By Clark Boyd

Technology correspondent



The small loans are aimed at helping developing countries

But in 1997, Mr Whittle's boss gave him a new challenge - to fund small projects. After several failed attempts to push these small projects through the World Bank bureaucracy, he decided to call a brainstorming session.

"My colleagues and I went into a room at the World Bank one day, and said, what if we just allowed anybody to come in and just pitch their idea. And what if we made decisions on the same day," said Mr Whittle.

They decided to put the plan into action, and it proved successful. More than 1,000 groups from some 85 countries submitted ideas for small businesses and non-profit projects.

More than 500 finalists were chosen, and came to Washington, DC, to make their cases for funding. On the final day, the World Bank awarded $5m to dozens of small start-ups.

But what Mr Whittle remembers most is a conversation with one South African woman who did not win that day.

She was not upset. In fact, she was convinced that there were many people around the world who would fund her project if they knew about it.

Going online

Dennis Whittle saw an opportunity to tap into what he calls the "secondary market" for donations. He quit the World Bank, and six years ago, he and a colleague started a private, web-based microfinance program called Global Giving.

Take a goat herder in Uganda. If you give him $25, that's two smaller goats. That's a great start. With $100, you can imagine more goats, perhaps a small shelter, stock up on goat feed

Jessica Flannery, Kiba

"The website is kind of like a combination of eBay and Amazon. And the idea is that qualified grassroots projects from around the world can be listed, as long as they meet certain qualifications.

"If you're a donor, and you're interested in HIV/Aids, you can find projects to fund. If you're interested in projects in Kenya, you can find those. It's a clearing house."

A potential donor searches through a list of small-scale projects on the Global Giving website. You can even e-mail project leaders for more information.

Then, the donor can choose to give as little as $10 to a project. Some, though, have given as much as $150,000.

Needy projects

Global Giving is not the only website tapping into internet's power to directly connect would-be funders with would-be entrepreneurs.

The couple behind Kiva spent time in Africa

Kiva's story starts a little more than two years ago, when Jessica Flannery went to East Africa. She was working for a group that gives $100 grants to needy projects.

"Every single day, I would meet an entrepreneur, and hear about how $100 had changed not just his or her life, but also the lives of their families, friends and other community members," said Ms Flannery.

"Take a goat herder in Uganda. If you give him $25, that's two smaller goats. That's a great start. With $100, you can imagine more goats, perhaps a small shelter, stock up on goat feed. So, that little bit of money can really help set someone up."

Jessica's husband Matt Flannery, a computer programmer, came to visit her in East Africa for a few weeks.

He too was moved by the entrepreneurial spirit he saw there. So, he set out to design a website that could connect small lenders with small donors.

"I wanted to start a little program where someone in America or Europe or Australia or anywhere with the internet could lend money online to a small businessperson in Africa," said Mr Flannery.

'Peer-to-peer' giving

The result is the Kiva website. Kiva is a Swahili word for unity or agreement. The site went live last year.

The challenge that these microcharity enterprises have is identifying great projects, vetting them, ensuring that they are on the level, and ensuring that they are using the money wisely

Ethan Zuckerman, Harvard Law School

"The way it works is you pay using PayPal," said Mr Flannery. "Then, you receive updates that are like blogs over e-mail and on the internet, and eventually you get paid back according to the performance of the entrepreneur."

Lenders do not receive interest on loans, but the borrower does pay some interest, which helps pay some of Kiva's costs.

But the internet can bring both great promise and great peril for microfinance, according to Ethan Zuckerman, a fellow at Harvard Law School's Berkman Center for Internet and Society.

Mr Zuckerman, who also sits on the advisory board of Global Giving, points out that the net makes it easy to give money to worthy projects, but it also makes it easy for scammers to dupe potential donors.

He says that guarding against these kinds of scams is an important service Global Giving and Kiva can provide.

"The challenge that these microcharity enterprises have is identifying great projects, vetting them, ensuring that they are on the level, and ensuring that they are using the money wisely," he said.

Globalgiving and Kiva say they work with local groups to vet would-be entrepreneurs. Both organisations contend that is the best and most cost-effective way to make sure money collected via the internet is distributed efficiently, and properly.

Both websites seem to have successfully tapped into what one could call a "distributed network" of small donors and lenders worldwide.

Global Giving has raised millions of dollars in donations for small projects in the developing world. And while the Kiva's co-founders will not put a dollar figure on the amount they have loaned so far, they do say that every time a new business is listed on the website, the needed funds are raised in just days, or even hours.

Clark Boyd is technology correspondent for The World, a BBC World Service and WGBH-Boston co-production