“ Kiva is the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world. „
Kiva was set up in the United States in 2005, and according to its website it has already loaned over $231 million to borrowers all over the world. Although the company is based in America, people from all over the world lend money through it. Kiva's main aim is to help people from poorer countries to gain access to financial loans that they wouldn't otherwise have access to, which helps them to set up and maintain their own entrepreneurial businesses and livelihoods.
Kiva is a microfinance initiative which aims to connect lenders to small businesses across the world. Kiva has fieldworkers across the developing world, who find local small-scale finance initiatives that require money to get their businesses off the ground, and then loans them the money they require. 'Microfinance' basically means that members of the public become lenders in place of Kiva, as Kiva must raise what it loans in order to stay afloat itself.
What this means is that when, for example, the local village bank is unable to lend money to an individual, it can instead put that person forward to the Kiva association, which immediately loans money to the individual, whilst also listing the details of the person and his or her initiative on Kiva.org for potential lenders to see.
I was introduced to Kiva by a friend who sent me a $25 Kiva voucher for my birthday. This is the smallest loan that can be given, and it translates to roughly £15. I spent a long time looking through projects across the developing world and eventually chose to donate my money to a Peruvian woman who needed funding to purchase ingredients for her food stall, to support her family.
I have found it very easy to browse through businesses on Kiva, as the website is very easy to use, with a clear layout and a good amount of detail about the borrower and his or her business. I have given 6 loans in total since signing up to Kiva in 2009, and the first sum I loaned to the lady in Peru was returned to me within 8 months. I then reloaned this to a group of cereal growers in Senegal, and so on. I already knew that I would like to invest in agriculture, health or education, and the website allows the lender to narrow down his search to such sectors, as well as to the country he prefers to donate in. The lender can also narrow his search down by gender, though I have not used this option myself.
With some loans, there is a small risk of the individual defaulting on their loan, ie not being able to pay it back to the lender, however this is a very rare occurrence. The longest a loan has taken to get back to me is a year, and the shortest took 7 months, but this is not a long time if you are not eagerly anticipating the return of your £15!
Kiva is an excellent and ethical gift for the person who has everything, who lives far away, or who is generally difficult to buy for. I have given one to my best friend who is currently working in Africa, one to my father (who has everything), and one to another friend who loves supporting new businesses and is interested in microfinance initiatives. Once the loan has been returned, the gift recipient - the lender - can choose to refund the returned money to himself, send the loan to someone else as a gift, or loan it to a new initiative himself.
On the Kiva website, www.kiva.org, the slogan reads 'Empower people around the world with a $25 loan', which I believe is something that they really do achieve. Kiva is an incredibly empowering initiative, as effective as any charity but not based on the idea of a one-off hand out. The company focuses on helping people to set up their own livelihoods, which means that they are able to rely on themselves in future - what is key is that it gives them financial independence.
As an experienced lender who also gives money to various charities, Kiva has made me feel very involved with the people I have loaned money to, as I have been able to follow the progress of borrowers' initiatives, and see that my small sums have really made a difference in their lives - in a very affordable way.
Kiva is a great website, it's all about microlending small amount of money to people with the aim of alleviating poverty. With interest rates being so rubbish at the moment I thought I would like my money to be doing something useful rather then just sitting in the bank. Kiva allows you to lend money in $25 increments to people who's profile you can search through on the website. Kiva has partnerships with microfinance institutions all over the world who manage the loan, information about the loan is available on the profile page so you can be fully informed before lending the money out. The profile covers information on the loan and person its going to, information on the country and more financial stuff like the Repayment Schedule. Its important to remember when doing this that's these are loans so its always possible to lose money. Payment is via PayPal.
The countries and situations covered are really broad so as an indication here are some of the loans I have. $25 (total loan $300) to a widow in Cambodia, to buy pigs to increase her income so she can help fund her children's schooling. $25 (total loan £1,000) to a family in Ecuador, to increase the stock in their shop and increase their income, they are saving up to buy a new house.
