Microfinance is a big deal these days. The principle behind it is that one of the biggest barriers to rising from poverty is initial capital. Many poor people run small businesses that could making much more money if they had, not a gift, but a loan. This loan provides the initial start up costs that allow people to expand their buisiness and eventually get out of poverty. Read more on it here:
Wikipedia on Microfinance. (Dammit. Apparently Wikipedia thinks the entry on microfinance sounds too much like an ad. So instead, here is an article by the Economist on microfinance.)
So I found this website called Kiva.org from a personal finance blog I read called “I Will Teach You to Be Rich”. This site allows you to personally make Paypal loans to entrepreneurs in other countries. You can read a profile on who you are giving a loan to.
I made a $25 loan to María Pilco, who has been running a General Store in Equador since she was young. My$25 is a portion of the $925 dollars total that she is asking for. When she gets all the money, then the loan will begin. It would be repaid in 6-10 months.
I think you can see her profile here.
I think that microfinance is in a way, better than charity. You are forcing people to be accountable with the money that they recieve, and I think that that will make a big difference on the results they get.