I have now for several years been loaning money via Kiva . I heard about this organization when I read Bill Clinton's book called Giving. This was a great book and it why I decided to loan money through Kiva.
The basic concept is that you loan money to someone somewhere in the world. You do that through micro credit organizations that advertise people who want loans on Kiva's site. You do not get any interest for your loan, but the micro credit organization charges interest on the loan, usually anywhere from 5% to 20% as I understand it.
I have made some 68 loans via Kiva and only one loan was not fully repaid. I got $22.38 back rather than $25 as the lender did not make the last two payments on the loan. I have been loan new money and re-loaning money paid back.
Kiva asks for 15% donation with each loan, but I must admit I feel that is too much for money re-loaned. So, I give an extra 15% on new money I put into Kiva, but not generally on re-loaned money. I understand that Kiva has expenses and I sometimes give them some extra money when I re-loan money. However, if I give 15% of all money re-loaned it would mean that I could re-loan money only 7.5 times before it disappears into Kiva.
When I loan money, I like to read the story on why people want to borrow money. I also check out the field partner, or the micro credit organization that will handle the loan. They have a Field Partner Risk Rating. This rating is based on governance of the micro credit organization and on whether or not they keep proper accounting books. I like the micro credit organizations I deal though to have a reasonable risk rating.
I also check the micro credit organization's delinquency rate. You should note that you may not always get back what you loan because of currency exchange. Being in Canada, you should know that Kiva runs on US$, so when you loan $25 it is $25 in US$.
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I am a long time participant in kiva. The one thing that I am disappointed by is that there is no way to provide a loan that is interest free. I have offered to make the interest payment as part of my loan (I would pay the interest) but kiva does not offer this.
ReplyDeleteI see no reason that someone who is struggling in real poverty should be forced to pay interest on a loan. Just give them the use of the money without interest and let them build a business.
BTW, the repayment rate on kiva loans is stellar, way better than any Western bank.
If you like Kiva, you might be interested in other peer to peer lending sites, such as the Lending Club. While it may not have the international reach of Kiva, it does allow you to earn interest on your loans.
ReplyDeleteThanks for suggestion on Lending Club. However, I do not really want to lend anyone money. I really look on Kiva as charity. It may not be the best view of it, but I think it is more constructive that other charity money I give.
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