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 $25 in US$.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.