Pierre Omidyar, founder of the US auction website Ebay, will on Friday make the largest individual donation to fund microfinance initiatives - small business loans aimed at stimulating economic growth in developing countries.
The $100m (€84m, £56m) fund, which will be run for profit by endowment managers at Tufts University in the US, marks a growing trend among a new generation of philanthropic entrepreneurs and technology billionaires to seek market-based solutions to global poverty rather than rely solely on traditional charities.
It also coincides with the launch by Bill Clinton, former US president, of a similar microfinance fund drawing on capital from several multinational companies, charities and government development agencies. This consortium, led by Deutsche Bank, and including Britain's Co-operative Bank, Hewlett-Packard and Merrill Lynch, was launched yesterday to distribute $75m to "institutions providing financial services to poor people".
Microfinance is known for making small loans, usually less than $200, to individuals, often women, to establish or expand a small, self-sustaining business. "Microloans enable the poor to lift themselves out of poverty through entrepreneurship," said Mr Omidyar, whose site is credited with stimulating a revolution in entrepreneurial activity among people in developed countries.
"The microfinance industry has shown that enabling the poor to empower themselves economically can be a profitable business."
The interest of technology entrepreneurs in such schemes can been seen at the recently-formed Google Foundation, which has formed a partnership with the Acumen Fund, a non-profit venture fund that invests in "market-based solutions to global poverty".
The broader trend towards social entrepreneurship is also supported by George Roberts, founder of private equity group Kohlberg Kravis Roberts, whose foundation offers management advice to non-profit-making social enterprises. Mr Omidyar is particularly interested in harnessing the power of for-profit companies for individual self-empowerment and says he has been re-reading Scottish economist Adam Smith for inspiration.
"I don't think the non-profit sector has a monopoly on doing good," he said. "It was something I realised at Ebay that business can have a huge social impact - look at the three-quarters of a million people making a full-time living [on Ebay] and many more learning that they can trust complete strangers."
Although a supporter of non-profit charities through his $400m Omidyar Network, the Ebay founder believes there can also be inefficient ways of addressing something on the scale of global poverty.
