Kiva -- Deserves An Update

[Beachboy]

Although Kiva has been covered before (search the Charity forum with "Kiva" for the links) I thought it deserves another update.

Kiva makes it possible for internet users to make loans (minimum $25) to credit worthy small businesses and entrepreneurs in developing counties, including the Philippines. . The oans go to a farmer to buy seed and fertilizer, a shop keeper to buy stock, a food seller/ preparer to buy ingredients, or fishermen to buy nets.

The loans themselves are administered by local micro-finance groups (often credit unions or co-ops) . Essentially you set up an account with Kiva (through paypal). You then go through their listings, find an individual or group you want to help, decided on the amount of your loan, and press the "Loan" button. Kiva will send you periodic updates indicating how much of your loan has been repaid. Once you get your money back you loan it out again. You even make some profit.

Because it is a business loan, there is some risk involved. But the average repayment rate is about 93%. You can also find zero risk loans; the risk is covered by the micro-finance agency.

Kiva works with seven micro-financing groups in the Philippines. They are listed below. Also listed is their page on Kiva. This page describes the organization and their portfolio performance. These are not “fly-by-night” organizations. They have decades of experience and many have won international awards in their own right. Most have borrowed over $1 million through Kiva – all in small loans ranging from $25 to a few thousand. Also listed is the organization’s own website.

(On the Kiva Page look for the "See All Loans from This Field Partner" link to see an individual listing of loan requests)

Alalay sa Kaunlaran, Inc. (ASKI)

http://www.kiva.org/partners/123

http://www.aski.com.ph/

Negros Women for Tomorrow Foundation, Inc. (NWTF)

http://www.kiva.org/partners/145

http://www.nwtf.ph/ -- website

Community Economic Ventures, Inc. (CEVI), a partner of VisionFund International

http://www.kiva.org/partners/125

http://www.cevi.org.ph/

Center for Community Transformation Credit Cooperative (CCT)

http://www.kiva.org/partners/144

http://cct.org.ph/

Gata Daku Multi-purpose Cooperative (GDMPC)

http://www.kiva.org/partners/136

No Website

Paglaum Multi-Purpose Cooperative (PMPC)

Note $2 mil portfolio, 0% delinquency, 4.15% return on average

http://www.kiva.org/partners/126

http://www.paglaumcoop.org.ph/

Edited October 15, 2012 by Beachboy

[Mike S]

WOW ...... now that is an interesting concept ...... thanks for that post I already checked out some of the info. on the Philippines borrowers and some are very interesting ..... may check into it some more later .... :thumbsup: ..... :cheersty:

[OnMyWay]

Very interesting. A few months ago I was researching Lending Club as an investment vehicle and I might dabble in it later. KIVA appears to operate on a similar concept with a charitable orientation, whereas Lending Club is profit oriented.

It would also appear that from an investment risk perspective, a KIVA lender, like a Lending Club lender, reduces risk by diversifying among many small loans, rather that a small number of larger loans.

[Beachboy]

profit oriented.

Yes, it's not for profit. The Lending Club would be the place for that. Kiva is more about promoting small business by providing access to low interest credit.

Farmers need to borrow for seed and fertilizer. This often puts them in the hands of money-lenders, who suck away what meager profit they make. If they have a bad year they are thrown into debt from which they might neve escape.

The sari-sari owner often consumes her profit leaving her without means to expand. Even a small loan can give her the means to buy more goods or even travel to a larger city to buy her stock there and so cut-out the middle man.

I had a Kiva account a few years back. It's actually fun choosing your loans and watching the money come back. (In the Phils you might even be able to visit the people you loan money too). When I ran into some financial problems at home and had to withdraw the money, I had no problem at all.

[Dr. Cockroach]

I would recommend Kiva.org too. :thumbsup:

I have been with them for over 3 years now and none of my loans been delinquent yet (20+).

You will get to choose the area, the race and even the kind of businesses you'd want to loan to.

The beauty of their concept is, you will be able to re-loan your money to another person making, in essence, that person who paid you back contribute to the cycle.

[i am bob]

This sounds like a great way to help support those who need a little help the most without breaking the bank.

[earthdome]

Thank you for posting this. I have bookmarked it. Micro loans in the Philippines was something on my list to look into. You just made it easier.

[Dave Hounddriver]

I looked into this before and got a negative opinion of it. I am open to have that opinion changed by those who have looked into it deeper. When I looked at it, it appeared to me that I 'invest' or 'give' my money to a microfinance company who loan it out to a local person. The local person pays very high interest and yet the foreign investor gets little or none of that. In effect, the microfinance company seems to be using 'my' money to lend out and make a tidy profit.

Is that how it is or did I misunderstand it? Feel free to explain if you have any first hand experience with it.

[Thomas]

I looked into this before and got a negative opinion of it. I am open to have that opinion changed by those who have looked into it deeper. When I looked at it, it appeared to me that I 'invest' or 'give' my money to a microfinance company who loan it out to a local person. The local person pays very high interest and yet the foreign investor gets little or none of that. In effect, the microfinance company seems to be using 'my' money to lend out and make a tidy profit.

Is that how it is or did I misunderstand it? Feel free to explain if you have any first hand experience with it.

It confused me some too. Kiva tells in an example money cost is 11 % (although loan giver get 4 % ?!) and the "transfer cost" is 25% for a loan of 100 USD. making the interest become 36 % for a year loan. (Much less than common for poor people in such countries, but still much.) But then it's supposed to include some basic business education, and to do them handler need to travel to the villages, and perhaps they don't have enough of skilled teachers they can need to employ some, and that explain some.

Edited October 16, 2012 by Thomas

[i am bob]

I went into the KIVA site and started reading the FAQs (under the Help tab). I then pulled up the page for one of the "partners" in the Philippines. Best I can see, yes, the "partner" is bringing in a fair chunk of the change - if you call the small amounts that they have loaned out a "chunk"....! And, further investigation into the "partners" themselves show that the loans are not all that they do. One is involved in lower costing pharmaceuticals for the poor, disaster relief, clinics, and other social programs for the poor or needy. So maybe letting them have that extra chunk of interest isn't a bad idea? Besides, isn't this more of a donation to help the poor and disadvantaged program where you actually can get your donation back?