Credit not Charity the Kiva Way

Normally in this blog I try to focus on educational technology with a range of deeper pieces on emergent technology trends from the perspective of pragmatically rolling them out. In this piece, I want to look at a slightly different service — something that I believe can have a profound impact on the lives of residents in 3rd world nations. I have been a member and a low-level advocate for a micro-credit organization called Kiva, (http://www.kiva.org) for just about a year now.

Kiva is a relatively new organization that raises capital and supports a world wide network of the equivalent of local credit unions in the developing world. You choose an entrepreneur and give them a loan of $25 in collaboration with other investors and this is typically repaid in 6-12 months, at which point you can withdraw your money or lend it again. Let me be clear, you receive no interest on your investment, so if you are reading this as a way to increase your personal wealth then better to click away now.

The Kiva proposition was sufficiently compelling for me to risk (sic) $25 and it was very clear from the investment cases that the impact $25 could make was both direct and measurable — something that is not always clear from traditional charitable organizations soliciting donations.

My first loan was to Francisca (pictured above) who wanted $300 in lots of $25 to buy two young rams. Her business proposal is here: http://www.kiva.org/app.php?page=businesses&action=about&id=78820

From reading her story, it is clear that this relatively small amount of cash made a considerable difference to her family and quality of life. I have gone on to re-invest her $25 and other funds about 6 times this year, and have persuaded a few other like-minded people to make similar investments. As a group, we have now made loans of $850 – investments that have benefited 34 individuals.

A quick trawl of the investment proposals makes it clear that the majority of these individuals are women or collectives of women who want to make a difference to their families. The loans fund opportunities that also benefit their communities. The word “education” is stressed again and again.

Kiva will have facilitated over $100 million in loans by 2010 in just a few years and has a very low default rate. For me one of the most compelling features is that your loan capital can be re-invested over and over again, multiplying its impact on people’s lives and world economies. Over $100 million has been invested, but in all probability this total represents $25 million lent four times by highly engaged investors made aware of the program through viral word-of-mouth. That is the power of Kiva in my eyes.

Interested?
If you are at all intrigued by the above model please take 10 minutes to visit the site (www.kiva.org) and see what you think.  Our small group, IT People Supporting Real Development (ITPSRD) has invested and recouped more than $850 in just one year from a very small start. In my opinion, this investment model is a stronger agent for change than charity, though not necessarily a substitute. It connects us with real people with ideas and families who want to make a difference to their family and communities – in parts of the world where access to capital is not readily available.

I continue to be impressed with the directness and efficiency of the Kiva model, and it’s a prime example of what I always hoped the internet could provide.  Someone can have the best idea in the world but without capital it remains an idea; this simple website allows ordinary people to connect and support real world development.

Spend 10 minutes taking a look and if you are tempted, don’t send charity XMAS cards from work this year, give a Kiva loan. Oh and join our group ITPSRD, if it feels right. The members of ITPSRD enjoy sharing stories of our Kiva beneficiaries with our colleagues in the IT community.

Happy Christmas to you and yours.
Dick
PS You can join our lending team  here