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Buy a New Car or Build a Village?

April 11, 2002

Buy a New Car or Build a Village?


WHEN Ramachandra Dhirendra sought $5,000 to refurbish the school bathrooms in Coimbatore, India, he turned to an unlikely source: an American online startup. He advertised his project on DevelopmentSpace, the site of a new company devoted to pairing small-scale entrepreneurs in developing countries with donors elsewhere.

"The results were nearly instantaneous," Mr. Dhirendra said by e-mail. "I mean, within two weeks after posting our project, we got our first investor."

The site (www.developmentspace .com) was founded by two former World Bank employees, Dennis Whittle and Mari Kuraishi. Using angel investors and their own wealth, they are creating what they hope will be a bureaucracy-free "perfect marketplace" — a bit like eBay (news/quote), but with international development projects instead of Pez dispensers and movie memorabilia. (Although the site refers to its registered donors as "investors," currently provides only for donations; Ms. Kuraishi said she and Mr. Whittle hoped to add investment opportunities soon.)

DevelopmentSpace focuses entirely on projects that require thousands of dollars, not millions, like an Australian campaign to combat gasoline-fume sniffing or an eye hospital expansion in Nepal.

"We're basically competing for mind space and attention span with people who are thinking about buying a new car or a new gadget," Ms. Kuraishi said. "They've got to be able to say, 'I just got on the Web and I found a school in Slovakia to support. How cool is that?' "

The site, online since Feb. 14, has more than 500 registered donors and 78 projects seeking funds. One project, Mr. Dhirendra's effort in southern India, has already found financing. DevelopmentSpace plans to charge a commission of 7 percent to 10 percent on all deals.

"They're very efficient and respond to your questions, even at night," said Meitamei Ole Dapash, executive director of the Masai Environmental Resource Coalition, who is soliciting funds for a tourism-friendly "model village" in Kenya. "That personal connection, the rapport that is built — it goes far beyond the aspect of looking for money."

The biggest challenge for the company, its founders and development experts say, is accountability. How can potential donors be certain that their money will not be squandered on a poorly run or fraudulent project?

The DevelopmentSpace creators say they have safeguards in place to ensure integrity. Many projects will have been endorsed by the company's partners, established organizations like Mercy Corps and World Neighbors. Entrepreneurs who approach the company will be screened by a third party approved by DevelopmentSpace, and their business plans will be scrutinized by graduate students and other volunteers.

The company also plans an eBay-style rating system that will let entrepreneurs and contributors rate one another for integrity and competence. "A bad rating, especially any that point to fraud, would be grounds for blacklisting," Ms. Kuraishi said.

Still, international development experts are cautious about the idea's prospects. "As far as linking investors with projects, that's a good idea," said Vikas Nath, an analyst at the United Nations Development Program. "But it's not as simple as buying a book. When it comes to social development projects, things can be a little more vague."

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