Kiva is an organization that not only allows the opportunity to combine your cash with other people’s to make a greater impact, but also completely redefines giving. In fact, what you’re doing with Kiva isn’t “giving” at all. It’s lending.

Kiva.org “connects people through lending for the sake of alleviating poverty,” and it does so in a strikingly innovative way. Called peer-to-peer lending, Kiva’s model allows many small loans from individuals like you and me to be pooled into bigger loans, then administered to entrepreneurs around the world via third-party micro-lending partners.

How Do I Do It?
It’s a bit like online dating. You log onto Kiva’s website, search through the online profiles of qualified entrepreneurs, and determine who will receive your loan. Your money (amount is determined by you, and can be as low as you’d like) is then pooled with that of other lenders who have chosen the same entrepreneur, and the funds are disbursed to a Kiva partner micro-lender who has made a loan to this entrepreneur.

When the entrepreneur pays the micro-lender back, the micro-lender pays Kiva, and Kiva pays you. You can then go on to re-invest (and by “invest,” I mean social investment — you aren’t making any cold hard cash on this deal) the repaid funds in another entrepreneur, or have them placed back into your paypal account.

What’s My Risk?
According to the Kiva.org website, out of $53,000,535 in ended loans, 97.87% have been paid back in full. So while Kiva does not absorb the risk of lost funds (if your chosen entrepreneur does not pay the loan back, you’ve essentially lost that money), your chance of being paid back in full is very high. If you’re just starting out, consider making a $25 loan, or another amount that you’re comfortable losing in the worst case scenario.

The Latest News
While Kiva has made its name as a facilitator of lending internationally, recently the organization has blurred the lines between third-world countries and the USA, introducing its collaborative micro-lending to the United States market of low-income entrepreneurs. This controversial decision to bring the process stateside has fueled much discussion in the micro- and peer-to-peer lending communities, and may make your decision easier or more difficult depending on your desired outcome and political leanings.

If you’ve got some time (and an ability to deal with a scant amount of cheesiness), check out this video about how Kiva works. Those of you who are visual learners will benefit:

A Fistful Of Dollars: The Story of a Kiva.org Loan from Kieran Ball on Vimeo.

Be sure to check out the first post in this series, Meetup Philanthropy.