*A short History of Lending Money*
On a hit-list of things your mother really wouldn't want to tell the neighbours that you took up for a career, a moneylender is up there near the top with murderers, child molesters, estate agents and terrorists. Despite the fact that the free movement of money through borrowing and lending has never been more recognised for its essential role in greasing the wheels of the economy, money lending has never been a very 'nice' activity. Think of the role models. There's poor old Shylock being denied his justly won and legally binding 'pound of flesh'; Jesus unceremoniously throwing the money lenders out of the temple; and the classic image of the mono-syllabic, baseball bat carrying, shaven-headed tattoo-knuckled loan shark's 'collection agent. Even the previously honourable profession of banking was often grudgingly admired but frequently derided. No accident that 'merchant banker' was cockney rhyming slang for....... well, you can work it out for yourselves.
Our well-educated grandmothers taught us the old Shakespearean adage 'Neither a borrower nor a lender be' so why am I about to come out of the lending closet and stand up proud and shout 'I am a money lender and I'm not ashamed of it - not one little bit'. The answer is simple; I'm using my spare cash to support an organisation called Kiva whose slogan is 'loans that change lives'.
I'm not lending cash to cash-strapped single mothers on sink estates at interest rates of a zillion per cent per day but I AM lending to people who have few alternatives about where else they could get the money they need. The difference is I'm doing so at zero percent interest and I'm not actually too bothered whether I get it back, although I know that statistically I probably will. And when the money comes back then I'll just lend it to someone else.
Kiva works through local 'field agents' to set up micro-financing loans for individuals or groups of small businessmen and women - by which I mean they have small business, not they are all little people. Millions of kiva supporters lend money in chunks of $25 a time and choose to support specific projects with specific entrepreneurs in countries all over the world. The $25 chunks get combined together to more sizeable loans that enable people to expand their businesses, buy equipment for their restaurants, get a laptop for their kids, even pay for an operation for their mother. There are as many reasons for borrowing as for giving. By joining together with other people who want to lend, we're giving people the chance to improve their lives without going into un-repayable debt and with the knowledge that when the final cent is paid off, they've achieved something significant.
There's an old cliché about giving a man a fish and feeding him for one meal or giving him a fishing rod and feeding him and his family for life. With kiva, we'll lend him the money to buy the rod and he'll catch enough fish to feed not only the family, but plenty to sell to his neighbours, generating money to repay the rod and create a new source of income for years to come - all without feeling the stigma of receiving 'charity'.
*Lending to the Developing World*
Loans to what we use to call the 'Third World' and now more gently refer to as 'less developed countries' or lower income consumer markets have a pretty bad history. The size of Aid loans were usually massive - enormous sums of money loaned by one usually Western government to another cash-strapped government, often with massive political strings and interest attached. Plenty of money never got to the people it was intended for and was diverted into the new presidential jet or prime ministerial swimming pool. Some countries had debts so huge that their entire economic output couldn't begin to scratch the surface of the mounting repayments. Whilst a vast amount of third world debt was written off a few years ago, the past experience of intergovernmental lending wouldn't make you look at that sort of activity as a good bet.
*M Personal Experience of Charities that Support the Developing World *
For many years I sponsored a child through Plan International. I'll be honest, I really wasn't at all engaged in the process - I just coughed up every month and felt a bit bemused about how it all worked. My lack of engagement was due to being 'allocated' a kid, a little lad in Benin of all the bizarre places when what I really wanted was to have some kind of input into where my money went - ideally to a girl in India, Pakistan or Bangladesh. I wanted my sponsorship to mean a girl somewhere was more valued by her community because she was bringing in my pennies. However, Plan isn't a shopping experience, you just get what you get and that's that. And the idea that it's all going to your kid is just plain fantasy - you sponsor a community and the kid in the photos is really just a symbol of that community. When a good friend who'd been sponsoring for about 15 years discovered that her sweet little smiley kid in Zimbabwe had reached the age of 18 and immediately signed up with Robert Mugabe's army, we all started wondering if this was really the best way to help. I eventually swapped out of the sponsorship and put my monthly money into their 'Forgotten Children' plan which supports homeless kids around the world. This meant more to me because I'd seen so many of these kids on my travels but it didn't feel very personal. I also have standing orders set up with Oxfam and Unicef but again, my money just goes into a big pot and I trust them to use it appropriately.
