Kiva

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Kiva logo and slogan
Kiva logo and slogan

Kiva is a non-profit organization with a mission to connect people through loans for the sake of alleviating global poverty. Using the Internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as $25 to help fund small businesses run by low-income entrepreneurs around the world.

Loans made on Kiva.org provide 0% interest to lenders. Kiva itself charges no interest from the borrower (though there has been discussion about collecting 2% interest from the microfinance institution involved in the future). (1) Borrowers are charged some interest by the respective microfinance institution handling the individual loan (2), though Kiva.org claims to keep track of how much interest is charged and will not work with those charging unfair or exorbitant interest rates. Kiva borrowers have a historical repayment rate of 99.75% (3). Kiva is working with regulators to allow microfinance institutions to offer variable interest rates to lenders.

Contents

How it works

MFI map
MFI map

Kiva allows microfinance institutions around the world to post profiles of qualified local entrepreneurs online. A lender can be any person with a credit card. A PayPal account is only required if one wishes to withdraw funds. (4) Lenders browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to microfinance partners, called "Field Partners", to disburse and administer. As loan repayments are made by the entrepreneur, the Field Partners remits funds back to Kiva. Once the loan is fully repaid, Kiva lenders can withdraw their principal or re-loan it to another entrepreneur.

PayPal does not collect a fee on Kiva transactions. (5) Kiva distributes 100% of the loan to the entrepreneur. Lenders do not receive any interest or other profit. The Field Partner who administers the loan collects interest from the entrepreneur.

Early progress

Named as one of the top ideas in 2006 by the New York Times Magazine, Kiva (www.kiva.org) is the world's first person-to-person lending marketplace for the poor. Kiva's goal is to reduce global poverty by letting consumers lend to and connect with a specific developing world entrepreneur online. Affordable capital helps low income entrepreneurs start or expand small businesses, creating a path towards economic self-sufficiency.

In a little over a year, Kiva has rapidly grown to become the most trafficked site in microfinance with +50,000 Internet lenders generating +$5 million in loans to thousands of entrepreneurs in +25 developing countries – all with a +99% on-time repayment rate thus far. Kiva is staffed and governed by experienced consumer Internet and microfinance leaders.

In addition, a number of major internet partners are supporting Kiva, including PayPal, YouTube, Google, MySpace and Microsoft. Kiva has also received wide acclaim from the blogosphere, mainstream media and development experts (featured at the 2006 Clinton Global Initiative and 2006 Global Microcredit Summit). Headquartered in San Francisco, Kiva is a 501(c)3 non-profit internet start-up.

A segment devoted to Kiva and its effects on those loaned money was aired on the PBS television show Frontline (6)

Organization and team

Co-founded in 2004 by Matt Flannery and Jessica Flannery, Kiva is based in Silicon Valley and run by a team with experience in mirofinance (Uganda, India, Tanzania, etc.) and technology (eBay/PayPal, TiVo, Google, MySpace). Kiva is a 501(c)(3) non-profit and expects to be a self-sustaining operation by the end of 2008.

IRS Form 990

The following table summarizes Kiva's 2005 IRS Form 990, Return of Organizations Exempt from Income Tax, for the period November 1, 2005 through September 30, 2006. (7) Form 990 is available for public inspection and is intended to providing the IRS and its stakeholders with a realistic picture of the organization and its operations, along with the basis for comparing the organization to similar organizations.

Kiva Microfunds 2005-06 IRS Form 990 Summary
Item Amount
Revenue
Direct public support 160,238
Interest 1,307
Total revenue 161,545
Expenses
Compensation of officers, directors, etc. 14,583
Other salaries & wages 22,927
Pension plan contributions 0
Other employee benefits 2,228
Payroll taxes 9,882
Professional fundraising fees 0
Accounting fees 7,500
Legal fees 1,890
Supplies 3,192
Telephone 1,934
Postage and shipping 51
Occupancy 20,019
Equipment rental & maintenance 0
Printing & publications 0
Travel 679
Conferences & meetings 532
Interest 0
Depreciation 0
Bank/Wire fees 880
Dues & subscriptions 99
Insurance 2,228
Marketing/Public relations 2,300
Website costs 9,956
Amortization 0
Total expenses 100,880
Net assets 60,665

See also

References

  1. http://www.kiva.org/about/faq/#Does_Kiva_charge_interest
  2. http://www.kiva.org/about/faq/#Do_Kivas_partners_charge_interest_to
  3. Kiva FAQ: "To date, Kiva.org’s repayment rate is 99.75%."
  4. Kiva FAQ: "You can pay by credit card through PayPal’s website, even if you don’t have a PayPal account. You will, however, need a PayPal account when you withdraw your funds as Kiva.org uses PayPal to handle all financial transactions."
  5. Kiva FAQ: "Kiva.org is the first organization PayPal is supporting by providing free payment processing."
  6. http://www.pbs.org/frontlineworld/stories/uganda601/
  7. Kiva Friends Topic - KIVA 990 IRS Form (includes copy of form as attachment)

External links

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