Search Results for: microplace

MicroPlace Microlending: Free $20 to Invest

As you may know, I support microlending to poor entrepreneurs in developing countries through Kiva and Microplace. I have a little under four thousand dollars spread across both sites, and intend to continuously reinvest my principal and any earned interest to create a “foundation” where my money keep being lent out over and over. Kiva is non-profit, while Microplace is for-profit. I have lost some principal at Kiva, but none at Microplace yet. Here are my previous posts mentioning Microplace.

Yesterday after reinvesting some funds, the website provided me a link to share that appears to give any new investor a free $20 to invest. No strings attached. When the investment matures, you have the choice of either withdrawing the investment (plus interest) to your Paypal or bank acount, or reinvesting it again in another loan. Why not try it out?

Update: Apparently this link is open to any investor once, not just new investors. I just tried it for myself and it did not give me a choice in investments. The $20 will be invested in “Reduce extreme poverty in Haiti and help reverse its fortune – Sevis Finansye Fonkoze via Oikocredit GC Note”, earning 2.0% per year until April 30, 2014. You do have an alternative to simply donate the $20 instead and receive the tax deduction.

MicroPlace: Buy a $20 Gift Certificate, Get $20 Free

Here’s a good last-minute gift idea for socially conscious friends – a $20 gift certificate to MicroPlace, which provides loans to low-income entrepreneurs. They have a B1G1 holiday promotion where if you buy a $20 GC, you get another $20 to send to the person of your choice for free (could be you if you wanted). Ends December 31st.

The cool thing about this gift is that you’re not just giving $20 to some charity “in their name” that they’ll never see. They get to help out a poor borrower, then then when the loan matures they get $20 + any interest! Your friend can then spend it however they wish (thus making it better than some Best Buy gift card), or reinvest in another microcredit fund. Thus the whole “gifts that keeps on giving” slogan. And you get $40 for spending $20!

Give a Gift that Keeps on Giving
Give a unique and special gift this holiday season. It is a gift of connection, a gift of hope, and a gift that believes that poor people can use their ingenuity and hard work to break out of the cycle of poverty.

Your gift can help fund loans to poor people who could start a business, save, and work their way out of poverty. And when you purchase a gift certificate of $20 or more on MicroPlace, we’ll give you a free gift certificate of $20 to send to someone else on your shopping list!

I now have over $2,000 invested at MicroPlace and also $2,000 invested at LendingClub (P2P Lending).

MicroPlace: Buy a $20 Gift Certificate, Get One Free

Just got an e-mail from MicroPlace that they are running a gift certificate promotion where if you buy a $20 GC, you get another $20 GC free. The gift recipient can then lend out the money to a poor entrepreneur and receive interest + $20 back later. Since the person actually gets the money back (or at least most of it assuming some defaults), and thus isn’t the same as a “$XX has been donated in your name” gift, I think it’s a cool twist on gift cards.

Give a Gift that Keeps on Giving
Give a unique and special gift this holiday season. It is a gift of connection, a gift of hope, and a gift that believes that poor people can use their ingenuity and hard work to break out of the cycle of poverty.

Your gift can help fund loans to poor people who could start a business, save, and work their way out of poverty. And when you purchase a gift certificate of $20 or more on MicroPlace, we’ll give you a free gift certificate of $20 to send to someone else on your shopping list!

To learn more about Microplace check out these posts, including my last microlending update.

Microlending Update: Kiva and MicroPlace Loan Performance

I saw some ads for Microplace today (probably targeted due to my internet browsing habits) and decided to check on my Microlending portfolio. If you’re not familiar, microlending tries to alleviate global poverty by offering small loans to entrepreneurs in developing countries who would otherwise not have access to credit.

Microplace is actually a for-profit site owned by eBay that packages microloans into investments with varying risks, focuses, and returns. Some people think that “for-profit” equates to evil, but I don’t agree. Here’s a link to a recent newscast done by CBS News.

I currently have $1,200 invested there, ranging from a 100% liquid note paying 1.75% interest to a 3-year note paying 5% interest. Payments are made quarterly, and I haven’t gotten my first interest payment yet. You can even fund using your credit card via PayPal.

Here are my previous posts on Microplace.

Kiva is a non-profit site where you can match up your contributions to a specific individual, starting with as little as $25. The entrepreneur is still charged a certain interest rate, but you don’t get any interest. I have lent out $350 to 14 loans, and all have paid back my principal so far except for one which paid back 92% total. Still, my overall default rate is only 1.32%.

