Proving that microloans can help to change the world one little bit at a time, Kiva.org hit a major milestone today. Since it’s founding four years ago, it has now made possible $100 million in microloans between individual lenders and entrepreneurs all around the world. The company has brought together 573,000 lenders (people like you and me putting in $25 or more towards a specific project), and 239,000 entrepreneurs.
Most of the entrepreneurs who benefit are in developing countries, but Kiva opened up its service to needy U.S. entrepreneurs last summer (which caused some controversy, but was the right decision). It also has APIs for other developers to build on its data set.
Kiva creates a personal connection between lenders and recipients. Each entrepreneur has a profile page with a picture and description of what they plan to do with the loan. Then every month you get an update on how much of the loan has been repaid. For instance, I joined other Kiva donors to give this furniture maker in Afghanistan a $1,075 loan a year ago. So far, he’s paid back 61% of the loan without ever missing a payment.
You can also create lending teams on Kiva. So far the 40 people on the TechCrunch team (join here) have loaned out $5,225 spread across 183 loans.
Once a loan is repaid, you can plow it back into another loan. I think of it as charitable giving, although it is not technically a charity. But the best form of charity is to help people help themselves . . . teach a man to fish and all that.
$100M is amazing… congrats to the Kiva team!
you’ve come a long way, baby
I have to say, this is a pretty positive, non-selfish site (in a sea of social media crap).
Once the economy gets better over here and I actually have money to part ways with, perhaps I’ll send some Kiva’s way.
…might actually help someone on the other side of the world. Not giving it to Americans though. You can get a job if you try to find work.
Just to clarify, I am American…but I don’t think opening this site up for Americans is a good thing. It’s the people in underdeveloped countries that need micro-loans. Giving $50 to an US citizen will just buy them beer and a $1000 will get them a flat-screen TV. It’s the less priviliged that need assistance.
I too am an American and I have made 7 Kiva loans over the past 3 years. Your insinuation that Americans spend their loan money on beer and TVs is baseless and offensive to me. There are plenty of Americans who are trying to start or expand their own small business. I don’t see how your comment even makes any sense, surely someone in Nigeria or the Dominican Republic could “get a job if they tried to find work”. They could also just as easily spend $50 on beer.
spend less time arguing / criticizing… more time loaning money to whomever you think needs it.
all up to you folks.
We love that microlending model, that’s the way to support people. Great.
The http://www.spirofrog.de team
I am a Kiva Member for less than two years, I am very happy with it so far. 60 loans given, not one of them is delinquent.
100 mio excellent we NEED more models like this!
Partners In Rhyme Inc has been participating in Kiva loans since January ‘09 and we have found it be an engaging and gratifying way to help people around the world.
Check out and join our Partners In Rhyme Lending Team here
http://www.kiva...rtners_in_rhyme
Kiva is a great success. And I am proud to be a part of it as a lender. It’s good to help people in this way!
I love Kiva. Donated lots to them as well. Such a great way for entrepreneurs to help other entrepreneurs.
What an incredible impact kiva has made for those who really need it in developing countries. Congrats!
I’m a fan of Kiva, but the process does not work as you’ve outlined above. The furniture maker you “lent money to” had already received a loan. Your money went to another worthy entrepreneur selected by the microlending agency in-country.
http://blogs.cg...at-it-seems.php
For what it’s worth, Kiva is not hiding the way the process works.
See: http://www.kiva.org/about/how
Amazing stuff. I love what Kiva is doing. Congratulations to the team for reaching $100M
“Proving that microloans can help to change the world one little bit at a time”
Actually, no. Kiva has proven that it has been able to help many small businesspeople in developing countries but the jury is still out on how much microloans actually due to combat poverty.
The social media/tech crowd gets all breathless about Kiva. But the crowd doesn’t really know a lot about development issues. They get attracted by a bunch of platitudes (e.g., teach a person to fish…) and mistake them for a panacea.
See the Boston Globe article below “Small Change: Billions of dollars and a Nobel Prize later, it looks like ‘microlending’ doesn’t actually do much to fight poverty”
http://bit.ly/q5MRg or
http://www.bost..._fight_poverty/
I don’t mean to be a total Scrooge. Giving to Kiva is surely a good and salutary thing. But I’m not sure how much it’s the miracle cure its (not always terribly informed) boosters make it out to be.
Definitely not a miracle cure. Uncontrolled… “micro-credit” is nothing more than charity. If you hand it out carelessly, it’ll be blown on booze (which is why Grameen Bank only deals with women borrowers by the way).
