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|Mission||"To connect people through lending to alleviate poverty"|
|Motto||Loans that change lives|
|Mission||"To connect people through lending to alleviate poverty"|
|Motto||Loans that change lives|
Kiva Microfunds (commonly known by its domain name, Kiva.org) is a 501(c)(3) non-profit organization that allows people to lend money via the Internet to low-income / underserved entrepreneurs and students in 70 countries. Kiva operates two models—Kiva.org and KivaZip.org. The former model relies on a network of field partners to administer the loans on the ground. These field partners can be microfinance institutions, social businesses, schools or non-profit organizations. KivaZip.org facilitates loans at 0% directly to entrepreneurs via mobile payments and PayPal. In both Kiva.org and KivaZip.org, Kiva includes personal stories of each person who needs a loan because they want their lenders to connect with their entrepreneurs on a human level. Kiva itself does not collect any interest on the loans it facilitates. It is purely supported by grants, loans, and donations from its users, corporations, and national institutions. Kiva is headquartered in San Francisco, California.
Kiva allows microfinance institutions, social businesses, schools and non-profit organizations around the world, called "Field Partners", to post profiles of qualified local entrepreneurs on its website, Kiva.org. Lenders browse and choose an entrepreneur they wish to fund. The lenders transfer their funds to Kiva through PayPal, which waives its transaction fee in these cases. 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. After receiving a user's money, Kiva aggregates loan capital from individual lenders and transfers it to the appropriate Field Partners, who then disburse the loan to the entrepreneur chosen by the lender. Even though Kiva itself does not charge interest on the loans, the Field Partners charge relatively high interest rates. As the entrepreneurs repay their loans with interest, the Field Partners remit funds back to Kiva. As the loan is repaid, the Kiva lenders can withdraw their principal or re-lend it to another entrepreneur.
Kiva was founded in October 2005 by Matt Flannery and Jessica Jackley. The couple's initial interest in microfinance was inspired by a 2003 lecture given by Grameen Bank's Muhammad Yunus at Stanford Business School. Jessica Jackley, formerly Jessica Flannery, worked at the school and invited Matt Flannery to attend the presentation; this was the first time Matt 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. In April 2005, Kiva's first seven loans were funded, totaling $3,500, and the original entrepreneurs were subsequently deemed the "Dream Team." By September 2005, the entrepreneurs repaid the entirety of their original loans, and the founders realized they had developed a sustainable microcredit concept. After the success of Kiva's beta stage, Matt and Jessica founded Kiva as a non-profit. In 2006, notable entrepreneurs and businessmen joined Kiva's staff, including Premal Shah from PayPal and Reid Hoffman CEO and founder of Linkedin. Shortly after its first anniversary in October 2006, Kiva reached $1 million in facilitated loans and acquired its twentieth field partner. To the present day, Kiva has continued to grow and expand its field partners while acquiring support from the media and the public.
As of May 27, 2013, Kiva has distributed $437,054,600 in loans from 938,049 lenders, that has been distributed to 1,050,587 borrowers. A total of 564,336 loans have been funded through Kiva. The average loan size is $406.79, and the average Kiva user has made 9.57 loans. Kiva's current repayment rate for all its partners is 99.01%. According to Alexa: The Web Information Company, Kiva's website ranks in the top 12,000 of all websites worldwide and ranks in the top 4,000 for the United States.
For the fiscal year of 2010, Kiva made $11,515,298 in total revenue and had $6,225,091 in total expenses, leaving $5,290,207 to invest. The organization's net assets in 2010 totaled $11,121,817. Kiva itself does not charge interest rates on its loans; they supply capital to microfinancing institutions for free. These microfinancing institutions then lend out money with very high interest, averaging over 30%. The organization's main sources of funding are grants, financial backing, and discounted services from many major national corporations and institutions. Chevron Corporation, Visa Inc., and Skoll Foundation awarded Kiva a two-year $1 million grant, $1.5 million grant, and $1 million grant respectively. Kiva also won a $1 million grant in Sam's Club's "Giving Made Simple" campaign and $500,000 in American Express's “Take Part” competition. Additionally, Omidyar Network awarded Kiva a $5 million grant over 5 years to help Kiva expand its field partners and support due diligence.
As of April 1, 2012, 80.46% of Kiva’s loans have been made to women entrepreneurs. Kiva emphasizes supporting women because women can gain the most from microcredit. Patriarchy and a strict division of labor still dominate the societies of many developing countries, and women often suffer the most from poverty because scarce resources are often allocated to a family's males, rather than its females. In their non-fiction book Half the Sky, Nicholas D. Kristof and Sheryl WuDunn tell stories of women whose lives were transformed through the microfinance institutions Kiva sponsors. With microloans, women gain spending power and spend less on instant gratification vices like alcohol, prostitution, and drugs. With extra income, they are able to educate their children, renovate their residences, or buy modern technologies and medicines. Along with economic power, a woman with a microloan often gains more independence and respect from her husband. Kristof and WuDunn write “microfinance has done more to bolster the status of women, and to protect them from abuse, than any laws could accomplish.” Women are able to empower themselves and become self-sufficient through the investments given by Kiva users.
