I’ve been a member of Kiva.org for over two years now. If you’re not familiar with Kiva, it’s a micro-lending organization which allows members to loan small amounts of money to entrepreneurs in developing nations and marginalized communities.
Micro-lending is an effective method of alleviating poverty. Entrepreneurs apply for small loans to start or expand their business. The expanded capacity of their business provides a number of benefits and decreases their vulnerability. Many use the additional income to send their children to school, build or make needed improvements to their home, provide sufficient nutritional food, and access health care.
Field partners from around the world post entrepreneurs’ profiles to Kiva. Kiva members contribute to loans $25 at a time until the goal is reached–usually about $500 to $1000. Over the next 6-12 months, the entrepreneur pays back the loan. As the entrepreneur repays the loan, Kiva returns the money back to the Kiva members. Members are then free to keep the money or re-loan it. It’s like giving a donation to alleviate poverty, except you eventually get the donation back.
A popular trend in micro-lending is lending exclusively or predominantly to women. Studies show that investing in the well-being of women is one of the most effective ways of improving the stability of impoverished communities. Kiva’s website states:
Many qualitative and quantitative studies have documented how access to financial services has improved the status of women within the family and the community. Women have become more assertive and confident. In regions where women’s mobility is strictly regulated, women have become more visible and are better able to negotiate the public sphere. Women own assets, including land and housing, and play a stronger role in decision making.
So far, I’ve made 31 loans in 22 different countries. You can view my Kiva profile here. I’ve chosen to loan predominantly to women. The beautiful thing about Kiva is that once the loan is repaid, you have the opportunity to reinvest it. The average default rate on a loan at Kiva is about 1.2%. So far, I’ve never had a loan go into default. In fact, no one I’ve loaned to has ever even missed a payment.
When you give to a nonprofit, the money is used, and then it is gone. With Kiva, you get to reuse it as many times as you want.