I have participated in charity activities with my family since I was five. In these activities, we have come to know many warm-hearted volunteers from all over the world. One of them was Gary B, an Australian website designer, who six years ago introduced us to the Kiva program.
Kiva is a micro-lending site that connects online lenders and borrowers around the world. A nonprofit organization, Kiva allows people to help low-income entrepreneurs with small loans in $25 increments rather than a single donation.
Over the past six years, my sisters and I have provided more than 2,600 small loans to aspiring entrepreneurs across 76 countries. Here are several reasons why we enjoy taking part in this program:
1. A Hand Up, Not a Handout
Kiva takes a unique approach for a nonprofit organization by primarily arranging short-term loans. The entrepreneurs need loans for a number of reasons, such as restocking goods for their businesses, purchasing building materials, and so on. The borrowers repay the loan in full after a predetermined period, usually several months, and the repayment can then be lent to others again and again. We respect those who help themselves by requesting loans through Kiva because they are not expecting anything for free. Here is an example of a Rwandan mother of seven children who needs a loan to buy more shoes to sell. The profits from the business are used to improve her family’s standard of living and pay school fees in the hope of a brighter future for her children: https://www.kiva.org/lend/912800
As the saying goes: If you give a man a fish he’ll eat for a day, but if you teach a man to fish, he’ll eat for the rest of his life.
2. The Power of Loans in Circulation
After loans are repaid, lenders can either continue to lend to others or withdraw their monies. The average Kiva repayment rate is an astounding 97%. Thus, a single contribution can be lent out multiple times over a few years, and the lenders are almost certain to get their money back in the end.
3. Saving Time and Money by Putting Technology to Work
The Internet shortens distance. With just a click on the screen, we are connected.
To help out in specified areas, such as shelter, energy, or education, you can select the categories on the main page. With the filters set, you will see a page filled with photos of borrowers. Clicking on a photo provides more details about that borrower’s circumstances and family.
As my sisters and I read through these stories, we are reminded of our late maternal grandfather and his inspiring rags-to-riches story. When growing up in poverty, he borrowed money from relatives to buy pigs. He then fattened and sold them to earn money for his tuition. Because of this experience, later he set up a scholarship for underprivileged students in his hometown that has been running for more than 20 years. Giving back when possible was a core value for him, which he would later instill in us.
Charitable lending online is more or less the same as traveling overseas to help out. With the added convenience of the Internet, we can participate without leaving home; it not only saves time, it spares us the fatigue associated with long travel. Thus, we are able to have more time to support other charities, such as providing meals to a homeless shelter, playing music in senior communities, and the like.
In addition, the money saved on airfare and other travel expenses can be used to provide more loans. Here is an example of a shelter project: www.kiva.org/lend/1253190. This loan would help the borrower purchase sand, cement, bricks, and equipment to build a toilet in Vietnam. For a $25 loan, which is a significant sum in many countries in the world, the expected risk is a mere $0.75 because of Kiva’s 97% average repayment rate.
4. Vision-Broadening Experience
In the beginning, we focused only on providing loans in the countries we had visited, including Peru, the Philippines, and Ecuador. In fact, it didn’t occur to us that there are many more developing countries whose GDPs per capita are less than $3000, countries in which $100 can buy a water filter that provides badly needed safe drinking water for an entire family. Our horizons were broadened after we became more involved and extended loans to borrowers in more countries. We also learned about economic and political factors that can cause currency loss when we received insufficient repayments as a result of exchange-rate fluctuation.
5. Rated Four Stars by Charity Navigator
One legitimate concern with Kiva is that it distributes loans through field partners, which creates the danger of those partners charging high interest rates to borrowers to cover their own operating costs. However, Kiva has begun carefully monitoring its field partners. This has greatly helped to mitigate the risk, and Kiva is currently rated four out of four stars by Charity Navigator. Furthermore, the company has launched Kiva US, a program in which the money lent out has no interest charged on it to US entrepreneurs.
Kiva is a great idea, and it offers a fast way to reach out to people who need help around the globe. Even though $25 is a small contribution and will be repaid, it is a step toward improving the wellbeing of the global community. Considering the millions of people who use Kiva, our desire to help each other grow is illuminated on Kiva’s website.