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| When Kiva began, lenders chose who could borrow their . Since then, the system has changed, so that loans are paid to borrowers before their stories are posted to Kiva‘s website.<ref>, by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010</ref><ref>, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010</ref> This is disclosed on Kiva‘s site; each It Seems''], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010</ref><ref>, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010</ref> This is disclosed on Kiva‘s site; each loan proposal states whether funds were pre-disbursed. Thus, lenders‘ loan funds likely go to borrowers other than those chosen by the lenders.<ref>, above, as accessed Jan. 2 & 16, 2010 (“. . . . <nowiki></nowiki> lend the it gets from Kiva to someone else, who may never appear on kiva.org.”)</ref> Whether lenders‘ preferences are used for lender preference trend analysis by any field partners or Kiva is not stated. Kiva‘s response has been to keep pre-disbursing but be clearer about the process<ref>, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010</ref> in its legal terms<ref> (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010</ref> but not in its main process description.<ref> as accessed via Kiva‘s home page Jan. 2, 2010</ref> | When Kiva began, lenders chose who could borrow their . Since then, the system has changed, so that loans are paid to borrowers before their stories are posted to Kiva‘s website.<ref>, by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010</ref><ref>, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010</ref> This is disclosed on Kiva‘s site; each It Seems''], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010</ref><ref>, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010</ref> This is disclosed on Kiva‘s site; each loan proposal states whether funds were pre-disbursed. Thus, lenders‘ loan funds likely go to borrowers other than those chosen by the lenders.<ref>, above, as accessed Jan. 2 & 16, 2010 (“. . . . <nowiki></nowiki> lend the it gets from Kiva to someone else, who may never appear on kiva.org.”)</ref> Whether lenders‘ preferences are used for lender preference trend analysis by any field partners or Kiva is not stated. Kiva‘s response has been to keep pre-disbursing but be clearer about the process<ref>, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010</ref> in its legal terms<ref> (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010</ref> but not in its main process description.<ref> as accessed via Kiva‘s home page Jan. 2, 2010</ref> | ||
| === Interest rates === | |||
| Some people, including microfinance pioneer ], argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book<ref>Muhammad Yunus and Karl Weber. ''Creating a World Without Poverty: Social Business and the Future of Capitalism''. PublicAffairs, New York, 2007</ref> he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties. | |||
| For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of USD$430 lent on average, comparable to the commercial ] rate of 24.5% for a loan of USD$635.<ref>{{cite web|url=http://lacuadraonline.com/featured-stories/the-coffee-trade-nothing-fair-about-it/3/|title=The Coffee Trade Nothing Fair About It|publisher=La Cuadra|=2009-04-15|author=Laura Shearer}}</ref> (For reference, the inflation rate for Guatemala typically varies between 5 and 10% and was just 0.62% in 2009.<ref>{{cite web|url=http://www.reuters.com/article/idUSN0734249820090707|title=Guatemala inflation rate drops to 25-year low|publisher=Reuters| It Seems''], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010</ref><ref>, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010</ref> in its legal terms<ref> (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010</ref> but not in its main process description.<ref> as accessed via Kiva‘s home page Jan. 2, 2010</ref> | |||
| === Interest rates === | === Interest rates === | ||
Revision as of 16:21, 6 May 2010
| File:Kiva.org logo.svg | |
| Founded | October 2005 |
|---|---|
| Focus | Economic development |
| Location | |
| Area served | World-wide |
| Method | Microcredit |
| Key people | |
| Employees | 34 |
| Website | http://www.kiva.org |
Kiva Microfunds (commonly known by its domain name, Kiva.org) is an organization that allows people to lend money via the Internet to small business entrepreneurs in developing countries around the world and in the United States through microfinance institutions. It is a 501(c)(3) non-profit organization headquartered in San Francisco, supported by loans and donations from its users and through partnerships with businesses and other institutions.
