KIVA- Haven’t you heard?

KIVA- Haven’t You Heard?

I’m going to divert from polio this week to tell you about one of the neatest non-profits, rather social businesses- Kiva.

Since its inception in 2006, Kiva’s garnered enviable public attention- appearing in the pages of Bill Clinton’s book Giving, on the Oprah Winfrey Show, in one of Nicholas Kristof’s columns, and more.

But there’s a reason for all this glitzy press.  Kiva did something that many in the non-profit world have struggled with: connecting the lender with the beneficiary.

Using the web, Kiva has been able to join the lending world with the receiving world, creating a new level of transparency.  Plus, you’re not giving a donation- you’re making a loan.  And that loan will be repaid.  So, you can recycle it.  Send it to another budding entrepreneur.  Again, it’ll be repaid.   Recycle it again.  You get the idea.  A small sum of $25 can be reused endlessly to assist entrepreneurs in the developing world.

Microfinance has had its share of critics, those arguing that it doesn’t solve the larger problem of stagnant economic growth in underdeveloped/ developing nations.  Microfinance has exorbitant interest rates, ones that you and I wouldn’t want to borrow at.  Microfinance is a trend, the ‘in’ thing, in vogue, a fad. 

Turns out, microfinance is taking a different approach to revolutionize the economy of say, Brazil or South Africa or Nigeria.  Rather than enacting grand public policies, it’s attempting to make small indents by supporting hardworking entrepreneurs.  Support enough entrepreneurs in one small community and that can affect the economic dynamics of a town/village, even city or state. And that’s just as vital.  In fact, today there are 10,000 microfinance organizations (MFIs) worldwide that have reached 100 million entrepreneurs.  That’s micro going macro.

Secondly, these loans are granted at higher interest rates at times.  But compare them to the state-issued loans or those from local money lenders and the MFI-backed loans appear much more reasonable.  Generally, the interest is used to pay for operational costs of Kiva partners on the ground.  Plus, microfinance gives to those who traditional banks would ignore.  So, even a modest interest rate is better than no loan at all.

And lastly, microfinance is the ‘in’ thing, a fad, etc.- well, it’s a trend that’s endured several seasons now.  Ask Yunus- he’s been doing it since the late 70s.

Kiva.org stands out among the many other MFIs because it’s web-based and makes it easy for you to give a loan, track it, and see who’s holding your money.  It’s not a one-man show, though.  Kiva relies on the support, expertise, and on-the-ground manpower of many other MFIs.  It partners with them to reach all those entrepreneurs. 

So, test it out- see if Kiva’s upholding its promises and visit the site: kiva.org.  

If you’re a student and insanely passionate about microfinance, join CampusKiva– our modest effort at creating a university-age community of microfinance aficionados.  So far, we’ve hit almost 50 schools in the US.  And now, we’re going international.  If you’re looking to start a microfinance chapter at your school or get your professor to devote a little class time to this SF-based social business, contact us at CampusKiva and we’ll help you get going.

For CampusKiva: http://sites.google.com/site/campuskiva/

(we’re updating the site but you can reach me at esha@campuskiva.org)

For Kiva: www.kiva.org

For my conversation with Premal Shah, President of Kiva, on Intent.com: http://www.intent.com/podcasts/2009/08/07/premal-shah-kivas-visionary-president

For Nicholas Kristof’s OpEd on Kiva: http://select.nytimes.com/2007/03/27/opinion/27kristof.html?scp=2&sq=KIVa&st=nyt