Kiva (organization)
From Wikipedia, the free encyclopedia
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| Type | Non-profit organization |
|---|---|
| Founded | October 2005 |
| Headquarters | San Francisco, California, United States |
| Key people |
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| Industry | Microcredit |
| Website | www.kiva.org |
Kiva Microfunds is an organization that allows people to lend money via the Internet to microfinance institutions in developing countries which in turn lend the money to small businesses.[1] It is a 501(c)(3) non-profit organization headquartered in San Francisco, supported by donations from its users and through partnerships with businesses and other institutions.[2]
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[edit] How it works
Kiva allows microfinance institutions around the world, called "Field Partners", to post profiles of qualified local entrepreneurs on its website. Lenders browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to the appropriate Field Partners to disburse to the entrepreneur chosen by the lender. As the entrepreneurs repay their loans, the Field Partners remit funds back to Kiva. As the loan is repaid, the Kiva lenders can withdraw their principal or re-loan it to another entrepreneur.
Lenders' funds are transferred to Kiva through PayPal, which does not collect its usual fees in this case.[3] It is possible to pay by credit card through PayPal's website, even without a PayPal account, but a PayPal account is needed to withdraw funds.[4] Field Partners charge interest to their borrowers, although Kiva claims to keep track of how much interest is charged and will not work with those charging unfair interest rates.[5] Kiva lenders do not receive any interest because Kiva is not registered with the US Government as a broker.[6] Kiva claims that its borrowers have a historical default rate of 2.5%.[7]
[edit] Organization and team
Kiva was founded in October 2005 by Matt and Jessica Flannery.[8] The couple's initial interest in microfinance was inspired by a 2003 lecture given by Grameen Bank founder Muhammad Yunus at Stanford Business School. Jessica worked at the school and invited Matt to attend the presentation; this was the first time he had heard of microfinance, but it served as a “call to action” for his wife. Soon after, Jessica began working as a consultant for the nonprofit Village Enterprise Fund, which worked to help start small businesses in East Africa. While visiting Jessica in Africa, Matt spent time with his wife interviewing entrepreneurs about the problems they faced in starting ventures and found the lack of “access to start-up capital” was a common theme. After returning from Africa, they began developing their plan for a microfinance project that would grow into Kiva, which means “unity” in Swahili or "nice" in Finnish. [9][10] Kiva is run by a team with experience in microfinance and technology.[11]
[edit] Publicity
- Author Bob Wood is a prominent advocate for Kiva Loans. [3]
- Nicholas D. Kristof wrote about the organization in "You, Too, Can Be a Banker to the Poor", New York Times, March 27, 2007. [12]
- Former US President Bill Clinton exhorted the students of Brandeis University to use Kiva in a speech given on December 3, 2007.
- Frontline[13] and The Oprah Winfrey Show had segments devoted to Kiva.
- Kiva is mentioned in Giving: How Each of Us Can Change the World, by Bill Clinton.
- "Lending hope over the Web" Los Angeles Times archive article, October 18, 2007
- The founders were on the Oprah Winfrey Show November 2007 "Oprah Features Kiva Founders".
- "Kiva PR Director Fiona Ramsey" was interviewed on "CBC Radio One's, SearchEngine".
- Greta Van Susteren is a supporter of Kiva and has made loans through the organization. [14][15]
[edit] Interest Rates
According to its web site, Kiva quotes interest rates as the "self reported average, annualized, flat interest rate in real terms charged by the Field Partner to the enterpreneur."[4] This means that interest rates are quoted using the flat calculation method. Flat interest rates are somewhat controversial in microfinance. Chuck Waterfield, designer of Microfin, a widely used financial modeling tool for MFIs, asks "Why did such a system appear in {microfinance} lending? The answer is obvious and cannot be debated: it allows the institution to charge nearly twice as much interest for the quoted interest rate as with the declining balance method."[16]
Kiva defends the interest rates of its lenders, however, saying its field partners provide much better rates than local alternatives, but must charge what they do because "the costs of making a micro-loan in the developing world are higher versus larger loans in the West."[5]
[edit] Statistics
As of March 8, 2009, Kiva has distributed $63,010,010 in loans from 458,538 lenders. A total of 90,201 loans have been funded. The average loan size is $425.83. Its current repayment rate is 97.79%.[17] According to Alexa, Kiva's website typically ranks well into the top 25,000 websites on the Internet.[18]
[edit] Sample loans
- 51 year old fisherman with three children in Azerbaijan
- 12 years of experience
- Seeks 12 month loan for $725 USD in order to purchase a refrigerator
- Has already successfully repaid two prior microloans
Loan to expand restaurant business
- 27 year old seeks financial independence
- Desires $475 USD loan to improve existing restaurant
- Has already successfully repaid one previous loan
[edit] References
- ^ "What We Do" on Kiva.org
- ^ "Supporters" on Kiva.org
- ^ Kiva FAQ: When I pay through PayPal, is PayPal taking a fee?: "Kiva.org is the first organization PayPal is supporting by providing free payment processing."
- ^ Kiva FAQ: Do I have to use PayPal?
- ^ Kiva FAQ: Do Kiva.org’s Field Partners charge interest to the entrepreneurs?: "Our Field Partners are free to charge interest, but Kiva.org will not partner with an organization that charges exorbitant interest rates."
- ^ Kiva FAQ: Do I get interest on my loan?: "Providing interest to our lenders is legally complex and we hope to provide this option soon as the regulations of the US Government allow."
- ^ [1]: "Of the $21,619,335 of loans with completed loan terms, the default rate is 2.2%"
- ^ "Kiva Facts At A Glance" on kiva.org
- ^ Flannery, Matt (2006). “Kiva and the Birth of Person-to-Person Microfinance.” Innovations (2:1/2): 31-56.
- ^ "Web-Based Microfinancing" New York Times
- ^ KIVA Staff
- ^ [2]
- ^ Frontline story about Kiva
- ^ http://www.kiva.org/about/help/stats
- ^ http://www.kiva.org/lender/greta5691
- ^ Waterfield in Srinivasan, p. 63.
- ^ "Official Kiva.org Facts & Statistics
- ^ Alexa.com - Kiva.org traffic details
[edit] See also
[edit] External links
- Kiva
- Microfinance Transparency
- VIDEO: A Fistful Of Dollars: The Story of a Kiva.org Loan
- VIDEO: Kiva in Nepal: A Field Visit
- VIDEO: The Kiva Story
- Several stories about Kiva on PBS's Frontline/World
- Podcast interview with Jessica Jackley Flannery, Feb 2008
- Interview with Premal Shah, President of Kiva
