Kiva [Microlending to the less fortunate]

Zaxxon · Post by **Zaxxon** » Tue Dec 20, 2011 2:11 pm

In the spirit of the holidays, I thought I'd post an invite link to Kiva, one of my favorite 'charities'. Kiva is a microfinance group that takes lending funds from folks like you and me and provides it interest-free to on-the-ground partners in impoverished areas who then manage loans to local people. The end result is that those folks are able to obtain funding for various projects at better terms than they'd get through a bank (if there's even such a thing as a bank where they're at, and if they could even hope to be approved).

At the end of a loan, you can either take your money back or re-lend it. (Defaults are very rare-- <1%.) It thus makes a good 'keeps on giving' charity as you can periodically put in small amounts and keep re-lending as time goes on.

Anyway, About Kiva, a general invite link, and finally an OO team invite link .

Happy/Merry/Fantastic/Kool Holidays/Christmas/Festivus/Kwanzaa!

GreenGoo · Post by **GreenGoo** » Tue Dec 20, 2011 2:52 pm

Neat.

Zaxxon · Post by **Zaxxon** » Tue Dec 20, 2011 3:26 pm

I also created an OO group in case we get any takers. It's not like having a leaderboard with competition would help OOers be motivated to join, is it?

Is it?

noxiousdog · Post by **noxiousdog** » Tue Dec 20, 2011 3:48 pm

I love this idea, and worked with prosper.com awhile back.

However, something isn't sitting right with me. The average loan (not the average donation) is $385.00. What is getting funded for $385 or less? I know something things are cheaper, like we could replace Pedro's cow. But we certainly can't buy him a tractor.

I can look at the loans, but I would urge anyone that wants to do this (and isn't considering it a donation) to look at the stories on prosper.com. It looks to be the same types of stories. I would suspect, unless there is some fundamental difference in American borrowers as opposed to international borrowers (more on that in a second), the default rates will converge.

A possible explanation is that credit isn't nearly as available. In the US, someone using prosper.com is likely someone who can't qualify at a bank. Internationally, the bank doesn't even exist.

Anyway, I love the idea, but do your due dilligence.

Zaxxon · Post by **Zaxxon** » Tue Dec 20, 2011 3:59 pm

noxiousdog wrote:I love this idea, and worked with prosper.com awhile back.

I hadn't heard of prosper.com. I'll check it out.

However, something isn't sitting right with me. The average loan (not the average donation) is $385.00. What is getting funded for $385 or less? I know something things are cheaper, like we could replace Pedro's cow. But we certainly can't buy him a tractor.

Not sure if you were being snarky, but yes a lot of these loans are on the order of replacing Pedro's cow, thatching a roof, etc. A lot of the loans are just smaller-scale than what we would think of as loan-worthy here in the US. Just taking the top three currently-funding loans, they are:

-$3300 for materials for a crafter in Bolivia
-$3875 for pigs, food and farm repairs in Indonesia
-$4150 for store supplies in Uganda

I see the $385 stat you mentioned, but my experience has been that the 'usual' amounts are higher than that, in the $1000-$3000 range. I'm not sure why the discrepancy.

A possible explanation [for the difference in default rates between Kiva and Prosper] is that credit isn't nearly as available. In the US, someone using prosper.com is likely someone who can't qualify at a bank. Internationally, the bank doesn't even exist.

I'm not sure. I do know that Kiva's default rate has been stable for several years. The risk of losing your loan is very low. Even so, I'd recommend treating it like a donation just to be safe.

LawBeefaroni · Post by **LawBeefaroni** » Tue Dec 20, 2011 4:07 pm

Prosper seeks a return on investor capital. Typically the terms are much better than a borrower would otherwise get, but they still have to pay interest.

Kiva is interest free, essentially a "charity" microloan.

I loaned through prosper once to see how it worked. Very interesting process but I wouldn't call it charity. Lenders are most certainly looking to generate a return. If you look, some of the rates are like 30%. These are extremely high risk borrowers. Nowhere near the Kiva (or lower rate Prosper) loans and most likely very high default rate.

FWIW, I heard about it from a friend that used it to buy an engagement ring. He paid it back, with interest, in a year.

It looks like now you can even trade notes via Folio. Cool, but a little worrisome.

Zaxxon · Post by **Zaxxon** » Tue Dec 20, 2011 4:14 pm

LawBeefaroni wrote:Kiva is interest free, essentially a "charity" microloan.

Well, not exactly. Kiva doesn't charge interest, but their partners that actually service the loan do. The borrowers are getting better terms with Kiva's involvement than they otherwise could, but they are paying interest. That's my understanding, at least.

On the dilligence front: CharityNavigator's info page for Kiva.

LawBeefaroni · Post by **LawBeefaroni** » Tue Dec 20, 2011 5:41 pm

Zaxxon wrote:
LawBeefaroni wrote:Kiva is interest free, essentially a "charity" microloan.
Well, not exactly. Kiva doesn't charge interest, but their partners that actually service the loan do. The borrowers are getting better terms with Kiva's involvement than they otherwise could, but they are paying interest. That's my understanding, at least.

