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Kai Ryssdal: You probably could have figured this would happen as the recession really took hold last year, but 2008 was only the second time there has been a year over year drop in charitable giving in this country in the past half century. Giving USA released the numbers today. But with the decline of outright charity have come other ways to get money into the hands of those who need it.
Micro-finance is one of those ways. Small loans and financial services to the poor and economically underserved. It's been huge in the developing world. And it's gone online. There are a number of Web sites that help Internet users fund entrepreneurs from Kenya to Cambodia. And today one of the biggest of them -- Kiva.org -- will let users make microloans to small business owners right here in the United States. Rachel Dornhelm reports.
RACHEL DORNHELM: In January of this year, Vika Sinipata fulfilled a long time dream. She opened her own business. Assisting the elderly.
VIKA Sinipata: Usually in the afternoon I just make her tea.
On this day she is at a client's house, outside San Francisco.
Sinipata: And then I make her sandwiches.
Sinipata says she had the idea for the business after taking care of her own relatives. What she didn't have was a line of credit.
Sinipata: I've tried the route through the bank, and they want two years of experience. And especially for myself, I didn't really have much foundation in the way of experience other than my MBA, and my background in sales and it wasn't enough.
So she launched her business with her savings -- $5,000. In March, she realized she needed another $10,000 for a license from the state and more marketing materials. And that's how she became a part of an experiment on the microlending Web site Kiva.org. Kiva is a nonprofit that allows individuals to lend to entrepreneurs around the world -- in $25 increments. Until today all of its borrowers were in developing countries.
PREMAL Shah: The economy and the credit crisis was a big motivator for Kiva looking at the United States and realizing wow, there is actually quite a need for capital domestically.
Premal Shah is president of Kiva.
SHAH: So say someone in Queens, N.Y., who might want to start a salon, or someone here in the Bay Area that might want to start a day care.
Microcredit in the U.S. has existed for two decades, but it gets less attention here than in the rest of the world. The average U.S. loan is $7,000, compared to a few hundred abroad. And relative need may be perceived differently too.
Shah: I really don't know if people are going to say, "Hey, my $25 goes further in South Sudan or in Cambodia than in does in, say, Queens, N.Y." It will be really interesting to watch.
Shah says Kiva users do show strong preferences and funding rates vary depending on the borrower's gender and geography.
Shah: For example, if you're an African, I'm sorry, a Kenyan woman farmer, you get funded 10.2 times faster than a male Bulgarian taxi driver.
To test the waters, Kiva is having two U.S. microfinance institutions post their entrepreneur's profiles online. Eric Weaver is CEO of one of them -- the Opportunity Fund in San Jose. It vetted Vika Sinipata's loan. Weaver says after the credit markets seized up, they've seen more interest in microloans.
ERIC Weaver: We're seeing more people come to us who previously were bankable. You know, they've had their line of credit frozen, or their term loan was not renewed, they weren't able to increase the credit they're getting from the bank.
So would a current Kiva user be interested in the U.S. option? I called up Reverend David Taylor, in Greenville, S.C. His Eastminster Presbyterian Church currently lends on Kiva.
DAVID Taylor: Actually on our outreach team, we've had conversations about how we could do a Kiva-like loan to people in the community.
Reverend Taylor says his congregation would probably be most interested in funding U.S. entrepreneurs from their own region. People across the country may have that option. If all goes well, Kiva plans to team up with microfinance organizations in Detroit, New Orleans and beyond.
In San Francisco, I'm Rachel Dornhelm for Marketplace.