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Doing Well by Doing Good at Trader’s Narrative

Doing Well by Doing Good

Kiva is a fascinating organization that uses the internet to bring capitalism and micro-finance to the most improverished areas of the world. The name is Swahili for “agreement” or “unity” and the concept is simple. You open an account and then begin to fund the business venture of a third world entrepreneur. Right now 100% of your loan goes to entrepreneur. This may change in the future after a critical mass has been reached.

The site uses Paypal and only requires a $25 minimum investment. You can build a portfolio of many different loans and the site helps you by keeping track of them. Also, the entrepreneurs file semi-regular updates on how their venture is going. So far, their repayment rate is 100% which might be shocking until you consider that all microfinance projects usually have repayment rates in the high 90%.

The only drawback is that your loan is interest free. All you can hope for is repayment. And the knowledge that you are helping someone you will probably never meet. If you are adamant about earning interest, give Prosper a look see. It is similar to Kiva but it is geared towards North Americans.

kiva logo.pngMany years ago Baron de Rothschild posed as a beggar for his friend, Ary Scheffer. While in the studio of the great painter in full costume with a tin cup and ragged clothes, a friend of the artist showed up running an errand. Seeing a beggar posing for Scheffer, he took a coin out of his pocket and dropped it in his cup. Rothschild said nothing and pocketed the coin.

Ten years later, Rothschild tracked down the good samaritan and had a note delivered to him along with a cheque for 10,000 Francs. In the note, Rothschild identified himself as the beggar and said that since receiving the coin, he had invested it and was now giving the principle back along with the accumulated interest and profits. He finished with “A good action always brings good fortune.”

I’m not sure if this is historically accurate but since the principle it teaches is timeless it doesn’t really matter, does it?

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