Charity, recession and micro-loans

Understandably people give less in charity during a recession. At the very least it forces us to re-examine how, where and to whom we give.

I recently came across Kiva, a microfinancing scheme which involves lending micro-loans "to unique entrepreneurs around the globe" "for the sake of alleviating poverty".

Reading around, there appear to be some drawbacks, most notably the exorbitant interest rates charged to borrowers. This latter aspect flies in the face of the microfinancing envisaged by its creator Muhammad Yunus, recipient of the Nobel Peace Prize in 2006.

Does anyone have any experience of being involved in such a scheme? Would you consider it as an alternative to "traditional" charity? Share your thoughts here.