Via a comment on MetaFilter, I just learned about the levels of tzedakah, which I'll copy here from Wikipedia because I found it interesting:

  1. Giving a poor person work (or loaning him money to start a business) so he will not have to depend on charity. This is because the person is now free from having to rely on charity. The giver has not just helped the recipient for the short while, but instead for the rest of their life. There are four sub-levels to this:
    1. Giving a poor person work.
    2. Making a partnership with them (this is lower than work, as the recipient might feel he doesn't put enough into the partnership).
    3. Giving a loan.
    4. Giving a gift.
  2. Giving charity anonymously to an unknown recipient.
  3. Giving charity anonymously to a known recipient.
  4. Giving charity publicly to an unknown recipient.
  5. Giving charity before being asked.
  6. Giving adequately after being asked.
  7. Giving willingly, but inadequately.
  8. Giving unwillingly.

Especially so in the context of the Grameen Bank, which just won the Nobel Peace Prize today. The Grameen bank is level 1.3 of tzedakah. Back in the day, the WPA was level 1.1. But I’m not sure level 1.1 can really be instutionalized outside the context of economic catastrophe. Even the WPA was criticized for promoting laziness. People don’t like to feel lazy, and sometimes it’s nice to have incentives to live up to our potential. The Grameen Bank provides those incentives, so I think on the levels of tzedakah, it’s about as good as a large organization can get.


In a comment to my post on microlending, Jessica asked what I thought about an organization that does what might be called microgiving, giving people animals that grow to be more valuable than they were when given. I'm all for charity in general, but there are several reasons why this would probably work better if the animals were replaced with loans. Loans are better than giving, despite the cliche about not borrowing and lending.

Local knowledge is better than a plan to save the world. Animals aren't the best use of money in all places at all times for all people. The theory behind microlending, largely proven in practice, is that people know what their local community needs, and they just need some capital to provide it. Maybe their local community needs animals. But maybe it doesn't. I remember a story - I don't know the source or if it's true - about a charity that gave cars to poor people, who then sold the cars and bought bus tickets. This ties into the next issue:

Shared responsibility is better than individual responsibility. If I give you a dollar, you are only responsible to yourself in how you spend that dollar. You may want to spend that dollar in the most beneficial way possible, but you may not know what that is, and even if you know, you might not be listening to yourself. You could easily be tempted to spend it on a short-term gain at the expense of a long-term investment. If I loan you a dollar, we have a shared responsibility for how that dollar is spent. We are both responsible to ourselves, but also to each other. Shared responsibility is multiplied, not just added. And when an organization stays around for a while, this responsibility gets multiplied even further over time. Which ties into the next issue:

Individuals are less likely to reinvest than organizations. Reinvestment is good. If I give you money, your wealth has grown. But you won't likely give money to someone else. If I loan you money, your wealth grows, and then you give the money back to me, and I can give it to someone else. And over time, I can give money to more and more people. Reinvestment build infrastructure which improves community. And now that I think about it, this is a problem with Kiva, the direct-microlending organization I wrote about earlier, because the individuals doing lending through Kiva are less likely to loan again than Kiva would be if it were handling the loans.

Another issue is the relationship created by giving vs. lending. We give down, to people who have less than us. We lend to peers and make them our partners in investment. This is a bit counter-intuitive, but I think it's true. Personally, I don't like to borrow money from people, but I like even less to take money from people. And then, of course, there's the cynical view that poor people are just lazy, which microlending preempts and microgiving doesn't.

So in general I think microlending is better than microgiving. That said, if you want to donate directly to people, go ahead. It couldn't hurt. I think microlending is a smarter way to redistribute wealth. But the world, in my opinion, is not currently lacking in smarts so much as compassion. I should also point out briefly that most of the principles I've described here don't hold true on a larger scale. I favor macro-giving over macro-lending, but I'll go into that some other time.


I recently added some advertising for a few charities to this site. One of the charities is the Grameen Foundation, a microlending institution. I have a BA in International Studies, and much of what I did to earn that degree was learning about various save-the-world plans and their pros and cons. After four years, I pretty much knew why the world would never be saved, because pretty much every save-the-world plan has some major problems. Except the Grameen Bank.

The Grameen Bank gives small amounts of money to people in developing regions, which they then invest in what they need to sustain themselves, and pay back the money. Just like any loan, not everyone pays back the money, but it's not a lot of money, so no big deal. And those who do pay back the money gain both capital and experience helping themselves, which is ultimately much more valuable. It's generally an excellent program, and you can contribute to it via the Grameen Foundation.

Today Seth Godin pointed to Kiva, which does the same kind of micro-lending as the Grameen Bank, only without the bank. Rather than give your money to the Grammen Foundation, you give it directly to the people who need it. I have mixed feelings about this.

At first glance, it appears this direct connection primarily benefits donors, who get to know exactly where the money is going. I also imagine this system requires more overhead than Grameen. But it's also more transparent, which is something all non-profits should strive for. And even if it does primarily benefit donors, that should bring in more donors and ultimately benefit recipients. I think I'll give Kiva a little more time to establish a history before giving it my coveted banner ad endorsement, but it's nice to see new activity in microlending.