Follow-up: Social lending decision tree

As reader comments from my last post made clear, people approach social lending for charity/microfinance quite differently than they approach it for investment reasons. So while the platforms may operate similarly, lenders/investors explore the sites seeking varying characteristics and values. With that in mind, this decision tree divides the social lending space into two different trees right at the beginning. The same key differentiators are highlighted, but perhaps this method of bundling investment and charity sites is more useful to aspiring lenders seeking the right platform for their needs and goals.

[Note: Click "full" on the bottom left of the widget for the best view]

Social Lending Decision Tree

View more presentations from mhil.

Comments

[Scott Barstow]

Melody --

I have enjoyed reading about your efforts to change the world after seeing your Twit RT'd from Tim O'Reilly.

I think a branch missing from your "loan money primarily to help people" tree is a branch for religious or spiritual care in addition to simply financial care and lending. Organizations such as Hope International and Opportunity International introduce a religious ( in this case Christian ) world view as a part of the program.

This is an important decision point for many people that are giving money, at least in the circles that I am participating in around this topic.

Thanks for the information and your insights.

[Tim]

Even more lending platforms to add! Soon you'll need to create a social lending search engine. I wonder why all of these platforms must re-invent the wheel. Can't a big player like Kiva just allow itself to be franchised a little better?

[Melody]

Thanks, Scott. Do you know of any web platforms to facilitate religious/faith-based giving? I agree wholeheartedly that these organizations play a major role in the "to help people" category, but since I'm focusing on web-based social lending platforms, I'm not aware of any such sites that have a religious focus. Would love to hear more.

Tim - These platforms all have their quirks that I think is a natural and productive step for a nascent industry. I imagine that in the future, the best model(s) will win and there will be some consolidation. It's true that it shouldn't be necessary to go to a specific site for education vs. payday vs. home repairt lending.

[Bhalchander Vishwanath]

Hi Melody,

Nice decision tree. I would like to bring UnitedProsperity.org to your attention.

With us online microlenders get to help entrepreneurs in extreme poverty ( living on less than $2 a day) and nearly double the impact of their microloans.

Key differentiators:
1. $1 is microloan guarantee by the online contributor or microlender gives nearly double the impact. i.e. $1 in microloan guarantee leads to nearly $2 in microloan to the poor entrepreneur since the bank is making a bigger loan based on a guarantee.
2. There is enough money with the banks in developing countries, it is just that they are a little risk averse. Our guarantee frees up local capital and our guarantee links local banks and microfinance institutions strengthening institutional linkages and reducing the long term need for aid.
3. Foreign exchange risk is mitigated with our guarantee since the guarantee funds remain in dollars and the banks makes the loan in local currency. Only in the event of default by the microfinance institution will our guarantee get called and the conversion of funds to local currency will happen.
In case of other international lending sites in the event of local currency depreciation, the microfinance institution could end up paying more than what they originally borrowed and the online contributors could lose some their principal if the currency depreciates significantly.

Our online contributors ' Social guarantors' get no interest on their contributions and can expect to receive their contribution back on loan repayment.

Best,
Bhalchander
Founder and CEO
http://www.unitedprosperity.org