The Hello Bar is a simple notification bar that engages users and communicates a call to action.

Kiva – The Rock Stars of Microfinancing!

by J. Money on Thursday, September 23, 2010

kiva logoI’m officially a Kiva member! It took me only about 2 years since first hearing about ‘em, but I’m now lending and feeling damn good about it.

If you recall from Twitter, I had met a partner of Kiva on my plane ride out to Poland and was enthralled before he could finish his 3rd sentence :)  This guy lived and breathed helping people!  In particularly in his hometown of La Paz, Bolivia.  So naturally my first batch of loans went directly there – to people I know could REALLY use the help.

But let’s back up a bit, what the heck is Kiva?  If you haven’t heard of them before (which would be surprising as they’re blowing up faster than Lady GaGa), they basically empower individuals like you and me to lend to entrepreneurs across the globe. You lend out $25, let’s say, get it back within a certain period, and then lend it out again to someone else (or just take it back).  So it’s different than charity where you give it out and it stays out (although obviously that has its benefits too!).

Kiva has mastered the art of combining microfinance with the internet, and in the process they’re creating a global community of people connected through lending. It’s awesome. And from what I hear takes a LOT of hard work and diligence. Kiva was born of the following beliefs (taken from their about page):

  • People are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way.
  • The poor are highly motivated and can be very successful when given an opportunity.
  • By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.

how kiva works
How awesome is that? It’s like a big happy family shooting money all over the place and trying to really make a difference.  And it’s working!  As I write this, Kiva has raised over $160 MILLION dollars from over 200 countries. It really is incredible, considering they’ve only been around for a few years max (well, they started in 2005 but really started taking off the last few years).

Kiva makes me happy. It shows that you can use your passion and hard work toward something GOOD in this world and it’s refreshing.  I don’t know how much I’ll end up investing out over the years, but right now we’re starting out with $550 (I was gonna do $500 but 2 of the Bolivian loaners tugged at my heart! haha…, so I lent them $50 each instead of $25 like I did the others).  It would be awesome to having a solid $5,000 – $10,000 in there constantly on rotation, but I dont’ think life will allow that right now.  Still, it’s certainly possible.

If you want to join me and give them a shot – even if all you can afford is $25.00! – take a few minutes and sign up, and then join Team Budgets Are $exy and we’ll all make good together :)  And be sure to join the team BEFORE lending because once you lend out you can’t go back and attribute it to any team – I made that mistake myself, although not the worst thing in the world.

Here are my pages below. They’ll give you a good idea on how it all looks in action. Hope to see you on there! And you’re still awesome whether you invest or not, we all donate our time and money differently – we’ll always respect that :)

My Lender’s Page: http://www.kiva.org/lender/jaymonee
Our Team: http://www.kiva.org/team/budgets_are_sexy

——————
PS: I forgot to mention, every single dollar you invest goes directly to the lendee! There is an option at the end to donate a few dollars to Kiva to cover costs and maintenance, etc, but it’s totally optional.  This means ALL of your $ goes directly to the entrepreneur you want to help! And no, it’s not tax deductible ;) You’re lending it out and (hopefully) getting it back, you’re not giving it to charity. So you can literally invest and then take all your $ back out down the road if you wanted, pretty cool stuff.
PPS: This is not an ad of any sort! I sincerely love what they’re doing :)


{ 21 comments… read them below or add one }

1 MK September 23, 2010 at 8:00 am

I’ve been wanting to start contributing money to Kiva for a long time. Now that I’m settled into my house, and my routing of paying bills, I think I may start contributing some money! I’ll be sure to join your team once I finally make up my mind to do it!

Reply

2 FinEngr September 23, 2010 at 9:01 am

Amazing how a simple idea started by Muhammad Yunus has grown to such a worldwide action plan. Congratulations on becoming a member! Impressed you’ve already set up 20 loans, but why is it 90% men and 100% Bolivia? ;)

Like you mention, it’s such a great system since it’s a direct lending program and there’s not “management” or “administration” fees that get tacted on to your donation!

