You may or may not have heard of micro-lending, the hottest new trend in global finance, but it is changing the way people borrow, lend and donate. Boiled down, micro-loans are small loans, generally from $100 to $1500, made to the working poor or other needy individuals who are unable to borrow money through traditional routes. Micro-lending first became an avenue for investors by helping impoverished individuals in third world countries—particularly women in rural areas—to borrow money for business, agricultural and educational ventures. The idea has spread so that you can now help individuals both far away and next door see their dreams become a reality. While some micro-lending will earn you a return on your investment, others are simply loans that will be repaid at dollar value, and some are actual gifts. No matter what, you can feel good about where your money goes. Check out the following four websites for ways to lend or donate your money:
1. Microplace.com is a micro-loan site that will earn you interest, generally 2-3%. For as little as $20, you can invest in a project that is meaningful to you from anywhere in the world. The money is then bundled with other investors’ dollars to go to a micro-financing bank, where it is then loaned to the project of your choice. Microplace ensures that 100% of your loan will go to the necessary projects. The best part is that you will earn a return on this investment. When the investment matures, you have the choice of withdrawing your initial stake or rolling it over into another investment.
2. Kiva.com is a nonprofit micro-lending site. With Kiva, you are making a donation that you will receive back. For as little as $25, you can lend money to an individual project anywhere in the world. The micro-finance bank will disburse the money to the borrowers, and you are repaid your donation as the micro-financier is repaid. You can then recycle your money to another loan, withdraw it, or donate it to Kiva for operating expenses.
3. Kickstarter.com is a website for writers, musicians, artists, and other creative individuals to generate funding for a project by requesting donations. With Kickstarter, the artist posts a description of the creative endeavor, and requests funds to help it come to fruition. In this case, you are a patron of the arts and making a donation, but the artist retains full creative control of his project. One of the most intriguing aspects of Kickstarter is the all-or-nothing funding. The artist requests a specific amount needed to create the project and has a time limit on getting the necessary pledges for that amount. If the time runs out and the project has not reached its goal, no money changes hands. It protects the artist from creating a project without funding, and donors feel comfortable taking risks on interesting concepts.
4. Sponsormydegree.com is a way to help American students who are trying to get through college. With this website, you can find a student (or graduate) who is in need of help either paying for school or paying off student loans. Your donation will go directly to either tuition or student loan payments, so you feel confident in your support of education. The cost of education has spiraled out of the reach of many students, and this website can give you the opportunity to help an individual. You can search profiles to find a student who attends your alma mater, is planning to go into your career field, or simply seems like a good kid who could use a hand.
Micro-lending and micro-philanthropy are ways for small amounts of money to make a big difference. If you are looking to invest or donate, think about making a micro-loan or donation.
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