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Kiva

Page history last edited by PBworks 15 years, 8 months ago


 

 

Kiva (charity)

 

peer-to-peer lending

Wikipedia Article

 

Kiva is an organization that allows people to lend money via the Internet to small businesses in developing countries. It is a 501(c)(3) non-profit organization headquartered in San Francisco, supported by donations from its users and through partnerships with PayPal, YouTube, Google, MySpace, Microsoft, and others. It expects to be self-sustaining by the end of 2008.

 

Loans from Kiva's participants are pooled together and given to partnering microfinance institutions, who in turn lend the money to entrepreneurs. The loans provide 0% interest to Kiva's lenders. Kiva itself charges no interest from the entrepreneur, but says that, beginning in 2007, it will collect 2% interest from the microfinance institution involved. The borrowing entrepreneurs are generally charged some interest by the microfinance institutions handling their loans, although Kiva claims to keep track of how much interest is charged and will not work with those charging unfair interest rates. Kiva claims that its borrowers have a historical repayment rate of about 99.8%. It is working with regulators to allow microfinance institutions to offer variable interest rates to lenders.

 

 

How it works

 

Kiva allows microfinance institutions around the world to post profiles of qualified local entrepreneurs online. A lender can be any person with a credit card. A PayPal account is only required if one wishes to withdraw funds.. Lenders browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to microfinance partners, called "Field Partners", to disburse and administer. As loan repayments are made by the entrepreneur, the Field Partners remits funds back to Kiva. Once the loan is fully repaid, Kiva lenders can withdraw their principal or re-loan it to another entrepreneur.

 

PayPal does not collect a fee on Kiva transactions. Kiva distributes 100% of the loan to the entrepreneur. Lenders do not receive any interest or other profit. The Field Partner who administers the loan collects interest from the entrepreneur.

 

Kiva Partners worldwide (2007):

 

 

 

 

Early progress

 

Named as one of the top ideas in 2006 by the New York Times Magazine, Kiva was the world's first person-to-person lending marketplace for the poor. Kiva's goal is to reduce global poverty by letting consumers lend to and connect with a specific developing world entrepreneur online. Affordable capital helps low income entrepreneurs start or expand small businesses, creating a path towards economic self-sufficiency.

 

In a little over a year, Kiva has grown to become the most trafficked site in microfinance with +89,000 Internet lenders generating +$10 million in loans to thousands of entrepreneurs in +25 developing countries – all with a +99% on-time repayment rate thus far. According to Alexa.com, Kiva's website typically ranks well into the top 50,000 websites on the Internet. Kiva is staffed and governed by experienced consumer Internet and microfinance leaders. Kiva has also received wide acclaim from the blogosphere, mainstream media and development experts; it was featured at the 2006 Clinton Global Initiative and 2006 Global Micro credit Summit.

 

A segment devoted to Kiva and its effects on those loaned money was aired on the PBS television shows Frontline and Oprah.

 

Organization and team

 

Based in Silicon Valley, Kiva is run by a team with experience in microfinance (Uganda, India, Tanzania, etc.) and technology (eBay/PayPal, TiVo, Google, MySpace).

 

News Articles

 

• peer-to-peer social cause – international loans to poor people (low/ no credit

• A while ago, Springwise featured Zopa, an online platform that matches creditworthy borrowers with individuals who'll lend money to them, thereby taking banks and other financial institutions out of the equation.

• Make way for a similar initiative that focuses solely on providing (charitable) microloans to entrepreneurs in developing countries – U.S. based Kiva. In their own words: "Kiva provides a new, sponsor a business option for individuals to connect with small enterprises in developing countries through flexible loans." Anyone with internet access and a credit card can now lend money directly to a farmer in Uganda who needs to buy livestock, or a refugee in Gaza hoping to set up a telephone repair shop.

• Loans requested by the entrepreneurs average USD 500. The average lender loans between USD 25 and 100, making payment via Paypal, and does not receive interest over the loan. Compared to simply donating money, Kiva's p2p model appears far more sustainable – both for borrowers and lenders. As founder Matthew Flannery explains: "When you loan to someone and get paid back, you get proof that a business has succeeded -- and you are more likely to loan again." Desktop philanthropists can track 'their' entrepreneur's progress via his or her journal, which includes information about the loan amount, how much has been repaid, and of course how the business is evolving thanks to the loan.

• Although the microfinance industry has grown 25-30% annually over the last five years, the demand for microcredit services among the world's poorest is still largely unmet. Combined with the news that the number of lenders to Kiva has exceeded the number of people they can find to borrow the cash, this sounds like an excellent growth market. If not for profit, then surely for good karma

 

Innovation & Partnership (increase funding)

 

 

Longtime Springwise readers may remember Kiva, the venture we wrote about back in 2006 that facilitates charitable microloans to entrepreneurs in the developing world. Now the organization has found a way to make loans go even further through a partnership with credit card issuer Advanta.

 

Earlier this month Advanta and Kiva announced the KivaB4B Project, an initiative through which Advanta will match the loans made by holders of its business credit card with up to USD 200 per month per card. Card holders simply select a business owner to sponsor through Kiva and make a grant using their Advanta BusinessCard. Advanta matches that grant, dollar for dollar, and Kiva distributes the total resulting funds. As the funds are repaid, they get deposited back into the card holder's Kiva account, while the match funds go back to Advanta. In the meantime, donors get materials to publicize their support, such as a KivaB4B button to put on their website, stickers for their storefront and postcards to send to customers.

 

Started in 1951 with USD 30 in seed money, Advanta is now one of the largest credit card issuers in the US small business market. Ami Kassar, Advanta’s Chief Innovation Officer, explains: “In our years of working with small business owners, we’ve found that many of them remember the moment someone gave them inspiration, some good advice, or a little cash to get things going. Now, through KivaB4B, American small business owners can offer that same ray of hope to entrepreneurs in developing countries.”

 

San Francisco-based Kiva has already opened a whole new world of opportunity to entrepreneurs in developing countries—it's facilitated more than USD 27 million in loans since its inception in 2005. With the power of a major bank behind it—and a little cause-related marketing incentive for donors—there's no telling how far its effects might go.

 

Website: www.kivab4b.org

Contact: aholderer@advanta.com

Source:  http://www.springwise.com/financial_services/

 

 

External links

 

 

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