I’ve written about Kiva before, but since it’s holiday time – I thought I’d mention it again. Since I first learned of the micro-lending concept, I have given Kiva gift certificates for birthdays and holidays. I have heard great stories from folks who have made investments, seen them returned, and are re-investing in new entrepreneurs. I learned of schools that use Kiva with students to focus their fund-raising efforts in unique ways. Kids research countries’ economic conditions, then convince their peers about who they believe to be the neediest. After reaching consensus, they donate funds.
If you haven’t checked out Kiva yet, please do. From their website:
We Let You Loan to the Working Poor
Kiva’s mission is to connect people through lending for the sake of alleviating poverty.
Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world.
The people you see on Kiva’s site are real individuals in need of funding – not marketing material. When you browse entrepreneurs’ profiles on the site, choose someone to lend to, and then make a loan, you are helping a real person make great strides towards economic independence and improve life for themselves, their family, and their community. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates and track repayments. Then, when you get your loan money back, you can relend to someone else in need.
Kiva partners with existing expert microfinance institutions. In doing so, we gain access to outstanding entrepreneurs from impoverished communities world-wide. Our partners are experts in choosing qualified entrepreneurs. That said, they are usually short on funds. Through Kiva, our partners upload their entrepreneur profiles directly to the site so you can lend to them. When you do, not only do you get a unique experience connecting to a specific entrepreneur on the other side of the planet, but our microfinance partners can do more of what they do, more efficiently.
Kiva provides a data-rich, transparent lending platform. We are constantly working to make the system more transparent to show how money flows throughout the entire cycle, and what effect it has on the people and institutions lending it, borrowing it, and managing it along the way. To do this, we are using the power of the internet to facilitate one-to-one connections that were previously prohibitively expensive. Child sponsorship has always been a high overhead business. Kiva creates a similar interpersonal connection at much lower costs due to the instant, inexpensive nature of internet delivery. The individuals featured on our website are real people who need a loan and are waiting for socially-minded individuals like you to lend them money.
How Kiva Works
Choose an Entrepreneur, Lend, Get Repaid
1) Lenders like you browse profiles of entrepreneurs in need, and choose someone to lend to. When they lend, using PayPal or their credit cards, Kiva collects the funds and then passes them along to one of our microfinance partners worldwide.
2) Kiva’s microfinance partners distribute the loan funds to the selected entrepreneur. Often, our partners also provide training and other assistance to maximize the entrepreneur’s chances of success.
3) Over time, the entrepreneur repays their loan. Repayment and other updates are posted on Kiva and emailed to lenders who wish to receive them.
4) When lenders get their money back, they can re-lend to someone else in need, donate their funds to Kiva (to cover operational expenses), or withdraw their funds.
I agree that microfinance and microcredit are promising strategies for reducing poverty. However, I am often critical of entities such as the Grameen Bank for their unusual blend of socialist-feminism and collectivist industry. Also, from an economic standpoint, I am unclear about whether or not there is even the slightest bit of profit to be made from such endeavors. Is there any interest rate at all? If there was monetary incentive for this in addition to social motivations, I bet more would get on board! Is Kiva different?
Kiva is pretty open about the notion that “investment” is not necessarily one with expectation of economic return, but an investment in human potential. Many of the students I work with are interested in fund-raising projects but are often frustrated about where and how to use their funds for greatest impact. A senior here at ACS raised several thousand pounds to donate to victims of the Sichuan earthquake last year, only to be deluged with requests from organizations she didn’t know or trust. (She ended up purchasing goods and shelter for individuals herself). I think sites like Kiva help students make decisions about how to help in small meaningful ways – and they can trust that the money is going (mostly) to the individuals, not to a top-heavy charitable organization.