When Kiva began, lenders chose who could borrow their money. Since then, the system has changed, so that loans are disbursed to borrowers before their stories are posted to Kiva's website. This is disclosed on Kiva's site; each loan proposal states whether funds were pre-disbursed. Thus, lenders' loan funds are likely to go to borrowers other than those chosen by the lenders. However, since the pay-back behaviour of the specific borrower chosen by the lender does influence whether or not the lender gets his funds back (except when an MFI has chosen to cover for borrower defaults), there is at least some connection between the lender and the specific borrower. Whether lenders' preferences are used for lender preference trend analysis by any field partners or Kiva is not stated. Kiva's response has been to keep pre-disbursing but be clearer about the process.
Although cases of fraud do exist, Kiva made the following statement on the partner page for SEED:
Whether defaults are extremely low has been questioned on the ground that a field partner may pay Kiva for loans defaulted to the field partner in order to maintain the field partner‘s good credit with Kiva. Whether interest rates collected by field partners are enough to pay for significant defaults depends on local economic conditions for each field partner.
In 2008, Kiva featured the borrowing profile of a Peruvian woman asking for a loan to buy equipment for her cockfighting business. This sparked debate among the Kiva Lending Community about the principles of the organization, and many complained that the organization was promoting cruelty to animals. Matt Flannery responded to the debate, by providing an overview of the legal issues surrounding the debate, and took a more relativist stance. Flannery wrote on Socialedge.org- a blog site designed to connect entrepreneurs for social benefit,
"...does this somehow help Kiva achieve its mission of connecting people to alleviate poverty? It's debatable. I think that allowing our partner to decide which loans to post without much interference is a good thing. We can be paternalistic when we start imposing our moral framework upon societies half a world away. Cockfighting in Peru is legal and part of a rich cultural tradition. It may not be humane or palatable from a Western perspective, but that misses the point. Kiva, the organization, should not be making those decisions. Our lenders should be the ones voting with their dollars."
This position has caused some lenders to pull their funds (often moving them to other microfinance sites such as United Prosperity, Zidisha.org, Wokai, Energy in Common, etc.) However, some have decided to continue to lend through Kiva, but do so in the spirit of Flannery's remarks. "Kivans Against Cockfighting Loans" was created in May 2009, and has since lent $15,625 as of 8 June 2012 to different borrowers pursing projects that do not involve the harming of animals.
In spring 2013 one of Kivas field partners, Strathmore University, posted a number of loans to cover full tuitions for students from low-income regions in Kenya who could not otherwise afford higher education. Shortly after, many lenders raised concerns because Strathmore University is a Corporate Undertaking of Opus Dei. This spawned a debate in the Kiva forums, leading to an open letter from Kiva's CEO Matt Flannery addressing the issue.
Some people, including microfinance pioneer Muhammad Yunus, argue that the interest rates of many microcredit institutions are unreasonably high. In his latest book he argues that microfinance institutions that charge more than 15% above their long-term operating costs should face penalties.
For example, in 2009 micro-loans from Kiva partners in Guatemala averaged 23.16% for the equivalent of US$430 lent on average, comparable to the commercial BanRural rate of 24.5% for a loan of US$635. (For reference, the inflation rate for Guatemala typically varies between 5 and 10% and was just 0.62% in 2009.)
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." Kiva itself does not keep any of the interest collected, but operates instead exclusively on donations.
The smaller microlending platform Zidisha aims to improve on the Kiva model and reduce costs for borrowers by eliminating field partner intermediaries completely, instead facilitating direct interaction between individual lenders and borrowers. Zidisha has managed to bring the cost of microloans down to about 9% for borrowers, including interest which is paid out to lenders. Unlike with Kiva, lenders also assume currency risks.
Kiva itself launched a more direct peer-to-peer microlending platform, called Kiva Zip, in 2012. Like Zidisha, Kiva Zip transfers funds directly to borrowers without outsourcing disbursements and repayment collection to field partners. Currently, Kiva Zip borrowers do not pay any interest or fees. Lenders are protected from currency risk but do not earn interest. Kiva Zip is considered an experimental platform, and offers loans in the United States and in Kenya. Kiva Zip's repayment rate is 86.1%.
According to its web site, Kiva quotes interest rates as the "self reported average rate charged by the Field Partner to the entrepreneur." As of January 7, 2010, 35.21% is the Average Interest Rate and Fees Borrowers Pay (Portfolio Yield) to All Kiva Field Partners.
