Kiva is a non-profit that makes micro-loans to entrepreneurs in developing countries.
The loans are not tax-deductible charitable donations and you do get paid interest or dividents so it’s not a financial investment. But it is an investment in people.
How does it work?
Maybe my own experience will explain it.
On Dec. 23, 2006, I deposited $82.50 with Kiva. Of that, $7.50 was a tax-deductible charitable donation to Kiva and the other $75 went to Jovcho Bakalov, a Bulgarian, who borrowed – along with my $75 – a total of $2,000 from a Kiva partner organization.
Bakalov got his loan in early January 2007. I got periodic emails about loan payments and an email today that the loan had been repaid in full. When a loan is repaid in full, the Kiva lenders get their original loan amounts credited back to their account where it can be reloaned, donated to Kiva or withdrawn.
Now, I’m starting the cycle anew. I added another $75 to my account for a total of $150 and made another $7.50 donation to Kiva.
I loaned $75 to Nguyen Thi Ngoc, a Vietnamese woman who wants to borrow $575 to buy pigs. and who at this writing needs $300 more committed.
The description of why she wants a loan is:
Mrs. Nguyen Thi Ngoc, 47 years old, is a third year member of TYM Fund (Kiva Partner). Her family includes her husband, her four children and herself. Their family’s main job is farming and animal breeding. She uses her previous loans efficiently so her family income increases significantly. The cost of piglets and cows are increasing, however, causing her a need to borrow larger loan. Since her children are all grown up and have their own job, it’s easier for Mrs. Ngoc to make the weekly repayment. This time Mrs. Ngoc wants to borrow 575USD to buy piglets and food for them.
Everything I know about raising hogs, I smelled on a farm, but Niguyen Thi Ngoc is a good risk. The partner organization has a high ratiing from Kiva and she has a previous track record. I could be wrong and be out $75, but I’m guessing, I’ll see this loan amount back in my account one day.
That leaves me with $67.50 to commit elsewhere with Kiva.
This is a brilliant effort on the part of the people that founded Kiva and I like the fact that these monies are loans that are expected to be repaid and that you get to pick who gets them.