thank you for following up. this is quite informative.

At any rate, Kiva sounds pretty cool.

non-profit managers aren’t *uninterested* in profits (I’d rather be pres. of Harvard than of Podunk, and I’m sure Yale would like to catch up with Harvard in endowment)–just *less* interested than for-profit managers (more profit does not mean “new bmw” for sure),so less likely (on the margin) to “chisel”

rob, I’m not arguing that non-profits are not profit-motivated (in the literal sense); there is a difference, after all, between non-profits and not-for-profits. That said, I really don’t think there is “less” incentive to scam off the top. In my opinion, the difference here is not the form of organization (although that can change the outlook/philosophy, and thus the product/outcome/method), but rather the legal system within which an organization works. For example, the risks/potential costs of defrauding as a 501(c)3 in the U.S. are really high, but this is not always the case in other countries.

1) Microfinance is and will continue to function as a charitable organization. It is impossible that they will ever be a viable for profit business. 2) Microfinance is a scam, it is still charity, disguised as something it is not.

This is totally untrue, both from a project design standpoint, and from an empirical standpoint. So far we have seen that microcredit, depending on its design, DOES work. If nothing else, it broadens the scope of capital and the potential of different actors to engage financially in a larger economic system. What is the “charitable scam” aspect for you? That instead of targeting already-privileged elites it targets the very poor?

MicroCredit, as developed by the Grameen bank, was never intended to be “charity,” but rather a viable business investment. While it may not have reached that point yet, at some point, Kiva wants to receive interest, and redistribute interest to the donors as well. The crucial benefit being of course, that most donors are just going to re-invest the profits from their interest into other people.

I just wanted to say that I liked this point If I were a donor, what I would prefer more than Kiva redistributing the interest to me (and others), would be if they redistributed it into other small loan projects for new lenders.

Omidyar disagrees. In fact, he (unlike Yunus) believes that this is the only way to scale microfinance.

And I realize that microfinance is only a small part of the solution to alleviating poverty. A $1000-loan to a farmer in africa is totally undermined if the US-Farm-Bill includes millions (billions?) of dollars in subsidies that make his business uncompetitive.

Not so yo.