Good luck & looking forward to some progress updates :)

Reply

3 FinEngr September 23, 2010 at 9:02 am

Oh and don’t forget to add some of those cool badges to your already cool site!

Reply

4 J. Money September 23, 2010 at 9:26 am

Haha…you noticed FinEngr? What I did was actually invest in every single Bolivian entrepreneur under the group of ImPro bank ;) I wanted to support my new Kiva friend and thought that would be an excellent way to dip my toes in and see how the whole process works. At the time, it was 90% men although now when I look there’s a whole new batch, mostly women! So interesting – it’s only been 1 week and there’s thousands of new faces up there…

The next round I’ll be picking and searching around all different countries, but had to give my Bolivians the love first.

@MK – Yeah, do it! Even if it’s just $25.00. It literally takes 5 minutes unless you’re like me and like to look around for an hour first ;) The cool thing is that once you get your $25 back you can just keep lending it out over and over again unless you need it, then you just take it back! (there’s still a chance of it never being repaid though, so only put in what you can afford to lose :))

Reply

5 Jenn @ Paying Myself September 23, 2010 at 9:57 am

I’ve heard other folks mention this before. It sounds like a great program! Do you know if there is any impact in terms of income tax? E.g. are you paid interest by your “borrowers” that you then have to claim?

Reply

6 Christine September 23, 2010 at 12:29 pm

Once I get repaid my loan I’ll join the team!!!! I’ve been doing it for the last year or so and always have gotten repaid 100%. There’s no such thing as interest but that’s not really the point.

Reply

7 Lisa September 23, 2010 at 12:35 pm

I’ve joined the team, but I just re-lent my money two days ago! I’ll lend again soon, and will definitely do so on behalf of the Budgets are $exy Team.

Reply

8 sarah September 23, 2010 at 12:42 pm

Joined your team and made my first loan. I am trying to do 1 Random Act of Kindness a day, I this counts for today’s mission! Thanks for introducing me to Kiva.

Reply

9 J. Money September 23, 2010 at 12:50 pm

Awesome, thanks guys!!!

And yes sarah, this counts! And very very interesting because I’ve started doing 1 good thing a day too :) I thought it would be really hard but it’s amazing how many opportunities are around us every day. Crazy!

@Jenn @ Paying Myself – I think Christine has it right (no interest) but that’s a good question – didn’t consider it when I signed up. I’d look on their site for more details just to be sure :)

Reply

10 Lisa September 23, 2010 at 1:23 pm

From their website:

Will I receive interest on my loan?

Kiva does not pay interest to our lenders. Kiva’s loans are not an investment and are not recommended as an investment.

Kiva does not charge interest to our Field Partners. However, our Field Partners do receive interest that is paid by Kiva entrepreneurs. Self-sustainability is critical to creating long-term solutions to poverty, and charging interest to entrepreneurs is necessary for microfinance institutions to achieve this. Our Field Partners are free to charge interest, but Kiva will not partner with an organization that charges exorbitant interest rates. We also require Field Partners to fully disclose their interest rates. You can find more information about the interest rates that Kiva’s field partners charge on our Field Partner pages: http://www.kiva.org/about/partners.

Microfinance is an expensive business, which is essentially the reason small loans are not provided by large banks. Charging interest to entrepreneurs enables our Field Partners to bear these costs and achieve self-sustainability.

Reply

11 Yana September 23, 2010 at 1:28 pm

I joined the team and made a loan. Hopefully it got credited to the team, couldn’t tell because it said one loan was made before I made mine, and it still said that after. I found out about Kiva awhile back and think it is a great thing.

Reply

12 Cristina September 23, 2010 at 1:54 pm

Hi J–I’ve been a reader for a long time but I don’t think I’ve ever left a comment. I am a huge Kiva fan and had to join your lending team. Thank you for spreading the word to all of your readers!

