Written by: Paul Rubin
Primary Source: OR in an OB World
Several years ago, I found out about Kiva.org, an online “microfinance” site where individuals can make small loans ($25 is the standard increment at Kiva) to entrepreneurs in low income settings. The entrepreneurs actually apply for larger amounts, which they typically receive from third-party “field partners”. The entrepreneurs repay the loans with interest to the field partners, who in turn repay the principal (no interest) to the original donors. A modest deposit by a donor can be turned over repeatedly into loans, enjoying a version of what in my long-ago undergrad econ class was termed the “multiplier effect”. I’ve made a fair number of loans over the years, nearly all of which have been fully repaid. It’s a bit of fun as well as personally satisfying.
So I was geeked to learn from one of my colleagues at the Broad College of Business, Professor Paulette Stenzel, that we have a student organization on campus dedicated to microfinance. The Spartan Global Development Fund is a 501(c)(3) nonprofit organization, created and run by students, that makes microloans both through their own field partners and through Kiva. It’s a registered student organization, meaning that any Michigan State University student can join. Students and nonstudents alike can donate through PayPal.
Next time I’m on the Kiva site, I plan to join their Kiva “team”, and I encourage anyone interested in microfinance to check out their site.