropy watchers like Stacey Palmer have with organizations like Kiva.

Ms. PALMER: One of the things that's challenging in the world of deciding where to give your money away is that while you may be passionate about a particular cause, most of us aren't really experts. You know, I might not know about what water project will most help the developing world.

So it's also good to give some money to the general fund of some organization you trust and make sure that the experts go out and figure out what is most needed.

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