As of April 2012, there are a total of 188 field partners listed on the Kiva website and their status is as follows: 105 Active, 11 Paused, 30 Pilot and 42 Closed. The following table shows the "Portfolio Yield"of a sampling of field partners. "Portfolio Yield" figures are calculated by dividing all interest and fees paid by borrowers to the field partner by the average loan portfolio of the field partner that given year. The figure provides a more accurate insight into the costs of borrowing because it includes fees associated with borrowing.
|Field Partner||Region||Portfolio Yield %||Status||Correct on|
|Aqroinvest Credit Union||Azerbaijan||30.01||Active||April 2, 2012|
|Alidé||Benin||28.90||Active||April 2, 2012|
|Emprender||Bolivia||36.47||Active||April 2, 2012|
|Fundación Agrocapital, a partner of ACDI/VOCA||Bolivia||23.00||Closed||April 2, 2012|
|IMPRO||Bolivia||17.16||Active||April 2, 2012|
|Pro Mujer Bolivia||Bolivia||36.07||Active||April 2, 2012|
|Zene za Zene, a partner of Women for Women International||Bosnia and Herzegovina||25.23||Paused||April 2, 2012|
|AMK||Cambodia||35.52||Paused||April 2, 2012|
|CREDIT, a partner of World Relief||Cambodia||27.34||Active||April 2, 2012|
|Hattha Kaksekar Limited (HKL), a partner of Save the Children||Cambodia||26.91||Active||April 2, 2012|
|MAXIMA Mikroheranhvatho Co., Ltd.||Cambodia||28.63||Active||April 2, 2012|
|Grounded and Holistic Approach for People's Empowerment (GHAPE)||Cameroon||22.10||Active||April 2, 2012|
|HOPE DRC, a partner of HOPE International||Democratic Republic of the Congo||80.30||Active||April 2, 2012|
|Esperanza International Dominican Republic, a partner of HOPE International||Dominican Republic||41.46||Active||April 2, 2012|
|Apoyo Integral||Ecuador||19.92||Active||April 2, 2012|
|Apoyo Integral||El Salvador||26.32||Active||April 2, 2012|
|Christian Rural Aid Network (CRAN)||Ghana||33.64||Active||April 2, 2012|
|Sinapi Aba Trust (SAT)||Ghana||64.68||Active||April 2, 2012|
|Asociación ASDIR||Guatemala||26.70||Active||April 2, 2012|
|The Foundation for Assistance for Small Businesses (FAPE)||Guatemala||54.10||Active||April 2, 2012|
|Prisma Honduras||Honduras||47.50||Active||April 2, 2012|
|DINARI Foundation||Indonesia||27.80||Active||April 2, 2012|
|Al-Thiqa Organization||Iraq||29.48||Paused||April 2, 2012|
|Iraqi Al-Aman Center/Kirkuk||Iraq||N/A||Closed||April 2, 2012|
|Faulu Kenya||Kenya||37.06||Active||April 2, 2012|
|Kenya Agency for Development of Enterprise and Technology (KADET), a partner of World Vision International||Kenya||29.58||Active||April 2, 2012|
|Kisumu Medical & Education Trust (K-MET)||Kenya||N/A||Paused||April 2, 2012|
|MCC Mol Bulak Finance LLC||Kyrgyzstan||49.64||Active||April 2, 2012|
|Al Majmoua Lebanese Association for Development.||Lebanon||31.73||Active||April 2, 2012|
|Ameen s.a.l.||Lebanon||20.63||Active||April 2, 2012|
|Local Enterprise Assistance Program (LEAP), a partner of World Hope International and World Relief||Liberia||63.30||Paused||April 2, 2012|
|Soro Yiriwaso, a partner of Save the Children||Mali||23.36||Active||April 2, 2012|
|Admic Nacional||Mexico||39.55||Closed||April 2, 2012|
|Fundación para la Vivienda Progresiva (FVP), a partner of CHF International||Mexico||23.36||Active||April 2, 2012|
|Microinvest||Moldova||28.49||Closed||April 2, 2012|
|XacBank||Mongolia||19.87||Active||April 2, 2012|
|Patan Business and Professional Women (BPW Patan)||Nepal||13.23||Active||April 2, 2012|
|ADIM ADEPHCA (Association of the Atlantic Coast for the Human Advancement of Indigenous and Mestizo peoples)||Nicaragua||N/A||Paused||April 2, 2012|
|ADIM (Asociación Alternativa Para el Desarrollo Integral de las Mujeres)||Nicaragua||48.37||Active||April 2, 2012|
|AFODENIC||Nicaragua||10.61||Active||April 2, 2012|
