Businesses With Impact:

The nonprofit organization Kiva came on the scene about seven years ago, long before Kickstarter or cloudfunding or peer-to-peer lending were household ideas. One of the first companies to really leverage the power of the internet to connect those who have with those who need, Kiva allows anyone to lend money to aspiring entrepreneurs in developing countries in a relatively risk-free way.

Based in San Francisco, Kiva works with a huge network of microfinance institutions around the world--which they call "field partners"--to facilitate the financial transactions and distribution of loans, which, from the giver's vantage point, happen seamlessly via PayPal. Field partners can be anything from businesses to schools to non-profits. The field partners are "on the ground" advocates for those in need in places like Africa and Ecuador and the Ukraine. They seek out potential entrepreneurs in third world countries and rural enclaves in order to sync them up with more privileged Kiva donors looking to help out. Part of the job of field partners is to seek out loan recipients who will be good bets: those with savings, solid ideas already in action, proven character.

Kiva relies on volunteers for such things as translating borrower stories to English for the web site--where you can read, in detail and with pictures, about those seeking funding, and decide exactly who you want to invest in, and why. Through a sophisticated web of technology and human effort (too sophisticated to break down here, but you can read more about it on their web site), Kiva connects your American dollars with a female Palestinian farmer looking for capital to invest in fertilizer, or a Peruvian motorcycle business that needs money to buy tires to resell. On Kiva's web site right now, Samar from Jordan is looking for a loan to buy a sewing machine to support her embroidery shop, and Julius in Kenya is seeking funds for flour and oil for his catering business. These are real people with real stories, and by investing in them, you help make the world a smaller place.

Unlike with peer-to-peer lending sites like Prosper or Lending Club, Kiva doesn't pay interest to lenders. The borrowers pay a small amount of interest (usually better than they can get with local, less reputable loan options), but this profit is used to pay the field partners, who are on the ground doing the legwork, finding appropriate recipients, and making sure money gets where it's supposed to. (The majority of Kiva's operating expenses come from optional donations people can make when purchasing a loan, as well as some fundraising and corporate sponsorships.)

In lieu of a financial profit from the money you lend, you get something that, in my opinion, is more valuable: the chance to make a tangible difference in the world and to impact a stranger's life in a positive, permanent way. Kiva is not about investing money in the traditional sense; it's about using your excess cash to jumpstart a life somewhere else in the world.

I love what the anonymous writer of "My Money Blog" says about Kiva, based on his experience lending:

"You can view the interest 'lost' as charity if you'd like. I kind of just see it as lending money to a friend - no interest, but you're hoping to create some positive change."

Kiva has been particularly instrumental in supporting female entrepreneurship in developing countries. According to their 2012 statistics (interesting to read here) almost 82% of their borrowers are women, across 220 countries. And they claim a 98.94% return on loans funded.

Here's a challenge: open a Kiva account today, choose a loan to fund, and then see how it feels to contribute to the life of a stranger. You might find that it's more valuable than the interest you would have earned by depositing that money in the bank or throwing it at the stock market. If you're shy about lending through Kiva, know that you can invest as little as $25 to start. Perhaps a few lattes to you, but to the recipient, it could be the chance of a lifetime. If you're reading this on your iPhone or Blackberry, I'm guessing that you can probably spare $25. Why not take a small risk and invest in the new economy-- and someone's future?

Get started at

Correction: in an earlier version of this post, it was incorrectly stated that Kiva's operating costs are covered by interest on borrowers' loans. Borrowers do pay interest, but that interest does not go to covering Kiva's operating costs. The majority of Kiva's operating expenses come from optional donations people can make when purchasing a loan, as well as some fundraising and corporate sponsorships.

This piece is part of my Businesses With Impact series. I'm highlighting companies that fit within what I consider to be a scope of "significant social impact," meaning that they exhibit a high degree of operational awareness of corporate responsibility, social capital investments and philanthropy. While my research is not qualitative per se, I am confident about featuring companies doing inspiring things to change the world in real ways. If you have a suggestion for a company or individual to feature, please contact me.