Micro-Lending with a purpose: A closer look at Kiva
Kiva is one of several non-profit organizations helping to provide access to financing and outside investment through microlending for humanitarian purposes.
What is Kiva?
Organizations like Kiva, Heifer International, and Accion International, are leading the charge in the global effort towards financial inclusion. These microfinancing organizations are helping to provide disadvantaged individuals and businesses with the financial tools to improve their lives and their communities.
Officially launching in 2005, Kiva is a 501(c)(3) U.S. non-profit based in California. As a person-to-person crowdfunding platform, Kiva connects everyday Americans who are willing to lend capital oversees to people needing small amounts of capital to start and grow their businesses. Because so many people around the world lack access to financial institutions, Kiva is helping to expand interaction with underserved and impoverished communities.
Through Kiva’s unique platform, over 1.3 billion U.S. dollars have been funded in loans. With an encouraging 96.8% repayment rate, Kiva has helped 1.8 million lenders invest in 3.4 million borrowers across 78 countries. Moreover, these are not your typical borrowers. The borrowers are real people, like Elizabeth Omalla, a widow from East Africa living in poverty with her seven children. Omalla, like the other borrowers from Kiva, hoped to use the loan to grow her business, a fishery.
Kiva has expanded tremendously in its fifteen-year history.
Kiva was created by founders Jessica Jackley, a former staff member of Stanford’s Business School’s Public Management Program, and Matt Flannery, a Stanford graduate, former TiVo programmer, and Jackley’s husband. The couple launched Kiva in April 2005, by launching a fundraising appeal to 300 of their closest friends and family. They sought crowdfunding for seven loans, totaling $3,500.00. To the couple’s surprise, all seven of the loans were funded in a matter of days.
According to Jackley’s 2015 autobiography, Clay Water Brick,“I wanted to create a way for our friends and family to experience these new stories of entrepreneurship . . . And then I wanted to give them a way to respond differently too—for the first time, not with a donation but with a loan.”
From their launch in 2005, to the spring of 2007, Kiva continued to use their borrowers diverse and compelling stories to entice users and grow their platform. However, Kiva’s big break came in 2007 when they were featured in a segment on The Oprah Winfrey Show. The spike in website traffic caused by the Oprah appearance was so massive, it caused Kiva’s website to crash.
Since Kiva’s sudden rise to fame, there has been some controversy that resulted in restructuring. However, Kiva has continued to grow substantially and continue to help promote business around the globe. By the end of 2018, Kiva had processed $1.2 billion in loans from 1.3 million lenders to 3 million borrowers worldwide. With Kiva’s innovative and pioneering crowdfunding campaign, as of today, a Kiva loan is funded every two minutes. You can watch the numbers grow here.
Not only does Kiva help those in impoverished communities, the company has expanded their borrowers to include small business in the United States. These loans are given directly through PayPal, whereas typical loans are administered through a Field Partner organized nearby.
A process driven by crowdfunding allows lenders to repeatedly fund approved borrowers with a small minimum investment.
First, the borrower applies for a loan and the loan goes through Kiva’s underwriting and approval process. If approved, the loan is then posted to Kiva for lenders to support, initiating the ‘fundraising period.’ During this period, Lenders crowdfund the loan in increments of $25.00 or more until all the necessary funds are raised. Over a period of time, the borrower then pays back the loan. Upon the buyer’s repayment, lenders can use the repayments to fund new loans, donate, or withdraw their money from Kiva.
The Kiva community embraces a wide range of entities and individuals dedicated to supporting borrower’s financial aspirations.
Kiva utilizes a global network of Field Partners to help vet borrowers, administer loans, assist borrowers in getting on Kiva, and much more. While Kiva’s Field Partners vary in entity category, they all share a common mission: a desire to help others. These field partners include nonprofit organizations, schools, social organizations, microfinance institutions, and others. Currently, Kiva has 7,827 Field Partners and trustees and 110 employees. You can find a full list of Kiva Field Partners and Trustees here.
The Kiva community also includes a team of over 400+ volunteers with its Review and Translation Program. These volunteers help to get the borrower’s information to the lenders, as they help with the reviewing and editing of loan profiles on the Kiva website. These volunteers are essential to the success of Kiva’s impressive website and platform.
Growth in microfinance is potentially life-altering for millions of people.
Kiva and other microfinance organizations are making a huge difference in the growth and future of small businesses around the world. Global lack of access to financial resources, like statelessness, prevents millions of people from having a chance at a better life. If we continue and strengthen these efforts to help the underprivileged, there is no question that we can make the world a better place.
If you’re interested in volunteering with Kiva, you can find information here.