Here are my previous posts on Kiva.

I am still very intrigued by the idea of setting up a pseudo-“foundation” to which I can contribute money and have it perpetually reinvest the principal and any interest earned into future microloans. It would be really cool to have something like $100,000 constantly being lent out to entrepreneurs around the globe.

Microplace Review: Investments, Application, Funding Methods, Bonus

I finally got around to looking closer at Microplace, a site owned by eBay that tries to alleviate global poverty by offering investments that enable loans to hardworking poor people. I wrote about them previously in Earn a 5% Return and Help Fight Poverty Too? but never ended up investing.

These microlending investments offered do carry risk to principal, although historical repayment rates have averaged 97%. I have just finished putting in $1,200 across three different loans of different maturities and interest rates. This a decent chunk of money, but again this is both an investment and a charitable gift. As you’ll see below, I have the potential to earn some interest and/or maintain liquidity. I like the idea of this money being repayed and then loaned out again later, ideally over and over again. My own little mini-foundation. 😉

My Investments
This is an experiment for me, so I wanted to try a variety of investments. I believe that if microlending can be both profitable and successful in reducing poverty, it will really take off. I went with some of the higher-yielding notes and also one with high liquidity. We’ll see how the repayment rates are.

Investment #1: Helping Poor Women in Nicaragua, Earns 4% interest per year, Principal repayment on 12/31/2010.

Investment #2: Help Nicaraguan farmers, Earns 5% interest per year, Principal repayment on 12/31/2011.

Investment #3: Called the Oikocredit Global Community Note, this investment enables loans to the working poor in several developing countries. 1.75% return per year, can redeem anytime. This last one is interesting because you can withdraw your principal at any time. I can already redeem only a day later:

Application and Funding Methods
The application process is very similar to signing up for a stock brokerage account. They will ask you identity information as well questions about your income and investment experience because they are selling securities that carry risk of loss. As for funding the loan, you can either use PayPal or a bank transfer:

Since eBay owns PayPal and Microplace, there are no fees for using PayPal. That means you can switch to a rewards credit card and earn some points or cash along with your investment. Why not? Just be sure to change your PayPal funding source. My credit card charge went through fine.

Got Bonus?
You know me and freebies. After signing up I received another e-mail about a Father’s Day promotion where you can even get a free solar-powered flashlight:

Invest as little as $20 in honor of Dad and MicroPlace will send a free solar-powered flashlight, to Dad. This eco-friendly flashlight will remind Dad how grateful you are for his caring and love. And your investment will help fathers and families work themselves out of poverty so their children can get an education.

MicroPlace Review: Earn a 5% Return and Help Fight Poverty Too?

“A billion people around the world work hard every day to lift themselves out of poverty. They don’t want your charity. They want your investment. Invest today, earn a return, provide them with a livelihood.” – homepage.

Sounds pretty good, huh? Microplace is owned by Ebay, and is an SEC-registered broker of microfinance securities to individual investors. Loans are classified by level of poverty, financial return, length of investment, and geographical location. Recently, they got my attention by offering a 2-year loan with a promised interest rate of 5% per year, and a 4-year loan at 6%.

What is microfinance?
Microfinance is the supply of loans, savings, insurance and other basic financial services to low-income households and businesses, usually in areas where people don’t have access to formal banks. Microcredit is the extension of very small loans (microloans) to these poor entrepreneurs. A big name in this arena is the Grameen Foundation.

Tell me more about this 5% return…
Here is the loan listing page, and here is a link to the long 63-page prospectus for these Global Poverty Alleviation Notes (how’s that for an investment title?). I have looked through it, but haven’t digested it all. They are offered by Micro Credit Enterprises (MCE), a 501(c)(3) nonprofit organization. MCE seems to focus on women entrepreneurs, which have made up about 90% of their borrowers. They seem to participate in a variety of countries on 4 continents, from Armenia to Bolivia to Cambodia.

These notes are not a mutual fund, and is not FDIC or SIPC insured. These are unsecured debt obligations, with partial backing of “philanthropic guarantors”. Basically, wealthy individuals and/or groups promise to repay parts of this loan if there are enough defaults. The details are a bit vague, but there seems to be a networked agreement across multiple guarantors. However, risks definitely remain.