Lending process
Kiva allows microfinance institutions around the world, called "Field Partners", to post profiles of qualified local entrepreneurs on its website, www.kiva.org. Lenders browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to the appropriate Field Partners to disburse to the entrepreneur chosen by the lender (but see Borrowers not the ones chosen through Kiva site). As the entrepreneurs repay their loans, the Field Partners remit funds back to Kiva. As the loan is repaid, the Kiva lenders can withdraw their principal or re-loan it to another entrepreneur.
Lenders' funds are transferred to Kiva through PayPal, which does not collect its usual fees in this case. It is possible to pay by through PayPal's website, even without a PayPal account, but a PayPal account is needed to withdraw funds. Field Partners charge interest to their borrowers, although Kiva claims to keep track of how much interest is charged and will not work with those charging unfair interest rates. Kiva lenders do not receive any interest because Kiva is not registered with the US Government as a broker.
History
Kiva was founded in October 2005 by Matt Flannery and Jessica Jackley. The couple's initial interest in microfinance was inspired by a 2003 lecture given by Grameen founder Muhammad Yunus at Stanford Business School. Jessica Jackley, formerly Jessica Flannery, worked at the school and invited Matt Flannery to attend the presentation; this was the first time Mr. Flannery had heard of microfinance, but it served as a "call to action" for Jessica. Soon after, Jessica began working as a consultant for the nonprofit Village Enterprise Fund, which worked to help start small businesses in East Africa. While visiting Jessica in Africa, Matt and Jessica spent time interviewing entrepreneurs about the problems they faced in starting ventures and found the lack of access to start-up capital was a common theme. After returning from Africa, they began developing their plan for a microfinance project that would grow into Kiva, which means "unity" in Swahili. Kiva is run by a team with experience in business, microfinance, and technology.
Interest rates
According to its web site, Kiva quotes interest rates as the "self reported average rate charged by the Field Partner to the enterpreneur." As of January 07, 2010 35.21% is the Average Interest Rate and Fees Borrowers Pay (Portfolio Yield) to All Kiva Field Partners.
There are a total of 134 field partners listed on the Kiva website and their status is as following: 77 Active, 5 Paused, 23 Pilot and 29 Closed. The following table shows the interest rate charged by a sampling of field partners.
Statistics
As of December 25, 2009, Kiva has distributed $110,671,610 in loans from 631,345 lenders. A total of 157,207 loans have been funded. The average loan size is $401.66. Its current repayment rate is 98.13%. According to Alexa, Kiva's website ranks in the top 15,000 websites on the Internet.
The total costs of running Kiva in 2008 totaled $4.7M. During 2008, the user base released about $37M to low-income entrepreneurs listed on the Kiva website. So, for every dollar spent on operations, Kiva lenders sent about $8 for loans.
Criticism
Borrowers not the ones chosen through Kiva site
When Kiva began, lenders chose who could borrow their . Since then, the system has changed, so that loans are paid to borrowers before their stories are posted to Kiva‘s website. This is disclosed on Kiva‘s site; each It Seems], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010</ref> This is disclosed on Kiva‘s site; each loan proposal states whether funds were pre-disbursed. Thus, lenders‘ loan funds likely go to borrowers other than those chosen by the lenders. Whether lenders‘ preferences are used for lender preference trend analysis by any field partners or Kiva is not stated. Kiva‘s response has been to keep pre-disbursing but be clearer about the process in its legal terms but not in its main process description.
Interest rates
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of USD$430 lent on average, comparable to the commercial BanRural rate of 24.5% for a loan of USD$635. (For reference, the inflation rate for Guatemala typically varies between 5 and 10% and was just 0.62% in 2009. in its legal terms but not in its main process description.
Interest rates
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of USD$430 lent on average, comparable to the commercial BanRural rate of 24.5% for a loan of USD$635. (For reference, the inflation rate for Guatemala typically varies between 5 and 10% and was just 0.62% in 2009. This is disclosed on Kiva‘s site; each loan proposal states whether funds were pre-disbursed. Thus, lenders‘ loan funds likely go to borrowers other than those chosen by the lenders. Whether lenders‘ preferences are used for lender preference trend analysis by any field partners or Kiva is not stated. Kiva‘s response has been to keep pre-disbursing but be clearer about the process in its legal terms but not in its main process description.
Interest rates
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of USD$430 lent on average, comparable to the commercial BanRural rate of 24.5% for a loan of USD$635. in its legal terms but not in its main process description.
Interest rates
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of USD$430 lent on average, comparable to the commercial BanRural rate of 24.5% for a loan of USD$635. (For reference, the inflation rate for Guatemala typically varies between 5 and 10% and was just 0.62% in 2009. This is disclosed on Kiva‘s site; each proposal states whether funds were pre-disbursed. Thus, lenders‘ loan funds likely go to borrowers other than those chosen by the lenders. Whether lenders‘ preferences are used for lender preference trend analysis by any field partners or Kiva is not stated. Kiva‘s response has been to keep pre-disbursing but be clearer about the process in its legal terms but not in its main process description.
Interest rates
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of USD$430 lent on average, comparable to the commercial BanRural rate of 24.5% for a loan of USD$635. (For reference, the inflation rate for Guatemala typically varies between 5 and 10% and was just 0.62% in 2009.)
Kiva defends the interest rates of its lenders, however, saying its field partners provide much better rates than local alternatives, but must charge what they do because "the costs of making a micro-loan in the developing world are higher versus larger loans in the West."
Fraud by one partner
In July 2008 Kiva discovered that fraud had taken place with one of their 112 field partners, an African organisation based in Cote d'Ivoire. They suspended activities with the organization and after an investigation followed by the negotiated repayment of loans, they cut all ties.
Full-repayment frequency uncertainty
Whether defaults are extremely low has been questioned on the ground that a field partner may pay Kiva for defaulted to the field partner in order to maintain the field partner‘s good credit with Kiva. Whether interest rates collected by field partners are enough to pay for significant defaults depends on local economic conditions for each field partner.
References
- ^ "Kiva facts". Kiva.org. Retrieved October 10, 2009.
- ""What We Do" on". Kiva.org. Retrieved October 10, 2009.
- ""Supporters" on". Kiva.org. Retrieved October 10, 2009.
- Kiva FAQ: When I pay through PayPal, is PayPal taking a fee?: "Kiva.org is the first organization PayPal is supporting by providing free payment processing."
- "Kiva FAQ: Do I have to use PayPal?". Kiva.org. Retrieved October 10, 2009.
- Kiva FAQ: Do Kiva.org’s Field Partners charge interest to the entrepreneurs?: "Our Field Partners are free to charge interest, but Kiva.org will not partner with an organization that charges exorbitant interest rates."
- Kiva Faq:Will I get interest on my loan?: "Loans made through Kiva's website do not earn any interest. Kiva's loans are not an investment and are not recommended as an investment."
- ""Kiva Background" on". Kiva.org. December 24, 2008. Retrieved October 10, 2009.
- , as accessed Mar. 31, 2010.
- Flannery, Matt (2006). “Kiva and the Birth of Person-to-Person Microfinance.” Innovations (2:1/2): 31-56.
- "Web-Based Microfinancing" New York Times
- "KIVA Staff". Kiva.org. Retrieved October 10, 2009.
- ^ "Kiva Help - Interest Rate Comparison". Kiva.org. Retrieved October 10, 2009.
- http://www.kiva.org/about/partners
- http://www.kiva.org/about/partners
- Hendrik, Gerrit (August 12, 2009). "Kiva.org traffic details". Alexa.com. Retrieved October 10, 2009.
- "Kiva Blog - Contours of a Crisis (II)". Socialedge.org. Retrieved October 10, 2009.
- Kiva Is Not Quite What It Seems, by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010
- Confusion on Where Money Lent via Kiva Goes, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010
- Confusion on Where Money Lent via Kiva Goes, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Is Not Quite What It Seems, above, as accessed Jan. 2 & 16, 2010 (“. . . . lend the it gets from Kiva to someone else, who may never appear on kiva.org.”)
- Matt Flannery, Kiva CEO and Co-Founder, Replies, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Terms of Use (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010
- Kiva‘s how-it-works page as accessed via Kiva‘s home page Jan. 2, 2010
- Muhammad Yunus and Karl Weber. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, New York, 2007
- Laura Shearer. "The Coffee Trade Nothing Fair About It". La Cuadra.
{{cite web}}: Unknown parameter|=ignored (help) - {{cite web|url=http://www.reuters.com/article/idUSN0734249820090707%7Ctitle=Guatemala inflation rate drops to 25-year low|publisher=Reuters| It Seems], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010
- Confusion on Where replies.php Matt Flannery, Kiva CEO and Co-Founder, Replies, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Terms of Use (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010
- Kiva‘s how-it-works page as accessed via Kiva‘s home page Jan. 2, 2010
- Muhammad Yunus and Karl Weber. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, New York, 2007
- Laura Shearer (2009-04-15). "The Coffee Trade Nothing Fair About It". La Cuadra.
- {{cite web|url=http://www.reuters.com/article/idUSN0734249820090707%7Ctitle=Guatemala inflation rate drops to 25-year low|publisher=Reuters| It Seems], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010
- Confusion on Where Money Lent via Kiva Goes, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Is Not Quite What It Seems, above, as accessed Jan. 2 & 16, 2010 (“. . . . lend the money it gets from Kiva to someone else, who may never appear on kiva.org.”)
- Matt Flannery, Kiva CEO and Co-Founder, Replies, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Terms of Use (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010
- Kiva‘s how-it-works page as accessed via Kiva‘s home page Jan. 2, 2010
- Muhammad Yunus and Karl Weber. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, New York, 2007
- {{cite web|url=http://lacuadraonline.com/featured-stories/the-coffee-trade-nothing-fair-about-it/3/%7Ctitle=The Coffee Trade Nothing Fair About It|publisher=La Cuadra|replies.php Matt Flannery, Kiva CEO and Co-Founder, Replies], Oct. 12, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Terms of Use (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010
- Kiva‘s how-it-works page as accessed via Kiva‘s home page Jan. 2, 2010
- Muhammad Yunus and Karl Weber. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, New York, 2007
- Laura Shearer (2009-04-15). "The Coffee Trade Nothing Fair About It". La Cuadra.
- {{cite web|url=http://www.reuters.com/article/idUSN0734249820090707%7Ctitle=Guatemala inflation rate drops to 25-year low|publisher=Reuters| It Seems], by David Roodman, Center for Global Development, Oct. 2, 2009, as accessed Jan. 2 & 16, 2010
- Confusion on Where Money Lent via Kiva Goes, by Stephanie Strom, in The New York Times, Nov. 8, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Is Not Quite What It Seems, above, as accessed Jan. 2 & 16, 2010 (“. . . . lend the money it gets from Kiva to someone else, who may never appear on kiva.org.”)
- Matt Flannery, Kiva CEO and Co-Founder, Replies, Oct. 12, 2009, as accessed Jan. 2 & 16, 2010
- Kiva Terms of Use (see § 1.1, 1st 2 ¶¶), as accessed Jan. 2, 2010
- Kiva‘s how-it-works page as accessed via Kiva‘s home page Jan. 2, 2010
- Muhammad Yunus and Karl Weber. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, New York, 2007
- Laura Shearer (2009-04-15). "The Coffee Trade Nothing Fair About It". La Cuadra.
- "Guatemala inflation rate drops to 25-year low". Reuters. 2009-07-07.
- "Kiva's Field Partners". Kiva. Retrieved October 10, 2009.
- "Cote D'Ivoire > Afrique Emergence & Investissements (AE&I)". Kiva. Retrieved October 10, 2009.
- Kiva Is Not Quite What It Seems, above, as accessed Jan. 16, 2010 (“f a borrower defaults, the lender will often cover for him in order to maintain a good reputation on Kiva.”)
See also
External links
- Official website
- Template:Dmoz
- Podcast interview with Jessica Jackley Flannery, Feb 2008
- Interview with Premal Shah, President of Kiva
- PBS's Frontline - World on Kiva