Microfinance in the US: Will There Be a Green Focus?

logoLeafy3Kiva.org, the world’s largest microfinance site, is so successful in part because Kiva itself is so fun, interactive, and imaginative in its presentation. They work with a host of field partners that fund small loans. People give small donations that finance these loans, and can see pictures of the businessperson, read about their idea, and decide to chip in to help that person rise above poverty. It truly is an amazing ‘feel-good’ story. What may be loose change to many citizens in developed countries is truly life-blood for many in the developing world. Kiva’s giving out $1 million in loans weekly in this way, and are the #1 most trafficked microfinance site. Despite the bad economy, Kiva’s had a record year.

Kiva has recently brought this model home to the U.S. by partnering with microfinance lenders (MFL’s) such as Opportunity Fund. The loans are bigger than some of the ones we’re used to hearing stories about (i.e., a $250 loan to a vendor in Uganda looking to sun-dry mangoes so that they have goods to sell in the offseason), but otherwise, it’s still microfinance. In the first week of doing so, someone in Cambodia lent money to someone in the U.S. It was a real moment of inspiration for everyone at Kiva, according to Giovanna Masci, Microfinance Partnerships Manager for the Americas at Kiva.

But let’s talk frankly about this “feel-good” story for a moment. Do I really feel good about Joe the Plumber getting a microloan? Well, yes, sure…but what would really make this a feel-good story is if Kiva decided to focus loans to green business startups.

Clean tech is not likely to be funding itself through microfinance, as there is simply too much money required in startup. Microfinance is most likely to be cafes, mobile food vendors, cleaning businesses, maintenance, and other low-budget startup companies needing funding.

In other words, Joe the Plumber may be a decent candidate for this kind of microfinance venture. Joe the Plumber made himself famous by decrying President Obama’s tax plan because as someone who would be profiting over $250,000 he would have to pay higher taxes and that somehow would destroy him. Republicans held him up as a model citizen crushed by the burdensome tax plan of the Democratic party. Joe even got a book deal out of it.

But the bottom line for someone like Kiva is, “Does the world really need more Joe the Plumbers?” Well,…kind of. Yes, the world economy needs more entrepreneurs. But in order to build a sustainable economy, don’t we need more Green Businesses? If Kiva were to focus its growing energy on helping people start green businesses, many of which would be ideal candidates for microloans, it would add substantially to the “feel-good” factor that Kiva offers its donors.

This is not necessarily easy to do. The small green business community is growing and getting its wings, but has yet to truly take off. And education of entrepreneurs that there are, indeed, better ways to do business is still in its infancy. Dry cleaners around the country are still being started with traditional, chemicaly-intensive processes using toxic Perchloroethylene gas. Dry cleaners that are using non-toxic substitutes, of which there are several, are still the grand minority. Coffee shops are still being opened that serve Folgers. Restaurants are being opened with kitchens completely revolving around deep fat fryers. Mobile food vendors are still getting licenses to sell hot dogs, chips and sodas to children at schools.

But wouldn’t it be nice if that all changed? Kiva’s growing power and position as the microfinance leader gives it a terrific opportunity to start focusing microloans to green, healthy, and socially responsible enterprises.

Scott Cooney is the author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill)

Follow Scott on Twitter: ScottCooney

Scott Cooney, Principal of GreenBusinessOwner.com and author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill, November 2008), is also a serial ecopreneur who has started and grown several green businesses and consulted several other green startups. He co-founded the ReDirect Guide, a green business directory, in Salt Lake City, UT. He greened his home in Salt Lake City, including xeriscaping, an organic orchard, extra natural fiber insulation, a 1.8kW solar PV array, on-demand hot water, energy star appliances, and natural paints. He is a vegetarian, an avid cyclist, ultimate frisbee player, and surfer, and currently lives in the sunny Mission district of San Francisco. Scott is working on his second book, a look at microeconomics in the green sector.In June 2010, Scott launched GreenBusinessOwner.com, a sustainability consulting firm dedicated to providing solutions to common business problems by leveraging the power of the triple bottom line. Focused exclusively on small business, GBO's mission is to facilitate the creation and success of small, green businesses.

6 responses

  1. I think it’s potentially divisive to bring Joe the Plumber into this. Granted I understand that his inclusion is meant to mock a caricature of the ignorant buffoon, many people in America relate to him as a hard working independent. There’s also nothing especially “ungreen” about him, other than the assumptions we make based on political stereotypes.

    Kiva understands that happy, prosperous people are a critical aspect of any approach to sustainability – you can forget the environment if people have no means to make ends meet. But assuming that many folks are not especially green minded in the pursuit of these micro-loans, it makes sense for Kiva to at least make “green” thinking a priority and perhaps favor prospective clients who understand this or at least express an interest in understanding it.

  2. Nice article by Scott but the real opportunity for KIVA is to help fund small scale green technology projects to its current demographics. To rapidly combat global climate change, a more cutting edge vehicle to help get useful capital into the hands of “bottom of the pyramid” would serve both the poorest and the planet more rapidly. As much as green investment here in the U.S. would help limit consumption, it would actually help change HOW small communities grow worldwide and limit their consumption habits for years to come.

  3. I love that Kiva has met with such great success in following the leads that Grameen & Accion International so effectively created. Microfinance is a boon to sustainability around the world. Political agendas are probably not playing a role in who gets loans and should also not be considered in anything Kiva does domestically in the US. There should, however, be certain criteria for these loans given the differing circumstances in the US market. Encouraging and favoring those entrepreneurial efforts that add to our movement towards sustainable businesses would be a huge help to our economy and well-being. I would love to see a baseline triple bottom line set of metrics in place to assess potential loans and to monitor them once they have been disbursed. Pie-in-the-sky? Perhaps, but our economy needs to take into consideration essential elements of sustainability in order to remain vibrant.

  4. Please visit our website at: http://www.GreenMicrofinance.com

    We at GreenMicrofinance are launching the GreenMicrofinance Loan Fund for financing clean energy, water, and agriculture. This is an environmental investment project that could become a model for the entire developing world.

    A New ‘Green Vision’ for the Developing World Jamii Bora’s Visionary New Partnership with GreenMicrofinance…

  5. I have $500 sitting in a Kiva account that was given to me for my birthday. I can’t decide who to give it to because I want to make sure that the beneficiary is someone who has sustainable operations. The recent findings that microfinance may not really be having that great of an impact on eliminating poverty made me think about the fact that most microlending doesn’t screen for social or environmental factors. Perhaps if they did, we would see an even greater impact of microlending…

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