What does lending someone from a third world country money to buy a goat, helping a couple fund their wedding and pledging cash towards a media grad’s feature film have in common?
They are all feel good investments designed to make a stranger’s dream come true, by loaning or giving a sum of money on an online platform.
So if you’re looking for a philanthropic investment opportunity, look no further than these 3 revolutionary movements.
You can change the world one micro loan at a time with online websites like Kiva, where 100% of the money you invest goes straight towards third world entrepreneurs who would otherwise struggle to get a loan in their country. As the name suggests micro loans are small loans that are usually for people needing to purchase equipment or tools for their business.
How does it work? Kiva offers loans from just $25 to fund things like helping a family in Africa buy seeds for their agriculture business or rolls of cloth to make garments to sell. As an investor you will receive updates on how the loan is being put to use via email and as the borrower repays the loan, the money will be deposited back into your bank account. You can invest alone or as a group, for instance Scott Pape from the Barefoot Investor has been supporting Kiva since 2008 with his Kiva lending team, made up of 1,327 members who have so far loaned $289,975 to people in need.
2. Peer to peer lending
Peer to peer lending platforms originated in the UK (RateSetter and Funding Circle) and the US (Lending Club and Prosper) and are based around the revolutionary idea of cutting out the middleman, AKA the banks. In Australia, SocietyOne is the only peer to peer lending platform (so far), however more are expected to come like UK-based RateSetter. So watch this space…
How does it work? The traditional peer to peer lending concept overseas is when individual investors lend money directly to strangers for things like a car or wedding. While the appeal for the investor is helping out a stranger, borrowers also benefit with lower interest rates attached to their personal loan than generally offered by the big banks.
Find out more about peer to peer lending with Mozo’s tell all guide here.
The great thing about the internet is it connects people from all over the globe with the click of a mouse. Online crowdsourcing platforms like Australian-based Pozible and US-based Kickstarter encourage investors to fund exciting projects or ventures that could be anything from a muso looking to bring their new EP to the world or a designer about to launch their new fashion brand.
How does it work? On both Pozible and Kickstarter, as an investor you can make a pledge on projects and if the project gets enough funding it will brought to life. However if it doesn’t receive enough pledges to reach the funding goal then nobody will be charged. But keep in mind crowdsourcing isn’t a loan, as you won’t get the money back. Your “reward” is seeing a stranger produce their project and share it with the online community.
Have we missed any innovative philanthropic investing movements? Let us know below.