microfinance and microlending

My portfolio management philosophy

1. loan wisely so the capital is preserved
2. help people

This may seem out of whack. Why is capital preservation #1 and helping people #2? It's a goose that laid the golden eggs scenario. If the loan capital is gone then I have nothing left to help people.

Since no interest is paid to Kiva microlenders there is no compounded increase in working capital. This makes stewardship of the capital critical; unless you pump more into it the amount can only decrease due to the (approx 2%) default rate. So I pick lending orgs with acceptable default rates, and prefer loans that will start paying back sooner and with lower delinquency rates.

To help keep my head wrapped around it, I think of it like running a microfoundation.

How I pick borrowers

• risk rating of the local lending partner. If I lose my working capital then I won't have money to lend. Easy peasy.
• something in common: raises chickens, cows, goats. Uses Linux. Stuff like that.
• in a geographical area I would like to support. So far I haven't found anything in Liberia or Iraq but I would like to (update: found 'em!) I am also interested in lending to the poor in the US, but due to the standard of living here the small amounts I can lend don't go as far.
• working in a field I find particularly human (baking, barbering, teaching) or capitalistically productive (retail, repair, transportation)/

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