The concept of micro-finance has been around since the 1970′s but it didn’t take off until recently when the Nobel Peace Prize was awarded to Professor Muhammad Yunus who worked to build up a micro-credit system in Bangladesh.
Micro-finance’s success is linked to the soundness of its business model. Unlike most charities which lack focused direction or sustainability, good micro-credit organizations rely on their lenders having sound information about the bowers and a proven system for making sure the borrowers pay back their loans. This type of charity, one based on generating real, measurable results has enticed many philanthropists who want to see their money benefit lives rather than be wasted on organization’s overhead costs.
Kiva has found a way to connect the various lending groups through a community site aimed at making donating easier and connecting lenders and borrowers through the power of the internet. Kiva allows lenders to see pictures and stories of the people they are lending to and see what each borrower intends to do with the money they will receive. Kiva has taken a fragmented industry and found a way to connect it through the creation of an online community. That is the genius of Kiva.
To learn more about the world of micro-finance and micro-credit I would suggest reading “A Billion Bootstraps” by Phil Smith and Eric Thurman.
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