feedback.

October 25, 2007 4:38 AM

Invest wisely. End poverty.
posted by gman (30 comments total)

Kiva does the same sort of thing, if you want to choose a micro-loan site that isn't run by eBay.
posted by blixco at 5:02 AM on October 25, 2007

Kiva does the same sort of thing, if you want to choose a micro-loan site that isn't run by eBay.

hence the last tag.
posted by gman at 5:07 AM on October 25, 2007

plus - i don't think kiva takes paypal or allows me to collect feedback.
posted by gman at 5:12 AM on October 25, 2007

End poverty is a little much. Microfinance has quickly become this ridiculous panacea. Giving people small loans won't build roads or schools. Microfinance is one very small part of any comprehensive and integrated development strategy. Of course, it plays right into all of our myths of individualism, hard work, bootstraps, and the role of the state, so whamo.
posted by allen.spaulding at 5:22 AM on October 25, 2007 [3 favorites]

Or you could actually invest wisely -- in something that will outpace inflation, like equities -- and donate the proceeds over 1.5-3% along with the tax savings you realize from the donation to a microfinance organization.

That doesn't give you the same warm fuzzy feeling as micromanaging your microlending, but it's more effective.
posted by backupjesus at 5:26 AM on October 25, 2007

The investments available offer investors a return of 1.5% to 3.0% a year

That is not wise investing by any standard I know of. That is giving away the money you could have earned investing wisely. Particularly if you only get the opportunity to earn that return. Is that a guaranteed return or is it risk with a very very low rate of return for underwriting loan sharks (18-60% interest for loan recipients!). What are the lending company policies, collateral and collection practices? Am I going to be funding kicking people out on the street or funding knee breaking for 2% on my investment? I think they need to up the transparency - vetting of lenders is pretty damn important.

I also wonder if straight up charitable donations to microlenders with tax deductions, if that is possible, might be a better investment. (on preview backupjesus beat me to it)

Oh and microplace devs - Unobtrusive JavaScript - give it a try. Your site is so very broken with JavaScript disabled
posted by srboisvert at 5:28 AM on October 25, 2007 [1 favorite]

Or you could actually invest wisely -- in something that will outpace inflation, like equities -- and donate the proceeds over 1.5-3% along with the tax savings you realize from the donation to a microfinance organization.

Related idea: The government could help out a bit by giving tax breaks to billionaires who would then be free to donate even more. I'm going to call it "cascade-down economics".
posted by DU at 5:40 AM on October 25, 2007

I'm a bit unclear as to how microcredit could be a scalable solution to poverty, particularly in places that have no middle class to speak of. There are only so many products and services that poor people could sell to each other at a better price than from big-industry mass-production, and there are only so many hot dogs that the one local rich executive can eat in a day.

I don't have a very good understanding on the subject, and my concerns could be unfounded, but how does availability of microloans help you when the market is saturated?
posted by Anything at 6:05 AM on October 25, 2007

Kiva

As a means of liberating women, in terms of the number of children they have, micro financing has been found to be one of the most effective methods, more so than traditional choppers full of cash or emergency relief type stuff. It's a sustainable method that ultimately leads to reduced population, smaller and wealthier families that live longer and better lives. This is good for everyone, including you and me.

Microplace looks very cool, this type of thing could only happen with the Internet.
posted by stbalbach at 6:16 AM on October 25, 2007

BTW "poverty" means different things to different people so saying micro financing will "end poverty" is kind of ridiculous. What it will do is reduce population and increase standards of living. Most women, given a personal choice, want small families (say, 0-3 kids), according to polls and observations of "liberated" countries - in particular in 3rd world countries where women die much more often in child birth. But most women in these countries have no say in how many children they have, they are baby makers and the husbands and extended families decide. If a woman is able to earn her own way through a small business, she is not beholden to her husband or family for support, and she is able to give her few children more resources (food, education) which improves the next generations standard of living and chances of entering the middle class.
posted by stbalbach at 6:25 AM on October 25, 2007 [1 favorite]

"Related idea: The government could help out a bit by giving tax breaks to billionaires who would then be free to donate even more. I'm going to call it "cascade-down economics"."

Now why would billionaires want to go and give perfectly good money away to workers when they could keep it all for themselves?
posted by Mastercheddaar at 6:25 AM on October 25, 2007 [1 favorite]

Kiva seems iffy since your micromanaging yourself.

One first needs several micro finance & development finance pseudo-charities who manage the loans like banks. Then convince some mutual fund reviewers to review them, including their interest rates & such. Just someone who keep track of all the bad news about any particular micro finance organization.
posted by jeffburdges at 6:29 AM on October 25, 2007

Now why would billionaires want to go and give perfectly good money away to workers when they could keep it all for themselves?

I hope you are voodooing my economics! Because if so, NO SECOND TERM FOR YOU.
posted by DU at 6:33 AM on October 25, 2007

Let me get this straight... I'm going to invest in poor people, and somehow get money. Yea, right.
posted by triolus at 6:40 AM on October 25, 2007 [1 favorite]

Microfinance does work. It provides a valuable service to people in developing countries who need loans for their business, but due to their lack of assets and the very small amounts they need cannot get loans from major banks.

