Monkeys, I want to take a break today from our typical self-focused discussion topics and talk a bit about a really impactful way you can give back this holiday season. Some of you may be familiar with Kiva.org - Kiva is a non-profit that organizes microfinance loans to entrepreneurs in the developing world to help them start simple businesses in their local villages.
These are people that live in impoverished and war-torn areas, and instead of looking to the government or the Red Cross for a hand out, they've decided to pick themselves up by the bootstraps and start a business. Their ventures are nothing complicated - I've funded cafes, agriculture, electronics repair, tailor shops, grocery stores, and construction businesses. They aren't world changing businesses, but they are life changing enterprises for these people and their local communities. Your loan could be the difference between literally breaking rocks to earn money for food and working in a skilled profession - both for the entrepreneur you back as well as the local employees they hire. Kiva microloans provide a critical source of capital that is otherwise unavailable or incredibly expensive - local money lenders exact interest rates of 250% or more.
Kiva will put you in touch with entrepreneurs across the globe who simply need a little startup capital to get on their feet. You'll see their picture and have a chance to read their background and their business plan. You'll get updates as they build their business and gradually repay their loan. And that's the most exciting part of Kiva for me - it's a loan, not a donation. It's a way to help people get on their feet while also encouraging independence, accountability, and responsibility. The entrepreneurs are required to pay the loan back over time (Kiva's repayment rate is 98.92%). Once you do get paid back, I hope you'll re-lend the money again to help another aspiring entrepreneur - your single capital commitment can be reused again and again to literally change lives.
Since Kiva is a non-profit, the entire sum of your loan is delivered directly to the entrepreneurs - over 470,000 of them so far in 57 countries have received over $180 million in microloans. You can start lending with as little as $25. If you want to magnify your impact even more, Groupon is currently running a Christmas special where you can purchase $25 of Kiva credit for only $15 - the remaining $10 is matched by Groupon and other donors.
So despite all we've been through on Wall Street this year, I hope you'll take some time this Christmas to reflect on ways you can give back to those around the world who are trying to lift themselves up and break their own cycle of poverty. You can get started in 5 minutes at Kiva.org.
great find
Great post - how long have you donated to Kiva?
Just went and made my first donation. While I think microfinance is a pretty cool concept, I am wary of the number of firms that commit fraud under the pretense of providing loans to small start-up businesses. So I'm impressed that Kiva does a pretty good job tracking all of its Fund Partners (microfinance orgs) - including profile pages on each, the amount of capital they have received, their respective loans, and also their Risk Rating and delinquency rates.
Pretty good transparency. And it looks like they actively monitor the 'at-risk' Fund Partners and close those accounts when they detect fraud.
wow Captk thats great. I think im going to grab a few credits and share this with some friends that I think would be interested.
Awesome non-profit org. The PayPal Mafia did it again.
This might be my favorite post on this website! Kiva is a great organization that I personally love and donate to.
By the way, credits make a great holiday gift!
Not to be a hater, but this statement just is not correct. Kiva is basically a middleman for microfinance lenders. Kiva partners with these banks and sets up a portal where ordinary lenders, such as ourselves, can make loans to these entrepreneurs. However, the loan is still facilitated by the microfinance lender and interest is charged, with an average rate of 35% to the borrower (per kiva). Kiva does not charge the microfinance institute interest.
That being said, the 35% is still a very good deal for several reasons;(1) it brings capital to people that otherwise wouldn't be have access, (2) while high for the developed world, the rates are significantly lower than loan sharks, which would be the only likely alternative, and (3) you are getting some trickle down effect of job creation as host country nationals are the field workers that facilitate the loan process. I have been living in a rural town of developing country doing development work for the past year and a half so I have seen these companies in action.
Overall, I think Kiva is a great way for someone to help out and let people create their own opportunities but people should be adequately informed when making a decision to donate/loan money.
If you want to learn a little more about why the field partners must charge some interest, checkout this blog post from Meg Grey, a volunteer with one of Kiva's field partners in Nicaragua: http://fellowsblog.kiva.org/2010/01/07/bad-roads-interest-rates-and-mfi…
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