Money doesn't actually talk. We do.

Not Quite Microfinance: Six Ways to Invest as Little as $1 in Somebody Else

Yesterday, Irina blogged about the launch of MicroPlace, an eBay-owned site that allows individuals to invest in microfinance institutions.

Today, we list other companies and organizations, both for-profit and non, that fit into the growing category of what we call Microfunding. They all help individuals like you participate, and they share a commitment to similar principles:

• They don’t require that donors or lenders have a ton of money

• They operate almost entirely through simple web sites

• They let you pick (or at least help pick) the individuals who benefit from your money

Here’s a rundown of six places to put your money to work, none of which require more than 100 bucks:

Site: DonorsChoose
Minimum Amount You Need to Participate: $10
Can You Make Money? No, but your donations are tax deductible
How it Works: Public school teachers post proposals for classroom projects and materials; donors give money to pay for part or all of any request they see on the site

Site: Modest Needs
Minimum Amount You Need to Participate: $1
Can You Make Money? No, but your donations are tax deductible
How it Works: Modest Needs offers one-time grants to families or individuals in danger of slipping into poverty; donors vote on who gets help

Site: Kiva
Minimum Amount You Need to Participate: $25
Can You Make Money? No, but you generally get your money back
How it Works: You pick a business in a developing country that you want to support and fund all or part of its loan request; you get your money back once the borrower repays the debt, and you can track the business’s progress on Kiva’s web site (but you earn no interest on top of the money you lend)

Site: MicroPlace
Minimum Amount You Need to Participate: $100
Can You Make Money? Yes, though not much more than about 3% annually
How it Works: Here, you’re effectively investing in individual microfinance institutions that lend to local businesses; you don’t get to pick which business gets your money but examples are on MicroPlace’s site for each microfinance institution

Site: Prosper
Minimum Amount You Need to Participate: $50
Can You Make Money? Yes, 10-20% returns annually are possible (but there are risks)
How it Works: The biggest U.S. player in peer-to-peer lending, Prosper lets borrowers post loan requests, say, to pay off high-interest credit-card debt and state what interest rates they’re willing to pay lenders; individual lenders pick from the proposals — say, only those from borrowers with great credit who are willing to pay 10% interest — and fund whatever loans they wish. Prosper collects each payment (that is, when the borrowers don’t default on the loans) and distributes it to the lenders.

Site: Lending Club
Minimum Amount You Need to Participate: $25
Can You Make Money? Yes, similar returns to those at Prosper are possible (with similar risks)
How it Works: Think of this as Prosper with a social-networking spin, where you can easily connect with (and borrow from or lend to) people you have a connection with.

– Ron Lieber

Photo: Flickr