On the dilligence front: CharityNavigator's info page for Kiva.

I'd consider that a charity. The individual contributors providing the loan capital aren't taking interest, nor is Kiva. Loan servicers in the field do, but that's like the Red Cross paying salaries or the Breast Cancer Research Foundation buying ad time. It's a legitimate part of the overhead.

So I guess it isn't completely interest free but it's return free and non-profit. Considering that the field partners help lower the default rate, their cut seems appropriate overhead.

Zaxxon · Post by **Zaxxon** » Tue Dec 20, 2011 5:48 pm

LawBeefaroni wrote:I'd consider that a charity.

I agree. I was just clarifying since there was some concern raised about Kiva. I don't want to hoodwink anyone into contributing w/o understanding how the machine works.

jimbo · Post by **jimbo** » Thu Dec 22, 2011 7:48 am

I have enough credit to gift someone $25.00 to try it out if you don't want to use your own money. I have loaned $425.00 over the past 1.5 years and have only lost $0.24. I got into this after reading Half the Sky and usually try to lend money to women that can use the money to either educate their kids or work to stay out of the sex trade. If anyone wants to get gifted a $25.00 donation, let me know.

Zaxxon · Post by **Zaxxon** » Thu Dec 22, 2011 9:43 am

Sweet offer, jimbo. Was that you that just joined the group?

Zaxxon · Post by **Zaxxon** » Thu Dec 22, 2011 10:35 am

*bump* so folks see the topic title edit with jimbo's offer.

jimbo · Post by **jimbo** » Thu Dec 22, 2011 10:52 am

Yes it was me.

Austin · Post by **Austin** » Thu Dec 22, 2011 11:12 am

Neat, checking it out.

Zaxxon · Post by **Zaxxon** » Thu Dec 22, 2011 1:12 pm

Austin wrote:Neat, checking it out.

Woot.

Zaxxon · Post by **Zaxxon** » Fri Dec 23, 2011 1:49 pm

Jimbo, I made you a team captain. Austin joined Kiva and had made his loan by the time I got to approving him into the OO group, and thus the loan didn't count toward our stats. Not that that really matters, but I figured duplicating the ability to approve joins is a good thing and you're clearly a big Kiva user, too.

Grundbegriff · Post by **Grundbegriff** » Fri Dec 23, 2011 10:47 pm

Other Salaries of Note
$132,500 Matthew Flannery Chief Executive Officer, Co-Founder
$132,500 Premal Shah President

Impressive!

jimbo · Post by **jimbo** » Sat Dec 24, 2011 12:11 pm

I am not sure how to take the impressiveness of the salaries. (Or if I should even take it at all). Initially, my cynical nature led me to believe that you were trying to say something about the fact that these guys were getting high salaries. Then I looked at the amounts, and the average salary of someone working at Kiva (95K) and thought "He must be referring to the fact that the co-founder and president are not making huge salaries. This is the interpretation I am going with because I like to think that people generally have the best intentions. This is one of the things I like about this charity, the money that you loan goes to the person you are loaning it to (as a loan and is therefore not tax-deductible), in addition, you are encouraged to (but not required to) donate $3.75 or (15%) of the loan cost for admin and other things (salaries, fundraising, etc.)(this part is tax-deductible). This way, you know up front how much money is being spent on helping people and how much is being spent on making the people who facilitate the helping able to support themselves.

Again, I don't know why I care about this but my initial reaction was negative and I just wanted to clarify.

Thank you for your patience reading this.

Zaxxon · Post by **Zaxxon** » Sat Dec 24, 2011 12:23 pm

I wasn't sure how to take Grund's comment, either. $132k isn't that high for the SF area, IMO. More importantly, 100% of funds lended go to the loan you choose; any amount you want to give to Kiva itself is separately noted when you lend, and 0% is an option.

Grundbegriff · Post by **Grundbegriff** » Sat Dec 24, 2011 1:48 pm

Zaxxon wrote:$132k isn't that high for the SF area, IMO.

Here are the medians for a selection of job classifications:
(Click to embiggen)

More importantly, 100% of funds lended go to the loan you choose; any amount you want to give to Kiva itself is separately noted when you lend, and 0% is an option.

I remember in the 1990s, when United Way used to say (and perhaps they still do) that the funds you particularly donated would go to, and only to, the charities you designated. Turned out that the breakdown of fixed percentages of haul allocated to various charities was independent of, and preceded, such expressions of preference. The reassurance to givers was psychological, not fiduciary.

I have no reason to think that's the case with this charity-- only that it has been the case with at least one notable charity that claimed the contrary.

In any event, give. Give like the wind. Give when you're feeling blue. Microfinance is a good thing.

Smutly · Post by **Smutly** » Sat Dec 24, 2011 2:20 pm

Just joined the group Kiva group... Do we want to target a particular group or individual to lend to or should I just go for it on my own?

Zaxxon · Post by **Zaxxon** » Sat Dec 24, 2011 3:48 pm

Smutly wrote:Just joined the group Kiva group... Do we want to target a particular group or individual to lend to or should I just go for it on my own?

