Kiva: Individual microlending

When looking at Questionable Content (it is a webcomic – I’m addicted to watching the guy develop his drawing style!) I saw a link for a site named Kiva. To explain what this is I will leave it up to the Kiva about page.

Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world.

It is so incredibly cool – it lets you loan money to individual entreprenuers in developing countries. Instead of giving money to a charity as a black hole you are giving money directly to someone who you believe will make good use of it – furthermore, you are pretty likely to get you money back!

This is a great way to incentivise capital transfers and charity – seriously cool.

Is anyone keen to join a TVHE Kiva group – I’m sure I can rope at least the other authors into it 😉

  • StephenR

    Way to be out of the loop! It’s been fairly high-profile for a few years now, as you might have gathered by the endorsements from Jeffrey Sachs and co. Hardly your fault of course, you really need to have stumbled upon the right issue of Time magazine etc, or been invited to join a group by a cooking website you frequently visit 😀

    There are actually a small handful of these sites now, but Kiva is certainly the big daddy! Makes a good replacement for those who don’t feel comfortable giving a ‘charity’ Christmas present, plus you’re actually slightly involved in choosing who gets the money, and you get updates from the borrower!

  • Hi StephenR,

    I knew that it was widely known in some circles (for example, a large number of people at my work have been involved with it for the past year) – I didn’t realise that everyone already knew about it though 🙂

    Even so – its worth more advertising, wooohooo 🙂

  • StephenR

    Ah, I see.

    It is!

  • To be clear by involved with it I mean that they invested money into it – not that it is part of there work 🙂

  • And by invested I mean that they have given money to groups on the site – not that they own stock.

    There is no financial interest here is all I’m trying to say – its just a cool idea I wanted to mention. Sadly, my ability to choose the right words has failed me 😛

  • FreneticMonkey

    i like their website it’s like trademe opened a bank 😉
    wouldn’t they raise more money if they paid interest to the lenders?

  • SimonD

    Yes – I’ve been involved with this for a while as well. I’ve gotten my money back three times now 🙂 In my opinion it is a vastly better way of helping those less fortunate than charity. It gives the entrepeneur in the third world power to improve their condition and avoids the hand out mentality.

  • “wouldn’t they raise more money if they paid interest to the lenders?”

    Indeed, if they offered the market rate of interest we would have an equilibrium 🙂

    However, there are two issues:

    1) Placing interest on it may move it away from feeling like a charity – if people get value because it feels like a charity, adding interest may lower donations/investment

    2) The market rate of interest for this type of investment may already be available on the site – it may be zero!

  • “Yes – I’ve been involved with this for a while as well. I’ve gotten my money back three times now 🙂 In my opinion it is a vastly better way of helping those less fortunate than charity. It gives the entrepeneur in the third world power to improve their condition and avoids the hand out mentality.”

    Definitely 🙂

    I mean, helping people in less fortunate countries build infrastructure and trade has to be one of the top ways of helping them out of poverty!

  • Raf

    If you like the idea join up with the Kiva Kiwis group

    http://www.kiva.org/community/viewTeam?team_id=92

    Micro and P2P lending may become more prevalent as the banking system collapses. Also look at http://www.Nexx.co.nz here in NZ which is due to start shortly.

  • StephenR

    From Stephen R:

    “Simon D and Matt:

    The gist of what you say is that this practice (essentially ‘wealth
    creation’?) is better than ‘conventional’ charity. My first thought in
    response to that was: it’s a little hard to be an entrepreneur when
    you’ve been infected by Guinea Worm i.e. your quality of life is so low
    that doing ANY work, let alone running a business, is extremely
    difficult. I value such projects to ammeliorate or fix such conditions
    higher than I do wealth creation, as I think an immediate end to
    suffering trumps enterprises like Kiva.

    I can stab in the dark and guess your reply(s) as being something
    along the lines of ‘revenue produced as a result of successful
    business will feed through either in the form of more public
    health/infrastructure revenue or produce money for private
    treatment/infrastructure measures’, but that is certainly very much in
    the long term. Or perhaps a bit of ‘a healthy mix of both is good’,
    eh?! 😀

    I happily use Kiva, but at the moment it takes only a small share of
    my charitable expenses, for the reasons above, plus it would probably
    get a bit confusing and time intensive allocating money to 20
    different projects a month!”

  • “The gist of what you say is that this practice (essentially ‘wealth
    creation’?) is better than ‘conventional’ charity. My first thought in
    response to that was: it’s a little hard to be an entrepreneur when
    you’ve been infected by Guinea Worm i.e. your quality of life is so low
    that doing ANY work, let alone running a business, is extremely
    difficult. I value such projects to ammeliorate or fix such conditions
    higher than I do wealth creation, as I think an immediate end to
    suffering trumps enterprises like Kiva.”

    Indeed – in some areas there are institutional issues that no amount of “credit availability” (which is what this effectively creates) can solve. Which is why there is definitely a role for other charities.

    “I happily use Kiva, but at the moment it takes only a small share of
    my charitable expenses, for the reasons above, plus it would probably
    get a bit confusing and time intensive allocating money to 20
    different projects a month!””

    Indeed – at some level it provides “too much” choice, given transaction costs. This is why I like the idea of groups 🙂

  • Raf :
    If you like the idea join up with the Kiva Kiwis group
    http://www.kiva.org/community/viewTeam?team_id=92
    Micro and P2P lending may become more prevalent as the banking system collapses. Also look at http://www.Nexx.co.nz here in NZ which is due to start shortly.
    EditDe-linkModerateSpamDelete

    Hi Raf,

    Very very cool – I will put up a post advertising the New Zealand group in the next few days methinks 🙂

  • StephenR

    “Indeed – at some level it provides “too much” choice, given transaction costs. This is why I like the idea of groups

    I actually never thought of it that way…might have to have another look…