waynehazle

I think this charity is worth mentioning here and on the Asia board. I saw this on the Oprah show last week when she talked about "Giving Back" with President Clinton.

Through this site, you can make small loans to people in developing countries. $250 can make the difference in the world to a woman in a village trying to have a fruit stand, or someone who needs a plow, etc. They interviewed the founders and they said the repayment rate is excellent.

I have registered on the site but have not made a loan yet. It seems worth looking into.

321go

Wayne, I've been a Kiva lender for quite some time now - it's an excellent organization.

Lenders don't have to fund the entire amount needed - usually you will loan $25.00 or more and it will be bundled with $ from other lenders.

ShayTay

I've also been a lender for a while. I think it's a great idea. The first person I loaned to in Kenya paid back the loan in full and I was able to shift those funds into another loan.

matnikstym

Thanks for posting this Wayne. I was thinking of this the other day but forgot the name of the organization and I must have missed Oprah that day.

PredatorBiologist

Thanks for posting this Wayne!

Microloans are the future, a great way to help people build their own economy and future.

ShayTay

To give all of you an idea of what a few dollars can do when invested through Kiva, here's a report I just received about the lady to whom I made my latest loan (I'm just one of several people making the loan.)

This is an update on Exodus Tailoring, run by Janet Sila, written by Naomi Arron:

Janet is a 27 year-old woman who is full of character, full of life, and full of determination to create a happy and secure life for her two children, her husband, and herself. When I met Janet, I saw one of the biggest smiles I have ever seen. According to my co-workers at ANK, her happiness can be greatly attributed to her Kiva loan. They told me that when she applied for her loan, she was a desperate, destitute woman seeking an opportunity, any opportunity, when it seemed like there were none to be found. While I could see remnants of difficult times, this was not at all the woman we encountered.

Janet and her husband are tailors in Mlolongo, a growing town just outside of Nairobi. Before her loan, Janet had to go to Nairobi often to purchase materials. She could only purchase the amount that had been ordered because she didn’t have any excess funds for future orders. Now, her shop is filled with materials and hope for the future. When applying for her Kiva loan, she had hoped to employ one person. However, with the huge increase in orders for clothes now that people in the area know that she has a large selection, Janet has had to hire three people to help fulfill them. Plus, with the upcoming festive season, Janet expects the demand for her clothes to increase even more!

Other neighborhood tailors with small shops have begun asking her if they could purchase some materials from her instead of travelling to Nairobi to purchase it. This is setting the stage for her future plans of becoming a wholesaler. With her added income, Janet hopes to become a wholesaler so that she can sell materials and clothes to all of the shops in the area. Currently, all tailors in Mlolongo must go into Nairobi which is not only time-consuming but also adds to the cost of the goods. Becoming a wholesaler would not only improve and expand Janet’s business, it would also be beneficial to the community as a whole.

At this season of giving, please consider making a microloan through Kiva!

bradley57

I've made four loans since I first heard about Kiva through Fodors, only small amounts but two have been paid back already.
It's not much so I don't miss it but I know that it is making a difference to individuals.
I've chosen to lend to a couple of people in places I have been,Tanzania and Kenya, and to a couple of people who do things I would like to do as a hobby, that they have to do to earn money to eat - keeping chickens, making food to sell etc. That just made it more interesting for me.
My children thought I was mad, that it was a scam, but even they were impressed when the loans were paid back in full and on time, and I showed them how group action can change lives for the better!

ShayTay

My first loan was also paid back in full. I then re-loaned the amount to this lady. My experience of the people in Africa is that they are hard-working and only need to be given a chance to earn a living.

ann_nyc

I've been lending thru Kiva also. Here's how it works. You put up the cash thru the website - it literally takes 5 minutes. Kiva then channels the cash to the 'field partner'. The field partner works directly with the recipient. Please note that the recipients do get charged interest, which goes to the field parter. The benefit to the recipient is that the interest rate (while sometimes higher than prevailing US rates)is lower than they could get otherwise, via loan sharks or whatever.

The recipient pays pack the money, usually in monthly payments. The money is not distributed to the 'investors' until the full amount has been repaid. At that point, you have the option to withdraw your money, or to roll it into another loan.

I loaned a total of 225 to two different people. One has already paid back her loan, and then I rolled that amount into 4 different loans. The same money can be loaned again and again.

