How to strike the right balance in microfinance lending

I was lending money to a grocery store owner in Mozambique and a cosmetics saleswoman in Haiti when I realized I was addicted.

I really enjoy microfinance sites like Kiva.org — maybe a little too much.

If you have $25 to spare, you can lend it to an entrepreneur halfway across the world and feel like you are making a small difference. He or she eventually pays you back (hopefully), the credit goes into your account, and you can start all over again.

Of course, I'm a cheapskate compared with someone like Bob Harris. The 51-year-old Los Angeles author and screenwriter has been lending on Kiva since 2009 and is up to an amazing 7,625 loans amounting to more than $190,000. That is all from an original $20,000, which has since cycled through multiple times.

"People like microfinance because it's so specific," says Harris, who wrote a book, "The International Bank of Bob," about his lending experiences. "You're not helping a charity in general; you're helping Maria in Ecuador start a print shop, or you're helping Sharon in Kenya finance a cow whose milk will help pay for her kids' education."

The concept has obviously pushed our emotional buttons. Kiva is now up to 1,276,189 lenders, who have doled out $691 million in loans.

Funds raised on Indiegogo, a similar site, have increased 1,000 percent over the past two years, with 275,000 campaigns in total. And 8.3 million people have pledged $1.6 billion to 81,000 different creative projects on Kickstarter.

Here are few tips to keep you from giving or lending more than you should:

For crowdfunding aficionados, the sums can certainly add up. Take $20 here and $20 there, and you are quickly into hundreds of dollars.

Sam Dogen is a fan of Prosper.com, where you can lend to promising entrepreneurs and even get a nice return (assuming the money is paid back). In the past couple of years, the 38-year-old from San Francisco made more than 7 percent a year, much better than he could get by parking cash at the bank.

But Dogen, who runs the site FinancialSamurai.com and wrote the book "How to Engineer Your Layoff," admits the lending process is "addicting." So he limited himself to a few thousand dollars, issuing 25 loans of $100 to $250 a pop.

He considers it part of his "alternative investments" bucket, putting in no more than what he can afford to lose.

After all, loans at Kiva are repaid at a rate of 98.75 percent. Wait long enough — the terms of each loan repayment depends on the individual project — and the overwhelming odds are that your $25 or $50 will circle back around.

Then you can send it back out and get your charitable fix all over again.

If you are in a relationship, your partner can be a handy source of sober second thoughts. Make sure your family can afford whatever you are lending out.

You can even include your kids in deciding what funds should go where and why, to help spur their own charitable impulses.

"When you're in a partnership, you certainly don't want to be doing anything financially they don't have any knowledge of," advises New York financial therapist Amanda Clayman. She enjoys using the classroom-funding site DonorsChoose.org.