October 05, 2010

The Hoop Fund: Applying the Kiva Model to Fair Trade

San Francisco

The Hoop Fund is a new Web site that uses an approach popularized by Kiva to increase the market for fair-trade goods, such as chocolate and hand-woven clothing, and help the farmer and craft cooperatives in the developing world that make the products gain access to capital to improve their businesses.

Visitors to the Hoop site can buy Coral Jasmine Rice grown by the Surin Cooperative in Thailand, but they can also make a loan to help the cooperative buy a freezer to preserve seeds from 35 threatened native rice species.

Giving people the opportunity to do both will create a stronger bond between consumers and the products they buy, turning them into advocates, says Patrick Donohue, chief executive and co-founder of the Hoop.

"If you invest in the production of coffee, that's your coffee too," he says. "So you can go out and say to your friends and family, 'I helped make this cup of coffee. You should try it out.'"

The Hoop's focus on loans to co-ops rather than to individuals is one of the primary distinctions between it and Kiva, says co-founder Deborah Hirsh. She says that community-owned businesses are a powerful vehicle for improving living standards for people in developing countries.

Says Ms. Hirsh: "Often a coffee co-op or a chocolate co-op or a weaving collective has literally brought electricity and schools and basic infrastructure to their communities." 

See more coverage from the Social Capital Markets 2010 conference on our Conference Notebook blog.