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Thoughts on charity

Not that I have any money right now, but I’ve been looking at different types of charities to donate to. To my mind, there are two types of charities. There are ones that are trying to prevent people from starving or some other imminent danger, and then there are ones that try to build something that will benefit people for a long time to come.

It’s important to remember that there are limits to what charity can accomplish. Usually, the more grandiose the idea, the bigger the goal, the more useless the charity is. So, if a charity wants to distribute vaccinations to a village, great! If they want to “end poverty,” it’s best to skip it. I’m also very dubious about the effectiveness of large organizations that have “agendas.”

Not surprisingly, I’ve been attracted to organizations that allow you to pick individuals projects or even people to donate to. The internet has made it possible to link up potential donors with people in need. There are a variety of sites that you can go to in order to make targeted donations. They range from “wish” sites that have Americans in dire straits or are terminally ill that ask for help, to sites that allow you to pick individual projects in third world countries.

For the traditional, give money to alleviate pressing problems right now type of charities, I like Global Giving. They let you pick what kind of cause you would like to help, and then you get to pick the specific project that appeals to you. Take a look around at the site, it’s really amazing.

I’m really amazed with Kiva.org. It is a way for you to get into the whole “microfinance” way of helping people in the third world. This isn’t a charity in the traditional sense. You don’t give money, you lend it. The idea is to stimulate entrepreneurial activity. Here’s how it works. A person approaches a lending institution in the country they live in with a business idea. The institution goes over the numbers and determines the viability of the business. If everything looks good, they post on Kiva and tell you about the idea and the amount they are looking for. You can donate anything from $25 all the way up to the total amount of the loan. The loans tend to be anywhere between $250 and $1000. When enough money has been collected, the loan is issued and repayment is expected within 6 months or a year depending on the loan.

Ok, yes, there is a possibility that the person defaults on the loan. Kiva claims that 98% of the loans are paid back. Here’s where it gets really interesting. Once your money is paid back, you have the option of taking it back, or in funding another loan. In other words, the money you put in can be used over and over again, helping different people over time.

Even $500 can go a very long ways in places like Madagascar or Tanzania. It can change lives. Very often, there are business opportunities to be had, but there is very little credit to go around. The idea that the $25 that you put in can be used over and over is very exciting. Sustainable charity has a nice ring to it, doesn’t it?

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