How to Make a Micro-Loan Overseas

This growing area of philanthropy makes use of business incentives.

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Dear Alpha Consumer,

I recently went on a trip to Ecuador and feel inspired to donate money to a micro-lending program in that country in order to help a small business owner there. What is the best way for me to do that? Micro-lending, which usually involves a lender in a wealthier country making a loan to someone in the developing world so they can invest in their business and then eventually pay back the loan, is a booming area of philanthropy. Since it involves an incentive structure that encourages business success, many lenders like the model more than those that require simply donating to charity.

There's also an easy way to make micro-loans. The organization Kiva allows lenders to look up individuals in search of a loan on its website. You can make a donation, usually between $25 and $500, and then keep track of the recipient as he grows his business. Then, once he pays you back, you can make another loan.

After searching the website for an Ecuadorian entrepreneur for you, I came up short -- there were plenty of postings from people in Peru, Bolivia, and other countries, but at the moment, there is not one from Ecuador. Fiona Ramsey, public relations director for the organization, explains that Kiva does have a partner in the country, Fundación ESPOIR, and they will likely post about new entrepreneurs soon. "Your readers should check back, particularly after the 1st of the month when all of our partners’ monthly limits roll over and they start posting new loans again. We’re really excited about this new organization ESPOIR and from what I hear they’re doing great stuff down there," she says.