Participating in Peer-to-Peer Finance

Ethical action: Directly investing to help others build their futures

Peer-to-peer financing occurs when people directly connect with each other without going through an intermediary, like a bank. When there is an interfacing institution it is usually a non-profit people’s organization.

One of the most common financial institutions in the majority world are rotating savings and credit associations (ROSCAs) All members of a ROSCA put in the same amount of money at regular meetings, then this pot of money is given to one member to use the funds as they see fit, with the process repeated until everyone has a turn.

Zopa operates as an online network in which people who have spare money lend it directly to people who want to borrow. Zopa stands for “zone of possible agreement,” highlighting the way loans are negotiated. Lenders set their terms,(such as the interest rates) and borrowers find a loan with the terms that suit them. Other countries have followed the model with Prosper in the US and P2P Financial in Canada.

Some organizations focus on investing in projects and enterprises. Kickstarter and Pozible are crowd-sourcing entities encouraging investment in creative projects. Two of the projects funded through Kickstarter that touch on the themes of this book are the short film Portraits of the Solidarity Economy (2011) and A Guidebook of Alternative Nows (2012).

Kiva, a not-for-profit lending institution, uses the Internet to facilitate investment by people in the minority world with small loans to individuals and groups in the majority world. More than US$317 million has been lent to projects in sixty-one countries, with a repayment rate on loans of almost 99 percent.

Unlad Kabayan Migrant Services Inc, is a Philippines-based community financing institution that helps migrant workers form savings groups to begin to accumulate small amounts. Their Migrant Savings for Alternative Investment program helps start enterprises in rural communities. These businesses generate employment opportunities and will hopefully provide people with an alternative to outmigration.

Sunday Soup generates funding for creative projects through community meals. People attending the meal decide how the funding is directed by voting on a choice of project applications.