I have written before about how the Internet is making it easier to volunteer through “microvolunteering,” and was good about helping a bit through Sparked.com at first, but I’ll be honest, I have totally bombed in the world of microvolunteering. My desire to do good, however, is not gone, so I was pleased to recently discover Kiva, a non-profit organization that leverages the Internet community to provide microfinancing that can help alleviate poverty.
Kiva basically works by collecting small loans from people all over the world, then dispersing that loan to a microfinance institution in their network, which then provides the loan directly to an individual or organization seeking a loan in their community. Kiva believes that by providing safe, affordable access to capital to people in need, these people will be able to create a better lives for themselves. The people Kiva helps generally don’t have access to big bank loans and therefore often can’t raise the capital necessary to grow their businesses. Check out he video on how micro financing works.
The lenders (you and me) can lend as little as $25 (it works out to less than 100 riyal) and get to choose the individual or group that money will go to. There are profiles of people seeking microloans on the Kiva website and a potential lender browses through them to decide where they want their money to go. There are people from all over the world seeking loans for a variety of efforts, including a motorbike business in Kenya, a small fruit shop in the Philippines, a clothing shop in Armenia and livestock sales in Tajikstan. All real people, all wanting to improve their lives, but for most of them it is impossible to get a big bank loan.
What really makes Kiva different than just donating to your favorite charity is that you are giving loans, and you get repaid. People that receive a microloan are required to repay it through the local microfinance institution – and they almost always repay the loan in full, with Kiva loan recipients having currently repaid 98.79% of all loans. Once they repay your loan, you get your money back. Once you get your money back, you can choose to have it returned to your account (boo), you can reloan it to a new individual or group (yay!) or you can donate to Kiva to help cover the operational costs (also yay!).
I decided to join the Kiva community and opted to give $25 to a group of seven individuals in the Dominican Republic who sell clothing, natural goods and shoes in a rural part of the country. One of the members of the group, Hirza, has received five loans and repaid them all. She is a mother of five children and is working to build a better life for her kids. She is using the profits from her small business to improve her family home. A truly motivated woman.
Registering for Kiva was very easy. You can use Facebook connect, or enter basic information. Kiva uses Paypal to process payments, but you don’t need a Paypal account to make a loan, simply a credit card. Once you make your pledge and enter your credit card information, your microloan is on its way. Once you have created an account, you are able to track your loans and easily make new ones.
I am very impressed with Kiva – as are the 594,000 lenders who have already used it to the tune of $223 million in microloans. I started small and will be interested to see how my first loan experience plays out, but truth be told, the risk is small, and I have wasted plenty of money on frivolous things. I am likely to keep reloaning the money, and should certainly pledge more. I say give Kiva a try and show the generosity of the people in Qatar.