|CEPRODEL||Nicaragua||27.71||Active||April 2, 2012|
|Fundación Leon 2000||Nicaragua||29.17||Active||April 2, 2012|
|Lift Above Poverty Organization (LAPO)||Nigeria||39.28||Paused||April 2, 2012|
|Asasah, a partner of Save the Children||Pakistan||34.08||Active||April 2, 2012|
|Palestine for Credit & Development (FATEN)||Palestine||15.52||Active||April 2, 2012|
|Ryada, a partner of CHF International||Palestine||17.89||Active||April 2, 2012|
|Fundación Paraguaya||Paraguay||36.58||Active||April 2, 2012|
|Asociación Arariwa||Peru||37.17||Active||April 2, 2012|
|EDAPROSPO||Peru||45.84||Active||April 2, 2012|
|FINCA Peru||Peru||60.03||Active||April 2, 2012|
|Manuela Ramos / CrediMUJER||Peru||42.40||Active||April 2, 2012|
|Microfinanzas PRISMA||Peru||38.78||Active||April 2, 2012|
|Ahon sa Hirap, Inc. (ASHI)||Philippines||33.97||Closed||April 2, 2012|
|ASKI||Philippines||38.30||Active||April 2, 2012|
|Community Economic Ventures, Inc. (CEVI), a partner of VisionFund International||Philippines||43.93||Active||April 2, 2012|
|Gata Daku Multi-purpose Cooperative (GDMPC)||Philippines||28.50||Active||April 2, 2012|
|Hagdan sa Pag-uswag Foundation, Inc. (HSPFI)||Philippines||36.88||Active||April 2, 2012|
|Paglaum Multi-Purpose Cooperative (PMPC)||Philippines||39.39||Active||April 2, 2012|
|Vision Finance Company s.a. (VFC), a partner of World Vision International||Rwanda||46.73||Active||April 2, 2012|
|South Pacific Business Development (SPBD)||Samoa||44.28||Active||April 2, 2012|
|Caurie Microfinance, a partner of Catholic Relief Services||Senegal||18.84||Active||April 2, 2012|
|Salone Microfinance Trust (SMT), a partner of ChildFund International||Sierra Leone||52.41||Active||April 2, 2012|
|Senegal Ecovillage Microfinance Fund (SEM)||Senegal||N/A||Closed||April 2, 2012|
|UIMCEC, a partner of ChildFund International||Senegal||17.61||Active||April 2, 2012|
|BRAC South Sudan||South Sudan||88.00||Active||April 2, 2012|
|BRAC Tanzania||Tanzania||47.44||Closed||April 2, 2012|
|Sero Lease and Finance Ltd. (SELFINA)||Tanzania||25.23||Closed||April 2, 2012|
|Tujijenge Tanzania Ltd||Tanzania||61.80||Active||April 2, 2012|
|Youth Self Employment Foundation (YOSEFO)||Tanzania||N/A||Paused||April 2, 2012|
|IMON International||Tajikstan||34.53||Active||April 2, 2012|
|MLF MicroInvest, a partner of ACDI/VOCA||Tajikistan||N/A||Closed||April 2, 2012|
|MLO Humo and Partners||Tajikistan||46.28||Active||April 2, 2012|
|FECECAV||Togo||21.67||Paused||April 2, 2012|
|Microfund Togo||Togo||N/A||Closed||April 2, 2012|
|Women and Associations for Gain both Economic and Social (WAGES)||Togo||20.70||Active||April 2, 2012|
|Pearl Microfinance Limited||Uganda||37.72||Active||April 2, 2012|
|BRAC Uganda||Uganda||50.47||Active||April 2, 2012|
|HOPE Ukraine/Nadiya, a partner of HOPE International||Ukraine||45.27||Active||April 2, 2012|
|ACCION USA||USA||14.52||Active||April 2, 2012|
|Opportunity Fund||USA||2.00||Active||April 2, 2012|
|Fund for Thanh Hoa Poor Women (TCVM), a partner of Save the Children||Vietnam||20.39||Active||April 2, 2012|
|SEDA||Vietnam||29.33||Active||April 2, 2012|
|TYM Fund||Vietnam||24.25||Paused||April 2, 2012|
|CIDRE||Bolivia||18.72||Active||April 19, 2013|
In March 2012, Reid Hoffman, LinkedIn’s Co-Founder, lent Kiva $1 million. Kiva then allowed 40,000 people to lend $25 for “free.” Lenders still choose a borrower, but the borrower will pay back Hoffman instead of the lender who chose them. Kiva hopes that the “free” users will lend to more of their projects, and thus increase their overall user base.
GiveWell also published a number of blog posts critiquing Kiva, and listed Kiva among the "Celebrated charities that we don't recommend." GiveWell board member Tim Ogden wrote a summary of blog posts by GiveWell and others that were prompted by GiveWell's posts.