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!