However, I would like to know how Microplace and Kiva actually work. If I loan money, is it going to a big pot that gets redistributed? Is it donated to microfinance lenders like the Grameen Bank? I am leery that it is actually going to a particular person who is sending me an email on their progress themselves, since let's face it, how many impoverished people in developing countries have access to the Internet and PayPal? I think the best that could happen is my money goes into the pot of a facility in a specific area, and then volunteers or employees periodically interview one of the benefiting borrowers and type that up in an email.

Also--triolus, yes, you can "somehow get money". If you lend money at an interest rate, and you are repaid that money plus interest, you have made money. Unless your comment was made to imply that poor people are lazy and will fritter away their loan and then default on the payment.

Of course, saying microfinance "ends poverty" is pretty ridiculous. You are never going to end poverty. You can improve living standards, but someone will always be in poverty at the bottom.
posted by Anonymous at 7:04 AM on October 25, 2007

Of course, saying microfinance "ends poverty" is pretty ridiculous. You are never going to end poverty. You can improve living standards, but someone will always be in poverty at the bottom.

Someone will always be at the bottom of the distribution but it doesn't necessarily have to be that the bottom is poverty.
posted by srboisvert at 7:12 AM on October 25, 2007

Microfinance has quickly become this ridiculous panacea.

I speak with some small degree of authority when I say: all panaceas are ridiculous. Get over it.
posted by anotherpanacea at 7:16 AM on October 25, 2007

This thread ridiculously redundant:

*Microfinance has quickly become this ridiculous panacea.
*all panaceas are ridiculous
*..micro financing will "end poverty" is kind of ridiculous.
*..microfinance "ends poverty" is pretty ridiculous
posted by stbalbach at 7:25 AM on October 25, 2007

also: utopian schemes are the 'I win' button of the literati.

Global Peace and Prosperity: Ok/Cancel?
posted by anotherpanacea at 7:30 AM on October 25, 2007

srboisvert, that depends on how you define poverty. Is it an absolute measure or a comparative one? People in poverty in the US are living very different lives than people in poverty in Indonesia. You might define it as the ability to provide for oneself and one's family. What is "providing"? Getting the minimum number of calories per day? Getting education? What quality of education? What quality of food? Health care--but for what? Cancer and AIDS are easy, but what about acne? The flu? A cold? Sports therapy for a pulled muscle? Poverty is very much a relative term.

Perhaps the best way to determine poverty and its affect on people's lives is whether or not they're happy. And that is again, relative. "Happiness" studies have shown happiness with one's lot in life is not judged on absolute terms but in comparison to the lots of those around you.

That's why I say there will always be people in poverty. Standards of living can rise, but that does not mean people are not in poverty--or at least won't perceive themselves to be.
posted by Anonymous at 7:41 AM on October 25, 2007

1.5-3% is not 'making money'. Its losing money because inflation is usually more than 3% (I estimate at 4%). If you go into a deal like this thinking everyone gets out ahead then you're fooling yourself. If you really believe in helping, then you should donate $20 and not expect a return.

Also, didn't we learn anything from the recent credit bubble? Cheap credit is useful, but you can't expect people who haven't had access to credit before and don't earn very much to pay it back every single time. Sure some can, but not all. That's why people who need credit the most, get rated the lowest credit scores and also have the highest interest rates.
posted by kookywon at 7:56 AM on October 25, 2007 [1 favorite]

Oprah likes Kiva. I like Kiva. You know the old adage about not trying to change the world, but rather focus on making one little corner of it a better place -- that'd be yer Kiva.

And they accept PayPal.
posted by Mike D at 9:03 AM on October 25, 2007

The Nobel committee seems to think mincrofinance is a valid idea.
posted by killy willy at 9:22 AM on October 25, 2007

doh! that's "microfinance"
posted by killy willy at 9:23 AM on October 25, 2007

I'm going to invest in poor people, and somehow get money. Yea, right.

Half the world - nearly 3 billion people - live on 5 dollars a day or less.¹

Kiva reports a 99.7% repayment rate.²

Do the math - investing in the poor is not only good morally, it's the worlds largest market and among the safest investments of any type.
posted by stbalbach at 9:31 AM on October 25, 2007

You don't make money on kiva, you can only get your money back. The local lender, usually a credit union or similar, makes the interest and handles the loan. You are lending the money as a sort of rolling charitable donation, which you can claim back once repaid, or re-give. You take a small risk of default. In effect, you are donating the opportunity cost of your capital. It's really not a way to make money nor is it intended to be.
posted by Rumple at 11:20 AM on October 25, 2007

"You don't make money on kiva, you can only get your money back."

Well, there's fiscal return-on-investment, and there's moral return-on-investment. Personally, I consider a "bank" account filling up with warm fuzzies to be just a fine return, thank you very much.
posted by Mike D at 11:34 AM on October 25, 2007

Mike D - I agree. I was responding to some people up-thread who seem to think that kiva is a way to make money off the world's poor.
posted by Rumple at 11:48 AM on October 25, 2007

It looks like the loan officers or kiva fellows help with getting the journals/emails posted. it does also list the lending partner for each loan.
posted by ejaned8 at 4:45 PM on October 25, 2007

From what I've seen, microcredit tends to be presented as a thing that "helps poor people", when, if I'm correct, the most generous clearly accurate thing to say would be "helps a portion of poor people", where the portion is limited by the structure of the available markets. The usual presentation gives the impression, categorically, that if someone is poor, microcredit can help them. But I haven't seen any hard numbers to indicate that it can scale anywhere beyond a very thin margin of people.
posted by Anything at 3:08 PM on October 26, 2007