The Do-Gooder Corner: Kiva

Kiva

The Do Gooder’s Corner mission is to relay information on volunteer opportunities in Chicago. Sometimes, however, the Do Gooder would like to focus attention on other ways readers can make a difference. One such deserving organization is the focus of this week’s column: Kiva.

To understand Kiva, one must understand microfinancing, which supplies loans, savings and other basic financial services to the poor. Microfinancing is nothing new (who hasn’t gotten a small loan to cover the rent from a parent, sibling or friend?), but on a global scale starting in the 1950’s, it took the form of governments in developing countries providing credit to small and marginal farmers as a way of trying to raise income. Since then, microfinancing has grown and evolved, and according to the U.N., there are now over 7,000 microfinance institutions serving the needs of the poor. Microfinancing also received some attention in 2006 when Grameen Bank of Bangladesh, a microfinance bank, and Muhammad Yunus, founder of Grameen Bank, won the Nobel Peace Prize.

While microfinance institutions (MFIs) were doing good work to serve the world’s poor, Kiva founders, Matthew and Jessica Flannery, felt there was a gap between individuals who could make small loans and the small businesses those individuals wanted to help. Thus, the idea of Kiva was born: connecting micro-lenders (that’s you, fellow Do Gooders) with small businesses in developing countries.

Kiva partners with MFIs that are already “on the ground” in the country or region the businesses are located. The MFIs assess whether a business is a good candidate for a loan, and if accepted, forwards the profiles Kiva. Kiva then posts profiles of loan candidates on its website. Individual lenders, primarily from the United States and England, can then make a loan (minimum of $25) through PayPal. The MFI then distributes the loan.

Lenders are paid back in full at the end of the loan term (usually between 12-18 months), but they do not receive interest for their loan. Because this is a loan, Do Gooders cannot claim it as a charitable donation on their taxes, however, any donation to Kiva itself is tax-deductible. Lenders receive periodic updates from the MFI about repayment progress and how the individuals are doing via email and journal entries.

You can watch PBS Frontline/World’s 15-minute documentary on micro-lending and Kiva at this link.

And check out www.kiva.org for more information and to make your micro-loan.