Whichever borrower strikes your fancy.

Grund wrote:I remember in the 1990s, when United Way used to say (and perhaps they still do) that the funds you particularly donated would go to, and only to, the charities you designated. Turned out that the breakdown of fixed percentages of haul allocated to various charities was independent of, and preceded, such expressions of preference. The reassurance to givers was psychological, not fiduciary.

I have no reason to think that's the case with this charity-- only that it has been the case with at least one notable charity that claimed the contrary.

A good point to consider. However, it doesn't appear to be the case here. Unless the field partners don't follow Kiva's stated process, of course.

Matrix · Post by **Matrix** » Sat Dec 24, 2011 6:42 pm

Prosper .com i heard had crazy high default rates and they had to clean it up. Though it think prosper .com is more like investment alternative, while kivs is purely not for profit hence very low default rate.

Smutly · Post by **Smutly** » Mon Dec 26, 2011 3:51 pm

I really, really like this concept. Just made my first loan. Thanks for letting me know about this.

Zaxxon · Post by **Zaxxon** » Tue Dec 27, 2011 11:42 am

Smutly wrote:I really, really like this concept. Just made my first loan. Thanks for letting me know about this.

Awesome; thanks for joining and for doubling the OO Team's loan stats.

Zaxxon · Post by **Zaxxon** » Thu Dec 29, 2011 1:23 pm

If anyone else is interested, I just got an email that through a partnership with Ladies' Home Journal of all places, new lenders can have their first loan subsidized (free) via this link.

hitbyambulance · Post by **hitbyambulance** » Mon Jan 02, 2012 2:51 am

i have donated $50 and requested to join the OO group

Zaxxon · Post by **Zaxxon** » Mon Jan 02, 2012 2:53 am

hitbyambulance wrote:i have donated $50 and requested to join the OO group

Approving now. Welcome.

jimbo · Post by **jimbo** » Thu Mar 08, 2012 10:13 am

Kiva is offering a free loan of $25.00 today. Go to the link http://www.kiva.org/women to check it out. If it is like they have done it in the past it is completely free to you and you get to poke around and hopefully decide to lend some of your own hard earned cash.

If you do, join the team.

Zaxxon · Post by **Zaxxon** » Thu Mar 08, 2012 10:22 am

Nice find, Jimbo. I had been meaning to make another loan (I try to add $25/year and hadn't done 2012 yet), and this spurred me to do it.

Zaxxon · Post by **Zaxxon** » Tue Mar 13, 2012 3:13 pm

TechCrunch has a bit more on Reid Hoffman's involvement in the free funding campaign going on now.

And here's the OO invite link again in case anyone wants to join us.

Smutly · Post by **Smutly** » Fri Jun 08, 2012 6:25 pm

bump

More free trials are available. Join Team OO. We've loaned $375 with 15 loans since late last year.

Zaxxon · Post by **Zaxxon** » Fri Jun 15, 2012 10:26 pm

One more bump. I just made another loan after having a previous loan fully repaid. Join us!

Smutly · Post by **Smutly** » Wed Aug 01, 2012 10:43 pm

Bump for another loan. 21 Team Loans made totaling $525. Send some good karma out there today!

Zaxxon · Post by **Zaxxon** » Tue Aug 07, 2012 11:19 am

And now we've got free trials plus a bonus loan back to the inviting user whenever someone joins through an invite link. The OO team is now up to 22 loans and rising. GAMIFICATION COMPELS YOU TO JOIN US. GAMIFICATION COMPELS YOU!

</bump>

Zaxxon · Post by **Zaxxon** » Wed Oct 03, 2012 12:16 pm

I received a repayment notice from Kiva this morning which prompted me to log in and check our status. 28 OOer loans for $825. Woot. Only six members, though.

You--yes you--want to join us. Between myself and those I've invited I can see loan counts for 58 loans. To my knowledge none of them have defaulted. Do a little good, and if you don't like the system, you can pull your cash back out after your first loan is repaid.

LawBeefaroni · Post by **LawBeefaroni** » Wed Oct 03, 2012 12:29 pm

This one cracked me up.

A loan of $2,000 helps Garik to pay for hired workers, poppy seeds and polyethylene cover for the greenhouse.

Zaxxon · Post by **Zaxxon** » Wed Oct 03, 2012 12:33 pm

That is pretty good.

Smutly · Post by **Smutly** » Wed Dec 12, 2012 9:07 pm

33 Loans from 6 OO Kiva Team Members. Total amount loaned = $1,100.

I will be making a loan this month... Join us in helping those who are trying to help themselves...!

And, it looks like our team favors the ladies...

Zaxxon · Post by **Zaxxon** » Thu Dec 13, 2012 10:23 am

Smutly wrote:33 Loans from 6 OO Kiva Team Members. Total amount loaned = $1,100.

Starting to be a significant number there.

If anyone's on the fence, I'm up to 20 loans and all have been successfully repaid. My invitees are at 45 and to my knowledge there have been no failures there, either.