Currently, kiva has so many people offering to lend money, that they actually limit you to $25 per loan.

lerasp

if i understand correctly, the person giving the money (the lender) does not earn any interest, although interest is indeed paid by the borrower? Why would anyone agree to that? You are allowing someone to earn profit for no investment of their own. and it's absolutely guaranteed that interest rates are pretty high. it doesn't make sense to me.
it's the equivalent of giving money to a bank a being ok if they don't pay you any interest. looks like a good business to be the bank.

lerasp

i looked at Kiva's field partners and some of the are FOR PROFIT organizations. For example, Microvest is Private Equity Fund that gives market-level private equity returns to its investors. as you may know, PE returns have been sky-high recently. they make that by keeping the interest the poor guy who's trying to make a living paying them. this is profiteering.

ShayTay

Whoa there, Lerasp! First of all, Microvest is NOT a Kiva field partner; MicroINvest of Moldavia is. Secondly, we don't lend monies to microloan programs for investment purposes in the traditional sense. We do it to help the poor break their cycle of poverty and make better lives for themselves and their families. My current loan has helped not only the original loan applicant, but several people in her community.

Kiva's role is to bring together, via the internet, microloan lenders and borrowers. Kiva "vets" the field partners, who in turn screen the loan applicants and post the loan requests on Kiva. The field partner may set up groups of borrowers for accountability purposes. They also disburse the loans and do collections, often traveling to remote areas. They also post the journal entries such as the one I shared in my earlier post. I'd say they earn the interest they charge, which they must disclose to Kiva. It's a smaller rate than is offered by local banks, who don't bother with microloans, anyway. There is no "profiteering."

matnikstym

Do you need to earn interest on helping people out? If you donated that $25.00 to a typical charity, would you earn interest? No. Kiva is a way of helping people make something of their lives. Kiva does keep the interest but as ShayTay says, they do earn it.

ShayTay

Actually, it's the field partners who keep the interest, not Kiva. They are the ones "on the ground".

lerasp

exactly, my beef is with field partners. yes, they have some expenses. no, the don't have expenses that are 100% of interest earned. if you are giving money to charity (i.e. forgoing interest you could be earning), then it should be going to the rightful recipients (poor people), not investment professionals (field partners) who have no risk and earn only profit. how much does it cost to post a journal entry?
by the way, there are large microfinance institutions that DO operate in these countries without middlemen (such as FINCA, Grameen Bank and others) who use profits earned on interest charges to give out more loans rather than to give bonuses to themselves.

321go

lerasp, perhaps you could give some specifics as to what field partner expenses are: "yes, they have some expenses. no, the don't have expenses that are 100% of interest earned."

ShayTay

Let's look at an actual example concerning the lady to whom I loaned funds. The field partner is an NGO called Action Now Kenya. The average interest rate they charge is 16%; that may sound high to an American, but the average lending rate charged by money lenders in that area is 46%. The total loan amount was $750 for 8 months. Therefore, the interest to be paid on the loan is $80. The lady who received the loan is in Mlolongo, about 15km from Nairobi. ANK had to interview her, probably more than once. Then, they took the funds to her. Now, they go out each month (at least 8 times, right?), check on her progress, collect the payments and report to the lenders via the journal...all for $80. That has to cover their labor costs, vehicle and fuel costs, and G&A. Gas was selling for about $5 a gallon when I was in Nairobi in June. I don't see a lot of profit there!

waynehazle

Shay,

Thanks for giving that little breakdown. Of course when I first heard the world "interest" I flipped out.

But with your breakdown, I feel better.

ShayTay

Thanks, Wayne. No one works for free, even NGOs. I also contribute (not loan) funds to an organization that does microloans in Ethiopia. These loans can turn hopeless situations into hopeful ones for many empoverished people. That's why Yunis won the Nobel Peace Prize in 2006.

Yunis' organization is the Grameen Bank mentioned by Lerasp. If you look at the financial statements of these nonprofit organizations such as Grameen or FINCA, you'll see significant cash on their books not invested in microloans and also large "net assets" at the end of the year (the "nonprofit" term for profit or net income.) I'm sure these organizations are doing great things in the area of microfinance, but to suggest that they are better than smaller in-country NGOs is a bit misleading.