It's usury by first-world standards, but it's a "below-market rate" in the countries where Kiva does business.
No, it's usury by any means of moral, ethical and historical practice the world around. Just because it's being lent at a "below-market rate" in a corrupt third world country where
everyone with money is making usurious loans doesn't magically make it right, it just means you're using flawed logic to allow the continuation and participation of the practice in a way that lets you ignore that you'd never be willing to subject yourself or your family to those lending conditions so you can sleep at night.
I'm not so sure that giving money is better than lending it out-- just different. I've been investing my money with local entrepreneurs, and as near as I can tell they're creating jobs and helping more people than are being helped by the food bank and the homeless shelter. (Of course the entrepreneurs are highly unlikely to hire from the people who are using the food bank and the homeless shelter.) The entrepreneur gives someone a job for a year or two with the prospect of becoming a self-sustaining continuing enterprise. The food bank and the homeless shelter help someone for a month or two and then stand by for the prospect of helping them again if they don't reach their own self-sustaining job. They're both very different "business models".
You're right, charity and lending are two different acts. It doesn't mean that a greater good can't (or shouldn't) be wrought from either act, but it doesn't change the fact that they're two different acts. Charity is not business and lending is not philanthropy. Kiva tries to present both as the same act (as Giggles has demonstrated in their OP), and takes advantage of people incapable of understanding that distinction for the purpose of perpetuating corrupt and unethical business practices in third world countries by convincing people who have guilt complexes about their first world wealth and selfishness that they're somehow "making a positive difference in the world".
I also note that you said you invest
locally. This means any lending you're providing is most likely done so under the restrictions and guidelines of United States and Hawaiian law. Your investments are having a positive net effect on your community, and as such your money is doing good work, but it's still business, and business at rates that you'd most likely find acceptable to participate in yourself. That means you're a kind and wise
investor. Although it speaks well towards your
overall character, it ultimately does little to sway my opinion of you as a
philanthropist as it fails to demonstrate the act of charity. Your
giving to the Fisher House and the Wounded Warrior Project, however, does. Although the two acts are not necessarily mutually exclusive, the wicked acts of one can still taint the virtue of the other. In all things, balance.
I know it costs a lot less to "save" the life of a child in Africa than it does to float a microloan to the child's family. But which is more likely to be a self-sustaining solution?
Neither. Both approaches are fundamentally flawed as both acts do little to address the root problems to those issues. They're bandage feel-good acts that do little to foster genuine improvement and support of an ailing foreign community. Perpetuating the status quo of a region full of suffering by feeding starving children GMO peanut butter and B vitamins through charity or giving that child's "entrepreneurial" father a loan for 75% of his family's net worth at 40% interest through conducting business rarely reduces their overall suffering, and can sometimes prolong it... and it does little to address the ills of the society that has contributed to the root cause of their plight, but it does sometimes perpetuate it further.
Peter Singer raises these philosophical issues (since he's a philosopher) in "The Life You Can Save". The most important thing I learned form the book is that there are no easy answers, and I suspect that the Kiva situation also falls into that category.
http://the-military-guide.com/2012/11/22/book-review-the-life-you-can-save/
And yes, I timed that post to kick off the holiday giving season...
I don't necessarily disagree with your or some of Singer's points, but if one just drives himself to conduct all his affairs with others the world around in a manner that he wishes them to be conducted with himself while being grounded in the spirit of love and respect, a lot of gray and these "difficult" questions just melt away. If you don't like something, stand your ground and don't make excuses. As a community, when we call debt an emergency, declare high-interest credit cards a bad idea, mock payday loans and
outfits like Western Sky, and
warn off loan sharks, Kiva ceases to be a difficult question with no easy answers. It is an organization facilitating business, and is doing so with for-profit banks lending money at rates that would not be tolerated by the majority of this community, and by their nature designed to consolidate wealth. There is no charity.
If you want to
lend money to do good and build up a community, conduct that business and lend that money responsibly and ethically. If you want to
give money to do good and build up a community, give that money whole-heartedly in a way that helps empower the people receiving that money in a responsible manner. Do one, the other, or ideally both... but don't do one and say it's the other. If you lie to yourself at such a basic level, your entire endeavor towards doing good can be easily jeopardized. Remember, these are tools that can potentially
enact good, they are not the embodiment of good itself.
I've been giving/contributing/being used by Kiva for a couple of years now. I read your comments and think "great...I've wasted good karma". Seriously makes me question my good intentions.
Don't let this discourage you from doing good and righteous things with your money, just let it be a learning experience to better help you to do the right thing in the future.