Thursday, August 14, 2008

What Small Business Donors Should Know about Microfinance Organizations

Organizations like Charity Navigator are great watchdogs on charities. It can help any donor, even you a small business owner, learn about the efficiency and accountability of a charity and its use of funds. You will soon be able to read more about how to evaluate charities in my new ebook, "5 Tips to Help Small Business Evaluate Charities Before Giving." ( But, there's a growing breed of charities that provides donors information on their dollars given and allows donors to chose specific projects and fund what appeals to them. These organizations are commonly called, microfinance organizations and they are gaining popularity fast among small businesses and solo-entrepreneurs. Among the most well-established are Kiva, Accion International, DonorsChoose and GlobalGiving. Kiva, for example, allows donors to finance microloans to budding entrepreneurs in third world countries. A recent article in the Wall Street Journal discusses this new breed of charities. The cool part about Kiva and other similar organizations is that donors can direct where they want their donation to go, and they get updates which track their contribution. Often, you can get a photo online of the individual your donation is assisting.

This new, quasi, eyes-on approach to giving is very appealing to donors. To boot, many of the microfinance organizations are doing an above 3-star rating on Charity Navigator. While there will always be critics with opinions about microfinance organizations, and I am happy they have a full time job and are paying taxes, the elevated interest in organizations such as Kiva is not going away anytime soon. To move families and individuals from a marginalized status in the global economy to a playing field which provides them some level of financial freedom and fair game in a market-place is very liberating both for them, their community, and the donor. The rewards have a large ripple effect. The one reward that has a lasting impact is the direct gift exchange between the donor and recipient. Lives are touched. Gratitude is felt and an impact is made on lives regardless of the size.