A recent BusinessWeek article discussed Kiva.org, an online experiment that allows people in developed countries to make micro lending as little as $25 to people in need in developing countries.

Yes, it is a nice experiement for sure, but I doubt it is a viable business model. Of course, one can expect to get a lot of satisfaction by being able to help others with small amounts, and likely to get the whole amount back, but it will be too time consuming really to show your generosity this way. All in all, it is really not cost effective for 40 donors to each spend 5 minutes to read the application and fund a $1,000 loan -- these 200 minutes can be better spent to make more wealth for more meaningful charitable efforts.

Compared to Kiva, I would rather pick up some big names from the Wikipedia entry, make my contribution, let them assign the funds and report back to me how many in need my contribution has helped.

Friends and neighbors have been lending one another money forever, but as the Web makes virtual neighbors of strangers, Kiva, which is Swahili for "agreement" or "unity," is harnessing the power of social networking to support microenterprise in the developing world. From Honduras to Uganda, microfinance institutions post MySpace-like profiles of people who need capital to start or expand their businesses. Then lenders -- aka you and I -- can sift through pages of business ideas and grant loans in increments as tiny as $25. PayPal processes the transactions for free, and lenders receive monthly repayments. The lender is out the money if entrepreneurs don't pay up, but microcredit has earned a reputation for high payback rates. In the five months since its launch, says Kiva, the site has had no defaults. It has processed $200,000 in loans, disbursed among 450 entrepreneurs.