* Why Kiva Interested Me *
When I received an invitation to join kiva I was really excited because finally someone was offering me a more personal way of getting involved. To be honest, I didn't actually realise it was a lending scheme at first and even now when the money keeps coming back, I still treat each loan as a potential gift and never as a loan. With Kiva you log onto a site with the profiles of hundreds, sometimes thousands of people around the world who are looking to borrow small amounts of money. For each of these Kiva Entrepreneurs, you get a small profile on who they are, where they live and what they want to do with their loan and how long they want the money for. You'll also be made aware of whether they've had and repaid loans through Kiva before. Everyone has been pre-screened by the local field agencies so Kiva has a high degree of confidence that money will be repaid. If you want to go into a great deal of detail, you can check out the performance record of the local field agency with ratings for their compliance, their rates of non-repayment and the proportion of their loans that are in arrears. To be honest there are a few agencies that haven't worked out and have been removed from the scheme but most of these are for very good reasons that are generally outside anyone's control. Not surprisingly, agencies in places like Gaza and Kenya have had 'troubles'.
* Is Lending the new giving? *
In these credit crunch times, the media tell us that a lot of people have cut back or stopped their charitable giving because they just can't afford it any more and I think this is a massive shame because the charities need the money more than ever. For this reason I didn't cut any of my regular giving in order to support Kiva. What I really like about micro-financing is that my money works really hard. It goes into the hands of someone who uses it, pays it back, and allows me to then lend it to someone else. My money is going round and round and making a measurable difference.
Each time I go to make a loan, all the repayments I've already received on my existing loans are on my balance and can be set against the next loan. So generally, each time I make a payment, it's for less than the full $25.
If you put a couple of hundred quid in a bank account and left it for a year, you'd see a tiny bit of interest and then the tax man will take another slice of that and by the time you've paid the petrol to go to the bank and the car parking charges whilst you pop in and withdraw it, you've not seen too much benefit over the year. The same money passed around in Kiva loans can create real INTEREST by which I don't mean percentages, I mean interest in the classic sense of the word. I get updates each time my entrepreneurs make repayments. Every now and then I get a field report about how someone's project is going - for example I recently received a report about a baker in South America who I'm supporting and I read about how his wife can't use her oven because it's outdoors and the wind had been blowing sand into the bread. So now he's using the money to build a hut around the oven to keep the sand out but he's waiting for the cost of certain building materials to come down before he does the building. Now that's what I call interest.
* Signing up *
Go to kiva.org and just figure it out. I'm not going to waste your time with a blow by blow account of how to do it because this review is more about the philosophy than the mechanics. Just believe me when I say that it won't take more than a couple of minutes. They want your money and they aren't going to make you jump through complicated IT hoops to get it.
When you sign up you can choose to have a public profile page or to be entirely anonymous. It's not facebook - people can't just go looking for you or checking up on you and it's not easy to go looking for a particular donor because the site is not about the givers, it's about the receivers. However each time you go to the site you will see some random member profiles and I have always found it quite interesting to read about why other people give and whether there are particular types of business they want to support. You also learn interesting things about where some people get their loan money from - for example classes of school kids raising money by doing events at school, mothers lending their kids' pocket money to teach them the importance of sharing, immigrants supporting people from their homelands and so on. I chose to make my profile visible because I like reading about other people and it's only fair they can see something about me. However, the profile contains nothing more than my first name, my location and a bit asking people to let me know if they spot any loan requests that are related to the particular industry I work in. A friend of mine chose to keep his completely anonymous but is just as engaged with the system as I am.
It's also important to know you really won't get spammed or hassled by Kiva. When you sign up and each time you make a loan, you can change the amount of information you receive. They'll generally tell you when the loan has been fully subscribed, then when the money has been disbursed, each time a repayment comes in, and whenever a field report is written about that entrepreneur. However, if you don't want them, you can opt out of all of this. However I quite like to get the odd message to remind me to go in and see how everyone is doing. I had a set of mails asking for support when Kiva made the shortlist in the USA for a big American Express funded award and I contacted everyone I could think of in the USA who might have an AMEX card to ask them to vote for Kiva. This was also a great way to pass the word to people about the organisation.
