Fundraising 2.0

For years, charitable organizations have relied on the same formula to solicit donations and raise support for their causes.

A video with a quiet ethnic music in the background.
Images of wide eyed, forlorn-looking children.
Announcing that X million people live on less than $1 a day.

While this type of presentation can tug on your heart the first couple times you see it, it can create the unfortunate side effect of hopelessness. The overwhelming nature of the statistics can make the potential donor feel that a donation will be only a proverbial drop in the bucket with no significant effect on the situation.

What is the local purchasing power of $1 anyway?

Then Kiva came along.

By encouraging person-to-person loans, they accomplish several very important things.

* Individualization - your money reduces poverty in the life of an individual, rather than a country with X million people.
* Sense of participation - the individual lender reviews loan applications, determines which businesses are the most deserving, and loans money as he or she sees fit.
* Sense of progress - as loan repayments are made, the lender receives updates by email. The effectiveness of microfinance is seen first-hand.

This blends rational business sense with philanthropy. Anyone with $25 could make a significant difference in the life of a person halfway around the world.

No melodramatic video needed.

Other microfinance organizations would do well to abandon the old method of fundraising and follow the new model Kiva has pioneered.