The actual interest charged to local microfinance institutions (MFIs) are stated to be from 8-10%. The rates paid by actual individuals are not stated, but can be as high as 30%. But these are often short-term loans to people with no collateral and few alternatives. The historical repayment rate is listed to be 96%.

What about MicroPlace vs. also lends small amounts to low-income entrepreneurs in the developing world. However, Kiva currently does not offer interest to lenders since it is a non-profit organization and is not registered with the SEC. Also, it has more of a person-to-person lending structure where you can choose the specific person you wish to lend to. However, I have read that Kiva is trying to offer interest in the near future.

Are you going to invest?
I’ve put some money to “work” at Kiva already, and my personal repayment rate on my completed loans from Kiva has been 98% so far. Given that I am still not very familiar with these investments, I still can’t treat the 5% Microplace note as a reliable investment. However, I am still leaning towards putting a chunk of money into it, because I do think significant principal loss is unlikely, and I want to give them a chance. If it works out, I think microfinance would really take off if there was also a financial benefit to investors.

Mosaic: Crowdfund Solar Projects With Just $25, Earn 5% Interest

Mosaic is a new crowdfunding start-up allows investors to invest in clean energy projects with as little as $25. A solar power farm needs financing to get built. They sell the energy produced to customers like major utilities and then pay investors back. Mosaic takes a cut. Mosaic has recently been more projects since their debut (and sellout) earlier this year.

Below is a screenshot of an actual project with a 12-year horizon with expected 5.5% yield that is currently in funding – the one I was looking at yesterday already funded! If you live in California, you’re likely to be familiar with PG&E which made a 20-year agreement to purchase power from this project. On the production end, Panasonic is guaranteeing a minimum power production level for 12 years (or else they cover the difference). I’m not sure what the interest rates on these types of project would be on the open market, but right now Yahoo Finance shows the average yield on a AAA-rated 10-year corporate bond to be 3.60%.

[Read more…]

Kiva Microfinance Loan Update & Default Rates

I have been lending some money to people through Kiva microfinance to help alleviate poverty since 2007. While reinvesting some funds that were paid back, I noticed that I just reached $1,000 in money lent out through 40 loans of $25 each. Kiva loans do not pay any interest. Out of the $1,000 that I have lent out, I have received about $805 back, about $185 is outstanding, and I have lost about $10. Now, you should know that the people borrowing this money are paying interest rates much higher than zero but much of that interest goes back to paying operational costs and covering defaults. There has been some debate as to whether this is becoming a form of predatory lending, but I believe there is a real need for such lending in these countries. You also have to trust Kiva in their selection of MFI field partners. I also do microfinance lending at Microplace.

Right now you can get a free $25 trial to try out Kiva using my invite link (I get nothing). You basically get to make a free $25 to a person of your choosing from a developing country, but when it is paid back you the money goes back to the sponsor. I know, rather cheesy. I think you should just have to keep lending it out by making it ineligible for withdrawal. That’s what I like about this type of lending – the money you commit can help many people over time.

Creating Our First Charitable Giving Plan

Up until this year, our charitable giving has been all over the place. If we saw something we wanted to support, we’d write a check. If our workplace had some sort of matching grant or charity drive, we’d participate. I always buy whatever a kid is selling when they come door-to-door because I remember how much I hated doing that when I was younger. (Although a pet peeve of mine is getting hit up for $1 at Safeway every time I buy some milk.)

We were sitting on a plane on so-called “Cyber Monday”, and thought it would be cool instead to decide on which organizations we wanted to support. (We also spent Sunday shopping at some outlet malls.) We weren’t alone. Payment processor PayPal just reported that charitable giving was up 45 percent during Thanksgiving 2010 as compared to last year.

Choosing Where To Give

Who should you let essentially spend your hard-earned money for you? Here is a list of the best charity comparison websites out there. In their holiday giving guide, Charity Navigator suggest that you pick charities that are financially healthy, committed to accountability and transparency, and creating measurable results.

However, giving for us is still personal, so we tend to include groups that are either local or have personally affected our lives. For example, Mrs. MMB and I both received some form of scholarship from our alma maters, so we give back to them.

