Kiva: Giving You Can Feel Good About
Aug 2nd, 2011 | By Carmen | Category: Financial, Personal finances | Print This Article
We know that we are often called upon to give to others: to take care of the needs of the poor and to help those who have experienced devastation and catastrophe. But the questionable practices of many charities and philanthropic organizations have left many of us with a bad taste in our mouths for charitable giving. We can each cite our own experience with dissatisfaction about how moneys were divvied up – usually to the organization (hey, I thought you said you were a NON profit, what happened?) and far less to the people who live with the aftermath of what made us give in the first place. We want to help others, but we’re becoming gravely disenchanted with many of the organizations asking for our money.
And how helpful is a handout anyway? Does this encourage people to be more self-sufficient, or is it more like private welfare? Is it me, or are organizations to which you can donate in good conscience becoming increasingly rare? Helping others and giving out of our own abundance shouldn’t present such a conundrum.
But what if you could help others and feel good about it? What if you could share, without just giving a handout? What if you could track where your money is going and see for yourself that it is actually going to help the person for the specific thing the person requested the loan for? What if you knew with 100% certainty that the money wasn’t going to line some supposed non- profit organization’s bank account? I am really hoping I have the answer to those questions. Have you heard of Kiva? Kiva is a different kind of giving – a way to help that actually helps without encouraging dependence on handouts.
Kiva specializes in microfinance, which is really a technical term for small-scale loans. Instead of funneling your money into handouts, Kiva specializes in loans to entrepreneurs located in developing and depressed countries. And every single dollar you loan, again, that you loan, not give, goes directly to the Kiva borrower you have selected.
It Might Surprise You to Learn How Far a Dollar Can Be Stretched
Most people are surprised to see what can be done with such a small amount of money. Borrowers are typically requesting a loan of $500 to $1,000 to purchase materials or merchandise to either start a business or expand an existing business. They often lack the resources or the means to grow their businesses and invest in them the extra capital that will help them begin to succeed. A Kiva microfinance loan can make the difference between success and failure for a small-business owner. And for someone in a developing country, success or failure can be the difference between feeding one’s family and not eating at all.
Twenty-nine year-old Haydee in Oaxaca, Mexico, requested a loan of $875 to expand her used clothing retail business. She has now received her loan and will soon be in repayment. Carlos Humberto from Ecuador seeks a loan of $1,000 to expand his shoe repair business. He’s 22% of the way there. Purevdorj in Mongolia is 76% of the way toward attaining his loan so that he can replace his family car with a newer one and refurbish the old car for his taxi business. Many of the uses for loans are ones we can certainly relate to, and some of us may even find it a struggle to put together.
For Less Than an Oil Change for Your Car or Lunch with Friends
Making a Kiva loan and helping another individual achieve self-sufficiency through entrepreneurship is simpler and far less costly than you might imagine. The ease with which you can begin lending is part of what makes Kiva so successful. The process is foolproof. Lenders can go to Kiva.org to browse the more than 600 individuals seeking loans across the globe. After reading about the individuals and their needs, lenders can elect to make a loan for as little as $25. That’s right, $25! The money, which is donated by credit card or PayPal, goes into an account until the borrower achieves his or her desired loan amount. Once the loan goal has been attained, lenders receive notice that the loan will be disbursed. Kiva uses volunteer field partners in the borrowers’ country to manage the loan disbursement and repayment. Christian organization World Vision is one of Kiva’s main partners – perhaps you’ve heard of them. As the individual continues in his or her endeavor, you receive updates on the progress that is being made toward their goal.
When the individual receives the microfinance loan to invest in his or her business, he or she agrees to a repayment plan. When the loan is repaid after several months, lenders receive back their investment. This money is then deposited into a PayPal account, and it can either be reinvested in another borrower or withdrawn.
Microfinance helps others in a way that actually helps the individual, the entrepreneur – not some organization. Many of Kiva’s workers are volunteers. They accept donations to cover administrative costs, but it is not required that you donate to the Kiva organization in order to become a lender. As of May 2011, 584,579 lenders loaned $215 million through Kiva. Each of these dollars went directly to the borrower.
You can get involved as an individual lender, but Kiva also strives to facilitate community among lenders. Many lenders have formed lending groups to be able to give to multiple people simultaneously, or they focus on a particular country or demographic for focused lending.
The hardest part of giving to Kiva is not deciding whether or not you should. Once you see how easy it is, know that your loan is 100% repaid and to see what it is going toward (and that you have a say in who gets a loan), making a loan won’t be the issue for you. At least it wasn’t for me. It’s not trying to figure out if microfinance is a good model, either. The biggest challenge, once you start reading the profiles and stories of Kiva, is deciding who and how many you will bless with a microfinance loan. Just in case you needed that link again, here it is: Kiva.org. You are guaranteed to love the return.
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