I want to talk to you a moment about Kiva. Kiva is a web site that lets you provide micro-loans to the poor with only $25. The loans are given to entrepreneurs and are facilitated through Kiva’s partnership with local micro-lending organziations. The micro-lending organization collects interest and you collect the principle on the loan. When your money is paid back, you can re-lend it. My family has a number of these loans in play and have been paid back many times and re-loaned again to new entrepreneurs.
Example: Kossi, a man in Lome, Togo, Africa needs $1200 for a new taxi, so he can sustain his family. You loan $25, and over the next week or so many Kiva lenders also put in $25. The total is reached very quickly, and the microlending organization is funded to provide and administer the loan. over the next 26months, the borrower pays it back, you receive the $25 back, and you can either withdraw it or re-lend. You can fund the loan with your paypal account, credit card, or other means.
Another Example: Surayo, a woman in Tajikistan, makes commercial women’s wear as a contractor out of her home. Her business has been growing, and she needs a loan of $700 to buy special material to increase her line. She plans to eventually open her own company producing and selling clothing. You loan her $25. I loan her $25. And lots of other people are loaning her $25. These are bundled into one microloan, which she gets as a lump sum, makes the investment, expands her business, and is able, with this kind of help, to break out of poverty.
We’ve been lending through Kiva for a few years. It works, it’s decent and straightforward, and if you’re worried about your money, you can lend with confidence even during an economic downturn. The default rates are slim – most lenders repay. At most, you risk $25 at a time (though you may want to fund several small entrepreneurs), and you can make a dent in poverty by helping people get a handhold on something real – their work. Visit www.kiva.org and you’ll see what I mean.