Also, I just wanted to point out that although the 15% recommended donation to Kiva at the end is voluntary, even the most efficient nonprofits needs 10-15% of the total amount of money that they collect/distribute to go towards operating expenses. So please donate if you can!

Reply

13 Jenna September 23, 2010 at 2:32 pm

CONGRATS! I love Kiva and have supported them for a long time. They also make great gift cards for young kids and are a great teaching tool. Give a $25 gift certificate, talking about helping other and microfinancing. Log on, pick someone to support. And if your friend makes a wise investment, they’ll get the $25 back to reinvest or spend on their own.

Reply

14 Steve September 23, 2010 at 8:22 pm

What is Kiva’s default rate? I was unable to find it on their website last time I looked.

Reply

15 J. Money September 23, 2010 at 10:27 pm

@Lisa – Good work, thx :)
@Yana – THANK YOU! I’m sure it counted :) We’re gonna have a great team – all doing good!
@Cristina – Thanks for sharing Cristina, and for reading! Glad to have you on board :)
@Jenna – Oooh I like that idea! And xmas is around the corner so I may have to give it a shot!
@Steve – Looks like it’s 1.1%. More on defaults & risk here: http://www.kiva.org/about/risk

Reply

16 sarah September 24, 2010 at 9:13 am

Hey J… I got the idea for the RAOK from this blog post. Check it out, it has great ideas in case you just stuck.

http://mixmingleglow.com/blog/?p=1358

Reply

17 J. Money September 24, 2010 at 9:46 am

YES! I remember that post actually – it’s on my list of “people doing good” that I’ve started creating :) AMAZING idea, spread so much love around man!

Btw, are you a member of Nate’s ItStartsWith.Us crew? If not, you should be :) He gathers thousands of people to do 1 good thing a week (and more, if you sign up to other parts of it) but that alone is awesome. Together the team has done really incredible stuff over the past year, and it’s also great for ideas too! Sign up and tell him I say hi :) We’re collaborating on something HUGE coming up – you wont’ want to miss it.

Reply

18 Mark September 26, 2010 at 11:29 pm

I see that the average interest rate the field partners charge to the borrowers is outrageous (35%). Is this the average interest rate in the microfinance industry? Is there anyway we can change this because I wouldn’t consider giving my money to field partners that charge 15+%.

The interest rate for borrowers in the Congo is 80%! It seems like a field partner with Kiva is a highly profitable venture which is a huge problem for a non-profit organization like Kiva.

Reply

19 J. Money September 27, 2010 at 12:11 pm

Oh wow, I never even saw that! If you check out their help center (http://www.kiva.org/help) there’s a section under there titled “Why are your Field Partners’ interest rates so high?” and it’s prettying interesting to read. Goes over a lot of the reasons why it’s so different than say, here in the States, and why they have to charge so much. I’m not going to pretend I know more than them on this, but I’ll admit it does sound kinda sketchy.

That said though, it’s not going to stop me from investing. Most of these people can’t borrow even a dime from a bank , so if they can really do good w/ these amounts they’re borrowing – and they’re rarely defaulting on them – I still consider it a win-win situation. Just not AS sexy as w/ lower amounts being charged.

Reply

20 Yana October 12, 2010 at 4:29 pm

Guess what? I found a way to help artists with loans without charging them interest – http://microfinance.novica.com/faq/#how_does_it_work
I think it is an excellent program and am hoping that Nono completes his loan request promptly! I was not looking for this in particular, but have shopped Novica before. I received a reminder that I had a discount about to expire, and was taking a look around. I really like Novica, but had no idea that they participated in microfinancing.

Reply

21 J. Money October 14, 2010 at 10:00 am

Interesting indeed, going over now to check out :) I think the more of these things that pop up the more connected we can all be to humanity again! Tired of all this “Me, Me, Me” mentality.

Reply

Leave a Comment

Previous post:

Next post: