Loans that change lives

Kiva is a non-profit that helps anyone with a credit card or PayPal account make microloans to the needy in 85 countries. Loans are interest free and are repaid 98.7+% of the time. Research has shown that small loans to poor people, especially women, have a big payoff in improving the human condition. The cost is as little as $25, the benefit to the borrower may be priceless. Getting your children or grandchildren involved in making loans can be quite educational. Consider giving a small portfolio as a gift.

You could just send a check to the State Department with a note to spend it on foreign aid, and hope a small fraction of it reaches the needy, or you can pick the needy person after reading their story and make the loan or part of it. When paid back, as most likely it will be, reinvest to help another. Note: Kiva looks like a person to person loan is being made. Actually their "Field Partner" makes the loan and supplies information about the borrower for the website. Kiva lenders (you) decide if the loan was worthy of being funded. If the loaned amount is funded, the Field Partner lender gets the money to lend to others. Otherwise they don't, but the person whose story is told already got the loan. When you decide to lend $25 you encourage the lender to make similar loans.

Since 2005, 1.2 million Kiva lenders have lent $650 million. You can make a loan in your own name or on behalf of a 'team' of lenders. There are about 30,000 teams. The number one team, with over 30,000 members, is the A+ Team where “A” is for “Atheist” and the "+" is for “Agnostics, Skeptics, Freethinkers, Secular Humanists and the Non-Religious.” In second place are the Kiva Christians with less than half the members, but ranking is by total lent and the Christians are a close second.

You can join one or more teams, and when you make a loan click on one to give your team a boost. Nothing more to it. You alone decide to make a loan, and you get paid back or not. The team has no money and so can loose no money. A new team is FreeThought Arizona. As a team member you can post to the team's forum and receive a daily digest of posts to the team. So the team becomes an online community. The A+ team is an active community, and FreeThought Arizona could be.

Basic Overview

Kiva is run by about 450 volunteers who work with 290 'Field Partners' (80% are non-profits) in 85 countries who identify borrowers in need, get their story in writing, translate it, Kiva posts it, and if funded, the Field Partner organization gets 100% of the money. The Field Partner collects the repayment per whatever the agreement was (which may include interest or fees paid to the Field Partner which averages about 35%, some of which covers defaults so you get paid back), and sends the amount received from Kiva back to Kiva. Kiva puts it back in your Kiva account. If you lend $25, Kiva will ask for 15% extra, or for $3.75 more for them, but you can edit the amount and give them $0 if you're feeling Grinchy.

If the borrower asks for $750 and the full amount is not funded, you lend nothing and get the loan put back into your Kiva account. Loan requests expire after 30 days. Best to spread your money about, so $25 per loan is common. Some loans are matched, so loan $25 and the borrower gets $50. The payback period can vary quite a bit, from months to years, so if you make 12 loans a year, investing $300 in helping others, and loans have an average 1 year payback, you can reinvest the $300 to help 12 more each year. A portfolio of $300 can keep on giving at a cost of whatever you donate to Kiva and may occasionally lose in non-repayments and in exchange rate fluctuations, which will come to about $50 per year, so figure you're giving $50/year and investing $300. This is a small cost compared to potential good done.

Most loans are 'backfilled' meaning the borrower has already gotten the loan from the Kiva Field Partner. If the Kiva loan is not funded, then the Field Partner gets nothing. Kiva lenders are vetting the Field Partner's choice of who to lend money to. This is an important form of oversight that reflects the lender's values and judgment. The money lent is what allows the Field Partner to keep lending and very much influences who they lend to. So your load to Maria may not go directly to Maria, but loans are likely to go to other Marias in the area. The whole microlending process is not as direct as ideally it should be, but is as close as in practice it can be. Individuals making microloans and deciding to whom is critical to making good things happen.

Those getting loans are not the really poor people. If the borrower wants to buy agrochemicals (from a multi-national corporation), then the manufacturer ultimately benefits. If the borrower wants to buy manure to fertilize an orchard, then who sells the manure is local, whoever transports it to the farm is local, those spreading the manure are local (and likely poor), so favoring loans that are spent locally does more than enabling the consumption of unsustainable industrial products.

When making a loan consider the Field Partner as they are the one you are giving money to. If you approve of the organization and the type of loans they make, then that is the overriding factor. Some lenders are religious-based and may tend to lend only to members, so those wanting a loan have to join, pulled by strings attached. The A+ team has tried to identify Field Partners of concern. Any organization may at best be a necessary evil in that as they grow they tend to overvalue themselves, oversell themselves and that includes Kiva. Still, private short-term lenders, per World Bank, expect 60% to 800% interest return, so the Kiva Field Partner average of 35% is far less predatory. Still, Kiva does not disclose what each borrower has to pay in addition to principle. This would be good to know before lending to a Field Partner, but not disclosing this information may be a cost of having them participate in the Kiva program. Successful groups tend to factor in self-interest.

A system of direct microloans that bypasses third parties is being tested, but only in USA and Kenya at this time. Lenders lend money directly to individuals based on what what the lender says. Some borrowers may be endorsed by a person or group who risks only their reputation. Repayment is abut 89%, but issues are being worked out. Borrowers have to get friends and relatives to invest first, which minimizes scams. The beta program is called Kiva Zip. A difference is that lenders can communicate directly with would-be borrowers and thereby assess them.

PayPal handles all Kiva transactions and waves all fees. While you can lend using a credit card only, to withdraw money from your Kiva account requires PayPal. If for some reason you need the money and don't have PayPal, you could open a PayPal account, transfer funds from your Kiva account to it, transfer to your bank, then close the PayPal account, all for the price of some typing. Or you can liquidate all or part of your account by sending others (children, grandchildren?) a Kiva Card as a gift which they can lend.

FreeThought Challenge: Make one new loan a month. As loans are repaid, reinvest. Maintain a portfolio of about $300 that keeps on giving. Feel good about it.

FreeThought Arizona Team How-to

I suppose I could go on at book-length about the whys and ways of microloaning, but first let's boil in down to the basic how-to:

  1. Go to Kiva site:

  2. Click 'Register': look upper right; enter the usual info and it's free.

  3. Click 'Teams' top middle of most pages and pick one or more teams to support. Hint: search for 'FreeThought Arizona'. You can/will get each team's forum posts. The A+ team is #1, the Church of the Flying Spaghetti Monster is active. One way to quickly decide who to lend to is to go to the A+ team forum and see who they approve, but while making the loan give 'FreeThought AZ' team your nod.

  4. Click 'Lend' top left and choose a borrower. Along the way to completing the loan, click on team 'FreeThought AZ' so the team gets nominal credit. Kiva 'donation' defaults to $3.75 (15%), but you can edit the amount.

There are currently about 6,000 people seeking a microloan, so it would take awhile to consider all of them, but you can filter the loans by place, type, gender, and on and on. Some Field Partners who manage the loans on the local level are religious groups and if that is an issue, the A+ team has tools to flag and rate the Field Partners.

Post to the FreeThought Arizona Kiva forum. If you lend to a worthy person/group, say why and if the loan looks like it might not be funded, ask other members to help fund the loan. This is about as up close and personal as it gets without a plane ticket. Every loan has the possibility, if not likelihood, of changing someone's life, that of their dependents and community, for the better.

The Forum: (To see messages you need to be a member and be signed in).