Ali is a car mechanic in Lebanon, Shamsaddin raises cattle on his farm in Azerbaijan and Judith owns a catering business in Peru where she cooks for weddings.

All three are examples of entrepreneurs in a developing country. Kiva.org is a website that allows you to support Ali, Shamsaddin, Judith and others like them not by donating, but by lending them money.

The concept, known as “micro-loans”, is not new ever since Muhammad Yunus set up the Grameen bank in 1983 to help alleviate poverty in Bangladesh. What is new and unique about Kiva.org (‘Kiva’ meaning ‘unity’ in Swahili) is the P2P (person-to-person) connection between the generous web surfer and the loan-seeking entrepreneur.

Micro-loans can provide huge economic benefits to a developing country. They allow local entrepreneurs to start or expand their small businesses, which in turn may create new jobs and opportunities. Entrepreneurs would not otherwise have this utility because ‘proper’ loans, i.e. from a bank, demand collateral, a bank account and are for far bigger sums. The average loan size entrepreneurs seek is about $400 (£240).

Embedded into the concept of micro-loans is sustainability, as once their business has grown and they have repaid the money, the individual entrepreneur has a greater capacity to support themselves and their families. Relying less on charity like food aid and hand-outs is empowering, and there is more satisfaction and dignity in a community that can support itself.

Kiva.org works directly in the field by partnering with local Micro-Finance Institutions (MFI), organisations that operate on the ground, to physically disburse the cash and collect payments.

Moreover, micro-loans have a benevolent nature: most MFIs are non-profit organisations usually with the aim of community development and creating job opportunities, unlike banks which lend money primarily to make profit. The benevolent nature of such micro-loans makes them similar to the Islamic concept of qard al-hasan (kind loan), which again emphasises the benefit to the debtor, rather than the creditor.

One criticism levelled at Kiva.org is the high interest rates entrepreneurs are charged by the field partners, often 30-35% on the original loan sum. Kiva.org justifies this by explaining that the nature of micro-lending is expensive. For example, a high-street bank in Britain can simply process forms and transfer sums between bank accounts, while an MFI must have staff walking on foot to disburse and collect a £200 loan to a farmer in a remote village. Thus, a higher interest rate is charged to cover their costs.

As the entrepreneur makes their repayments, the web surfer will receive their original amount of money back; this of course is the difference between Kiva.org and normal charities.  Interestingly the generous web surfer naturally has the option of re-lending to another entrepreneur. This begs the question: Which is more effective at alleviating poverty? Making a £100 one-off donation, or constantly re-lending a £100 sum to several entrepreneurs? While any economic analysis of this question would be a statistical nightmare, it can at least be said that each form of generosity has its place. Either way you are making a sacrifice out of your own good will, namely losing the ability to spend your £100, for which Allah (swt) will reward you.

Since its launch in 2005 Kiva.org has fast gained popularity in true Web 2.0 fashion. Its co-founders, Matt & Jessica Flannery, established Kiva.org as a U.S.501(c)3 non-profit organisation, the US equivalent of being a UK registered charity, but their online community extends far beyond just the US. Additionally they have managed to gain the support of several organisations including PayPal, which has agreed not to charge a fee when processing payments, making it the first organisation to gain this exemption.

One definition of philanthropy is the “active effort to promote human welfare”; it comes from the two Greek words philos (loving) and anthropos (humankind). There is no one size fits all when it comes to human beings carrying out charitable or selfless acts, and for many generous feeling web surfers who have joined the Kiva.org online community, lending is the new giving.