Kiva (organization)
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| Founders | Matt Flannery Jessica Jackley (Now Jessica Flannery) |
|---|---|
| Founded | October 2005 |
| Headquarters | San Francisco, California, United States |
| Staff |
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| Area served | World-wide |
| Focus | Economic development |
| Method | Microcredit |
| Employees | 34[1] |
| Motto | Loans that change lives |
| Website | http://www.kiva.org |
Kiva Microfunds is an organization that allows people to lend money via the Internet to microfinance institutions in developing countries around the world and in the United States, which in turn lend the money to small businesses.[2] It is a 501(c)(3) non-profit organization headquartered in San Francisco, supported by donations from its users and through partnerships with businesses and other institutions.[3]
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[edit] 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. 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.[4] It is possible to pay by credit card through PayPal's website, even without a PayPal account, but a PayPal account is needed to withdraw funds.[5] 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.[6] Kiva lenders do not receive any interest because Kiva is not registered with the US Government as a broker.[7]
[edit] History
Kiva was founded in October 2005 by Matt Flannery and Jessica Flannery.[8] The couple's initial interest in microfinance was inspired by a 2003 lecture given by Grameen Bank founder Muhammad Yunus at Stanford Business School. Jessica Flannery, then Jessica Jackley, 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.[9][10] Kiva is run by a team with experience in business, microfinance, and technology.[11]
[edit] 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."[12]
As of November 15, 2009, 35.21% is the Average Interest Rate and Fees Borrowers Pay (Portfolio Yield)to All Kiva Field Partners. The following table shows the interest rate charged by a sampling of field partners.[13]
| Field Partner[14] | Region | Interest Rate % | Correct on |
|---|---|---|---|
| AMK | Cambodia | 37.00 | November 15, 2009 |
| ASKI | Philippines | 50.00 | November 15, 2009 |
| Ariana Financial Services Joint Stock Company (AFS), a partner of Mercy Corps | Afghanistan | 37.00 | November 15, 2009 |
| Asasah, a partner of Save the Children | Pakistan | 38.00 | November 15, 2009 |
| BRAC Tanzania | Tanzania | 37.00 | November 15, 2009 |
| FECECAV | Togo | 26.00 | November 15, 2009 |
| Fund for Thanh Hoa Poor Women (TCVM), a partner of Save the Children | Vietnam | 23.00 | November 15, 2009 |
| Fundación Agrocapital, a partner of ACDI/VOCA | Bolivia | 23.00 | November 15, 2009 |
| IMON International | Tajikstan | 38.00 | November 15, 2009 |
| Manuela Ramos / CrediMUJER | Peru | 46.00 | November 15, 2009 |
| Microfinanzas PRISMA | Peru | 40.00 | November 15, 2009 |
| MLF MicroInvest, a partner of ACDI/VOCA | Tajikistan | 38.00 | November 15, 2009 |
| Pearl Microfinance Limited | Uganda | 47.00 | November 15, 2009 |
| Prisma Microfinance | Nicaragua | 15.00 | November 15, 2009 — Closed (Prisma‘s partnership with Kiva was closed in September 2009 on a mutually agreeable basis) |
| Regional Economic Development Center (REDC Bulgaria) | Bulgaria | 1.00 | November 15, 2009---------REDC was acquired by another Kiva partner, Mikrofond EAD in Bulgaria. |
| Senegal Ecovillage Microfinance Fund (SEM) | Senegal | 8.00 | November 15, 2009---------(This partner specializes in agricultural loans which have abnormal collection periods and, for this reason, these on time repayments cannot be accurately represented in our database) |
[edit] Statistics
As of October 4, 2009, Kiva has distributed $95,136,910 in loans from 568,810 lenders. A total of 135,613 loans have been funded. The average loan size is $406.45. Its current repayment rate is 98.42%.[1] According to Alexa, Kiva's website ranks in the top 15,000 websites on the Internet.[15]
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.[16]
[edit] Criticism
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book[17] he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
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."[12]
In July 2008 Kiva discovered that fraud had taken place with one of their 112 lenders,[18] an African organisation based in Cote d'Ivoire. They suspended activities with the organisation and after an investigation followed by the negotiated repayment of loans they cut all ties.[19]
[edit] References
- ^ a b "Kiva facts". Kiva.org. http://www.kiva.org/about/facts. Retrieved October 10, 2009.
- ^ ""What We Do" on". Kiva.org. http://www.kiva.org/app.php?page=about. Retrieved October 10, 2009.
- ^ ""Supporters" on". Kiva.org. http://www.kiva.org/about/supporters. 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. http://www.kiva.org/about/help/questions?subtopic=Completing%20the%20Payment%20Process#question1. 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. http://www.kiva.org/about/background/. Retrieved October 10, 2009.
- ^ 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. http://www.kiva.org/about/people/. Retrieved October 10, 2009.
- ^ a b "Kiva Help - Interest Rate Comparison". Kiva.org. http://www.kiva.org/about/app.php?page=help&action=InterestRateComparison#AverageInterestRateBorrowerPaysToKivaFieldPartner. Retrieved October 10, 2009.
- ^ http://www.kiva.org/about/aboutPartner?id=123
- ^ http://www.kiva.org/about/partners
- ^ Hendrik, Gerrit (August 12, 2009). "Kiva.org traffic details". Alexa.com. http://www.alexa.com/data/details/traffic_details?site0=kiva.org&site1=&site2=&site3=&site4=&y=r&z=1&h=300&w=610&range=3y&size=Medium&url=kiva.org. Retrieved October 10, 2009.
- ^ "Kiva Blog - Contours of a Crisis (II)". Socialedge.org. http://www.socialedge.org/blogs/kiva-chronicles/archive/2009/01/07/contours-of-a-crisis-ii. Retrieved October 10, 2009.
- ^ Muhammad Yunus and Karl Weber. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, New York, 2007
- ^ "Kiva's Field Partners". Kiva. http://www.kiva.org/about/partners. Retrieved October 10, 2009.
- ^ "Cote D'Ivoire > Afrique Emergence & Investissements (AE&I)". Kiva. http://www.kiva.org/about/aboutPartner?id=53. Retrieved October 10, 2009.
- Podcast interview with Jessica Jackley Flannery, Feb 2008
- Interview with Premal Shah, President of Kiva
- PBS's Frontline - World on Kiva
