I have mentioned Kiva before: Microfinancing Entrepreneurs (on our Curious Cat Economics and Investing blog). In addition to being a good cause Kiva really shows some great management strategies. The use of Information Technology to connect people directly is a wonderful example of using IT effectively (understanding psychology).
Kiva lets you loan money directly to an entrepreneur of your choice. Kiva provides loans through partners (operating in the countries) to the entrepreneurs. Those partners do charge the entrepreneurs interest (to fund the operations of the lending partner). Kiva pays the principle back to you but does not pay interest. And if the entrepreneur defaults then you do not get your capital paid back (in other words you lose the money you loaned). I plan to just recycle repaid loans to other entrepreneurs.
I have just placed an additional $150 in loans to 6 business entrepreneurs (in Honduras, Indonesia[2 loans], Tajikistan, Uganda and Ukraine), along with a $100 donation to Kiva (adding to my previous Kiva loans of $350). Since our last post the Oprah Winfrey Show, President Clinton’s newly released book Giving and others have sung the praises of Kiva and made it a challenge to find entrepreneurs of Kiva to lend to (Kiva is working on building their capacity – to keep up with the demand. That seems to have been partially fixed (for awhile the supply of the entrepreneurs was completely exhausted) in last few weeks (though still they limit you to no more than $25 per entrepreneur – in order to allow the large numbers of people that want to lend to at least have the chance to loan something).