* How to make a loan *
Go to the site, browse through the entrepreneurs and pick one or more that you would like to help. Check out the data on the field partner if you want to - or if you aren't too bothered about whether the repayment history is good, just go ahead and don't worry. You can screen the long list on various criteria such as geography if there a particular country or region you want to support, gender (you might want to be supporting people 'like you'), what type of business they are in and so on. There's a key word search - I always search on the word 'bakery' for example.
Once you find your entrepreneur, click the button that says 'Loan $25'. If you wanted to loan more, then you could do more than one loan to the same person but always in multiples of $25. If you want to do some more loans with other entrepreneurs, click some more buttons and when you are ready go to your basket, review what you've got and then head to check out. Since 100% of the money you loan goes to the entrepreneur, Kiva generally give you the option to add a donation of 10% towards their costs. You can do this, you can reduce it to an amount you are happier with, or you can give nothing - there's no pressure. I generally give a couple of dollars but if I'm feeling skint, I reduce it or don't give anything. You'll also have the option to use any credit from repaid loans as part of your payment for the new one.
Payment is by paypal and is in dollars. This is my only slight annoyance but since paypal give Kiva massive support by supplying them with free money handling services, I can't get too mad. What I don't like is that if I have any balance on my paypal account, they insist on taking the payment from that and the exchange rates that they apply are much worse than I can get on my commission-free Nationwide credit card.
* How I use it *
I do a lot of work on the travel website www.trivago.co.uk which pays me for my efforts by transfer to my paypal account each month. So each time I get a payment from trivago, it triggers a thought in my head to go and do another loan. I've gave Kiva vouchers to some friends who got married earlier this year. Unfortunately their wedding presents all got swallowed up when their wedding list company went bankrupt. I replaced the one postable item I'd bought them, but decided a set of crystal glasses wasn't a good idea to put in the post so I spent that money on Kiva. At first I was worried that they wouldn't use the vouchers, but when I went to visit them before Christmas, I was amazed to find that the husband had spent ages researching the different entrepreneurs, thinking about which countries he wanted to support and what type of businesses. And he really had got stuck in to seriously assessing the options.
In the run up to Christmas I decided that anyone on my Christmas card list for whom I had an email address would get an email instead of a card and all the money I would have spent on cards and postage could go to Kiva instead. So on Christmas Eve, hubby and I sat down and picked three entrepreneurs to give our money to. This was my husband's first experience with the site and he picked a young guy called Ivan who lives in Peru and wanted to buy a bull to help him plough his fields. He's still going on about how his mate Ivan is doing and wondering whether he's got his bull yet. We also picked a micro-bank in Cambodia where about a dozen people had clubbed together to apply for a joint loan for lots of different projects, and a group of ladies in Pakistan who want to buy an auto-rickshaw for their sons to run a business.
* Getting others involved *
Each time you make a loan, Kiva tries to encourage you to mail some of your friends and tell them about it. I'm very reserved and British sometimes and I really struggle with this. I'm of the 'don't let your left hand know what your right hand is doing' philosophy when it comes to charity and I'd be dead embarrassed to mail a bunch of friends and ask them to get involved. I wouldn't even write this review if it wasn't under a pseudonym. I know that lots of people don't share my interest in the developing world, many have specific charities that are very personal to them and I think that's their business. I wouldn't want people to hassle me about a charity and so I don't feel right to do it to others. That's one of the main reasons I've written the review - I can tell lots of people about Kiva and hopefully some will be interested enough to give it a look but nobody will feel under any obligation. I've also changed my user photo to the Kiva logo - maybe someone who thinks 'I must have a look at that' will be reminded each time I rate their reviews. I'm also trying to figure out how to add the Kiva logo and info as a footer on all my personal emails.
* Summary *
Kiva's a great way to get involved with real people around the world and make a difference to their lives at relatively little cost. I also find it really enjoyable and very involving. Lend as often as you feel you can, reinvest when you want to, and if you lose interest in the site, you can always withdraw the money you put in once it's been repaid. So please, if you like the idea, give it a go. Over 1.5 million dollars were loaned in just the week before Christmas so lots of people just like you, not necessarily rolling in money but just interested in helping out, are already involved, sending a little and making a big difference. Plenty of lenders will only ever do a single loan but many will go one to build their own little global lending empire - what a nice way to take over the world!
UPDATE - someone who has just joined and doesn't have a paypal account just contacted me to say that you CAN make loans using a regular debit card.