Used well (for investment rather than consumption) it can be quite helpful for economic development. Every free economy starts out dependent on entrepreneurs to create jobs & output. Without access to credit, this cannot happen. Of course micro-credit is not the cure-all… having proper political institutions in the country is equally important.
My challenge to the Kiva hype is not related to the inherent good of micro-credit… but rather the inefficiencies in the Kiva system. The ones really winning from this model are the lending institutions that Kiva dumps the money into (not the entrepreneurs).
These institutions are charging HUGE interest rates to the entrepreneurs, and thus are really the one’s winning from all the American money that is being fed to them without strings. They have a huge incentives to post wonderful stories on the site and *show* that the borrowed amounts are properly being repaid (by the way, if you think collection practices in the west are tough… just imagine those used in developing countries)
Is this really the best way to administer micro-credit?
and the CEO’s response
http://blogs.cg...der-replies.php
I wish someone here will share answers to the following:
1. I am assuming that 100& of the amount we lend actually goes to borrower. Correct?
2. Does the borrower pay any interest and service fees to Kiva’s partner?
3. What is the overall default rate at kiva?
4. Does the loan repayment installments make it back to the lender through Kiva or directly from the partner?
Thank in advance for clarification!
Answers to your questions:
1) No. 100% of your money goes to the microfinance institution which then decides how to allocate your money.
2) Yes. The average interest rates charged by Kiva’s MFI partners is around 30%. This is broadly in line with the overall microfinance industry and is reasonable given the costs of administering loans in the places where MFIs do so.
3) The overall default rate at Kiva is very low currently, less than 3%. However, the MFI partner is really the responsible party determining what they repay. Repayment is not actually directly tied to the performance of any particular borrower.
4) The repayments flow from the MFI partner to Kiva and then to the Kiva user.
For a nearly complete review of the recent conversations about Kiva’s practices and marketing see: http://bit.ly/3MrZ1x
1. Yes, you are prompted to donate an extra few $ to cover kivas costs but you’re not obligated to. If you put $25 for the loan, $25 is given. When I’ve donated I donated the $25 and then the $3 or so Kiva asks for to cover their costs.
2. The borrower does pay interest on their loan, Kiva outline this in multiple places. The loans are very short term so the interest is quite high, this is to both offset the costs and encourage them to not rely on loans.
3. It’s a tiny tiny percentage, something like 0.05%. This is partly due to how they’re handled; a field partner will want to keep up it’s reputation, so if someone lended to is going to default they’ll ask the local community to help pay back the loan. I don’t know anyone who has experienced a person defaulting.
4. It works through a partner system, there’s a group of partners who each handle a specific group of people. So if “edward” wants a loan he’ll discuss it with his partner, if it goes well they’ll get it onto the kiva site, you’re shown the default rate of that partner, if the loan gets funded then the money goes to the partner who then distributes it to the individual, the individual then pays the money to the partner who pass it onto kiva.
This is my understanding of it anyway.
These are all, what you would call, Frequently Asked Questions:
http://www.kiva.org/about/help
I know a prince in Africa that needs a loan, just in case anyone was wondering.
This is easily one of my very favorite dot coms. I hope Kiva grows go give out a trillion dollars in loans, Kiva and Kiva-like dot coms.
Wow that is impressive. Congrats to Kiva also to Prosper.com that’s done 182Mil
Thank you so much for this post. We are huge supporters of Kiva. Our team has raised over $8,000 in the last 6 months, with two of our team members forgoing home purchases in order to dedicate more time and money to kiva.
You can join our kiva team here: http://www.kiva.org/team/ecoki
Thanks guys!
Kiva are a registered 501(c)3 not for profit in the US (check their footer)
S
I think this method of “donating” money is much more preferable over the upcoming donation marathons on tv. Most people only participate to lighten their moral burden, not because they actually wanna help. And even if they do, most of their money never makes it those, who really need it, because of too much bureaucracy and too many corrupt government officials. Of cause organizations need to raise money too to keep operating, just like Kiva does, but the sheer amount of money lost is is unbeliavable. Microfinancing is a great way to help people help themselves and create a lasting substance.
Great news for Kiva, true testament to the internet as a distribution channel for spreading the messaging and allowing everyone to do their little part. Wokai is trying to implement the same model in China, making good headway! http://wokai.org
Highly encouraging milestone. The concept of microloans needs all the validation it can get !
Similar efforts in India –
RangDe – http://rangde.org
DhanaX – http://dhanax.com
Wishing all of them success !!
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