Microfinance Podcast Coincidence

This morning in my podcast queue I listened to two shows in a row that discussed microfinance. The first was more technical, the Ruby on Rails podcast interview with the MicroPlace developers. The second was the “My Needs/Your Needs” episode of the Heather Gold show, which included microfinance expert April Rinne. What’s interesting to me is the tension between the two discussions and how they fit in with my thinking. When MicroPlace began getting press, I thought that it had a definite possibility to do more good than Kiva. My reasoning was that because Kiva pays no interest, the money they could get from me would be what I can afford to give philanthropically. Since MicroPlace pays interest in the 3.0% neighborhood it means that rather than using what I can give, it could be what I have to invest at that rate. These two amounts differ by orders of magnitude.

What I thought was really odd was in the Heather Gold Show discussion they seemed to suggest that Kiva is more pure because it is pure philanthropy rather than interest bearing. I think the opposite, that MicroPlace is situated to do much more good. If via either site the investments have the same benefits but you can afford to put more money in, then the interest bearing system makes much more sense to me. This is a clear case of idealism versus pragmatism. The San Franciscans dismissed making interest as somehow slimy whereas doing it for the sheer desire to do good is superior. I just don’t see it that way. If by charging a few percentage points annually they can make it so that people can put in orders of magnitudes more cash into the system then many more people can be helped. Bring on the interest, no matter what the hippies think!

2 Replies to “Microfinance Podcast Coincidence”

  1. Hi there Slusher Evil Genius,

    It’s really interesting to hear what you came away with from the conversation. My strongest memory is guest Thea Hillman saying she didn’t trust actions based on benevolence. I came away from the whole thing more attuned to people being self-aware and taking care of their needs in any action they take in order to also meet the needs of others.

    It’s by no means a completed conversation, but I’m certainly questioning the elevation of self-sacrifice as a good.

    What is the core goal? Making money? Helping others?

    Solving a problem?

  2. Interest-bearing microloans are a wonderfully pragmatic way to bring capitalism’s good qualities to bear in places where, perhaps, people have only seen the worst excesses of capitalism mixed with despotism. This is both on the lender’s side (where the lender may be an ordinary citizen who has credit card debt and so forth) and on the recipient’s side (whose country may have been involved in some major public works project that lined the pockets of the rulers and their lackeys, but didn’t show much of a benefit for ordinary citizens).

    I totally agree with your point that one can personally make a bigger investment when one is able to get a return, and I’m glad you brought it up. Financially, it definitely makes more sense to put an investment into something that will have a direct beneficial return, especially if one’s own livelyhood depends on making good investments.

    Kiva is more “pure” from an altruistic perspective, because it gives people the ability to make a small sacrifice in exchange for a social benefit that is personally measured by each individual. There are huge social organizations based on acts of individual sacrifice that bring abstract as well as concrete rewards to people.

    Fortunately for everyone, microfinance is a big field and there is room for financial as well as spiritual ROI.

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