Kiva - Give the Gift of Self-Sufficiency

Kiva.org is a unique and clever way to help others who are less fortunate than we are. Instead of handing over your hard-earned cash to yet another charity, where you might not have any knowledge of exactly what your donation is being used for, or whether it is actually reaching the people you thought you were helping, Kiva has taken a different approach.

Kiva is not a charity; it is a business loan. The minimum loan amount is US$25. You can browse through a list of entrepreneurs from developing countries such as Cambodia, Nigeria, Peru, and Pakistan. The entrepreneurs requesting loans from Kiva are doing so to either start a small business, improve or expand an existing small business, or purchase stock for their business. Choose the person who resonates with you.

Together with several other lenders, your $25 goes towards the loan capital that the entrepreneur has applied for. Once the capital has been raised (which usually takes less than a day due to the growing popularity of Kiva), the loan is dispersed by a Kiva-vetted microlender who operates in that country.

Here I do recommend that you check the interest rate that each microlender is charging their entrepreneur. Some charge less than 10%; personally I consider an interest rate above 30% to be excessive, especially since so much of the cost association is covered by the Kiva concept. However, these microlenders are also running a business, and may be small entrepreneurs themselves, therefore they do need to turn some sort of profit to survive.

The beauty of Kiva, though, is seen at the end of the loan term, when the entrepreneur has repaid their loan. The $25 you lent to this first entrepreneur is returned to you, and now you can re-loan the same money to another entrepreneur with another business to build up. This is the concept that thrills me. Over and over again, the same money is helping people who are using it to build businesses that support them and their families. The repayment rate is extremely high at Kiva. The default rate as at 21 November 2008 is only 1.24%.

But that's beside the point - if you were donating this money, you wouldn't expect to get it back. You also wouldn't have a chance to give it to someone else once the first person no longer needed it. So, this holiday season, give up $25 to put into a Kiva account (for yourself, or on behalf of a loved one), and enjoy choosing the entrepreneurs to lend that money to over and over again.

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