Spreading The Love

In the beginning, I wanted to have us pick four organizations to support, and then divide our money evenly. For example, if we were to give $2,000 then each place would get $500. However, once we got going we ended up having so many different charities we “had” to give to, so we decided to split the money in half, and then we could give how we wanted. We could each give all of it to one single charity, or split it between 20 of them. Here’s what we ended up with:

Universities (Alumni)
Local Humane Society
Local Hospital Foundation
4-H Youth Program
Microplace Microfinance*
KIPP Schools
PSI (Global health: HIV/AIDS, malaria and family planning)

*Microplace is not a non-profit, but instead a for-profit site owned by eBay that packages microloans to entrepreneurs in developing areas into interest-paying investments. All of my interest earned is reinvested, so that each year the outstanding loan balance grows. Right now, if you give a $20 investment gift to someone, you get another $20 matching gift for free. $40 impact for $20. The recipient picks where the investment goes, and when it matures they get $20 back to re-invest or keep.

Support Haiti Recovery Effort Through Microlending

I received this e-mail today from Microplace, which provides loans to low-income entrepreneurs around the world. I think it’s a great idea, although of course you should remember that you are lending money and it may or may not be repaid. You may consider augmenting your charitable contributions with this type of investment.

Haiti earthquake increases need for microfinance to support rebuilding

Dear Jonathan,

A massive earthquake with a magnitude of 7.0 hit Haiti on Tuesday near the capital, Port-au-Prince, and is feared to have killed thousands. This disaster requires both immediate emergency relief and longer term rebuilding efforts. Microfinance will support the financing needs that inevitably arise from this type of catastrophe as Haitians look to rebuild their country.

You can help today by investing on MicroPlace in Fonkoze, the largest microfinance institution in Haiti.

Even better, I see that Microplace is still running their Buy-1-Get-1-Free promotion, where if you buy a $20 gift certificate towards any fund, you get another one for free. That’s $40 of microlending funds for only $20. To find the Fonkoze Haiti fund, click on Find a Gift Now, and use the Geographic filter > Latin America > Haiti.

What? Kiva Is Not Really Person-to-Person Lending

I’ve written about Kiva before – They allows individuals to make loans starting at $25 to low-income entrepreneurs in the developing world, also known as microcredit. By doing so, you can provide affordable working capital for the poor (money to buy a sewing machine, livestock, etc.), hopefully empowering them to earn their way out of poverty.

However, Kiva may not work exactly like it suggests on their website. You’ll notice that they post up pictures and stories of people needing loans, and you get to pick the exact person you want to lend to. Back in 2007, I thought I loaned $25 to Vitolina:

Vitolina owns a set of beach fales that she rents out to back-packers or picnickers passing through the village and works hard to keep the structures in good condition. Fales are simple, small open huts with thatched roofs built in the style of the traditional Samoan house. Vitolina?s fales are situated on a white sandy beach on the Samoan coast. She readily welcomes guests and provides them with a simple roof, unbeatable views, and home-cooked meals. She will use the loan to renovate the beach fales.

However, chances are that the person you clicked on already got the loan months ago. Your money is simply going to the microfinance institution (MFI) who already lent to that person, and will use that money to lend to another future person or general project. The direct “person-to-person” link does not exist like it does, for example, at LendingClub.

There is a lot of recent discussion on the web on this issue. Thanks to the commenter who made me aware of it. Check out this NY Times article and the blog post by David Roodman that started it all.

After reading the posts and several follow-ups, it does make practical sense that Kiva can’t actually match a lender to a specific borrower – it would take too long for the borrower to get the loan. However, it does show that “good stories” do matter. Remember those “Save The Children” commercials where you’d get a letter from the child you helped? Same deal. Your money goes to the general organization, not any specific child.

As a result, Kiva has changed how it explains their loans and their homepage tagline went from “Kiva lets you lend to a specific entrepreneur, empowering them to lift themselves out of poverty.” to the more generalized “Kiva connects people through lending to alleviate poverty.”

The other common variable that is somewhat hidden away to new visitors is that while you loan money at 0%, the actual MFI will likely go on to loan money to the entrepreneur at around 30% APR. The difference pays the operational expenses of the MFI and may partially subsidize defaults in order to maintain the advertised tiny 0-2% default rates.

None of this means Kiva or microcredit is bad. Sure, it’d be nice if I could lend at 0% instantly to a borrower in Cambodia who could pay 0% interest too, but right now that’s not possible. I still plan on lending at both Kiva, but will no longer get the “warm fuzzy connection” feeling from Kiva and may direct more funds towards Microplace or Grameen Foundation.