Give the gift of interest free microloans: Kiva.org
This year my family will be giving Kiva gift certificates to our friends and loved ones. Kiva partners with microlending organizations all over the world that give small loans to individuals. Those loans are generally made to entrepreneurs without access to capital. It’s a lending model invented and made famous by recent Nobel-laureate Muhammad Yunus.
Kiva is a web-based fundraising site that ties in to existing microlending around the globe. They list the projects available for funding, and you can chip in your money to help make the loan. You make loans effortlessly via PayPal. When the full loan amount is committed (by one or multiple donors), Kiva makes the loan happen through it’s partners.
Through the life of the loan, you’re updated as payments are made, or when there’s other interesting news about one of your loan recipients. Updates are via email and RSS.
When your loan is repaid in full, your loan amount is returned to you for loaning to another project of your choice. So once money gets into Kiva’s microlending cycle, it doesn’t leave. A $100 gift certificate for a friend is a gift this year, but also a gift each time the loan is repaid as your friend gets to pick another project to fund.
In August we made a small contribution to Dorah Mwihaki, a farmer who wanted to improve her granary to help her business which pays for her kids’ education. So far she’s paid back $10 on the original $225 loan.
This year we’re running most of our giving through Kiva–what better way to positively affect the world than share some of the abundance we as Americans take for granted? Kiva makes it so easy to find entrepreneurs to give to. Try it, and spread the wealth!
technorati tags: kiva, microlending
December 24th, 2006 at 12:29 pm
Thanks for the tip on this.
We just got a gift cert. for my father-in-law. Hope you’re having a good time in Hawaii!
September 18th, 2007 at 12:58 pm
I also loan through KIVA, and will continue to, but for the record it is not an interest free loan for the recipient. They are charged interest by KIVA’s agent. The recipient does indeed pay interest.
I wish this were not the case and I am looking for an outfit that does not charge the recipient interest.
From KIVA website……
…”Do Kiva.org’s Field Partners charge interest to the entrepreneurs?
Yes. 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.org will not partner with an organization that charges exorbitant interest rates. Kiva.org also requires Field Partners to fully disclose their interest rates.
Microfinance is an expensive business, which is essentially the reason small loans are not provided by large banks. While Kiva.org’s Field Partners do not bear the cost of capital or the cost of default, they do bear transaction costs and currency risk. Charging interest to entrepreneurs enables our Field Partners to bear these costs and achieve self-sustainability.”
September 18th, 2007 at 1:13 pm
In fact, to add to my above post, the average interest charged by KIVA field partners is 20%!
I have two loans out and one charges the recipient 12% interest and the second charges 17%…the percentage goes down the higher loan amount.
This is no small amount for a poor person.
I will still loan money but, in my opinion, this is exorbitant for the small borrower.
December 31st, 2007 at 9:31 pm
It seems disingenuous to not make mention of this on the website of “how it works”. Nonetheless, considering that most of these folks would end up paying nearly triple digit “interest” rates to loan sharks and others, an average of 20% is better than most folks get on their credit cards in the USA. So it’s rather relative isn’ it?
I’m into helping folks get some measure of self pride and reliance in their lives and keeping them home rather than having them come across the border illegally and costing the taxpayers indirectly much much more in social costs.
July 30th, 2008 at 5:31 am
Unfortunately every loan company will charge interest on a loan, otherwise why would they lend you money in the first place? It’s certainly not for the good of their health! Every company tries to make a profit and the only way to do so with a loan is to charge interest…