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By Donnie Huang
June 2022
(Kiva.org Logo)
K… I… V… A…
Kiva.
A word you probably heard floating around a few months ago in February.
Now, what in the world was that?
The key to understanding this strange word lies in “microloans”.
Microloans, simply, are “small amounts of funding intended to help start or grow a business” (Ames). These small loans are usually “peer-to-peer”, meaning they are “issued by individuals rather than banks” (Hayes). Microloans are a part of a larger system known as ‘microfinance’ which is an option for those who are not eligible for traditional lending methods. Ineligibility reasons may range from poor credit history to only seeking small amounts of funding. Since there is high risk and low potential profit, institutions tend to avoid offering loans to some people. This is where microloans shine.
Kiva Advertisement (Miller)
One place people can conduct microloans is Kiva. Founded in 2005, it is a non-profit crowdfunding platform that aims to “expand financial access to help underserved communities thrive”. Since its creation, Kiva has funded “$1.73 billion” to “4.3 million borrowers” in “77 countries” with a “96% repayment rate” (Kiva). What makes this crowdfunding different from others (such as GoFundMe) is its focus on loans rather than donations. Loaning allows the donated money to be reused for multiple projects, thus providing a larger far-reaching impact. Kiva works with microfinance organizations, called “Field Partners”, to deliver the funding to the borrower.
It is important to note though, that there may sometimes be interest rates involved. Although Kiva themselves does not charge any additional fees, Field Partners tend to charge interest for managing the loans. These Field Partners are generally for-profit, thus the interest rates are usually higher than banks due to the higher risk of the loan not getting repaid. So the borrower usually has to pay interest on top of the loan. Once the loan amount is repaid though, the loaner can loan to another borrower and the cycle continues.
Kiva's Process By Fadwa Liraki
Examples of Kiva Participants (Miller)
As of April 2022, ISB’s funds are currently diversified into 4 loans: Zakia (from Jordan in the Middle East), 2 De Febrero Group (from Bolivia in South America), Muong Phang 66 Group (from Vietnam in Asia), and Charity (from Kenya in Africa).
First, Zakia wants this funding for her son Fadid’s art college tuition because Fadid’s father does not support his choice of degree. Second, the 2 De Febrero Group’s Rosa wants this investment to expand her fruit business and provide a financially stable life for her family. Third, Dien from the Muong Phang 66 Group wants this loan to buy fish supplies so she can expand her business and send her children to school. Fourth, Charity wants this loan to purchase better quality fertilizer so she can grow her income and improve her family’s quality of life.
Zakia (Zakia’s son Fadid is pictured)
Muong Phang 66 Group (Dien is the rightmost person)
2 De Febrero Group (Rosa is the rightmost person)
Charity
More information regarding ISB’s involvement and the borrowers’ stories can be found here: https://www.kiva.org/lender/internationalschoolo2831
For more updates on the school's involvement with Kiva, check out Kiva informational board displayed in the school!
Q&A:
Q&A:
What does “Kiva” mean?
What does “Kiva” mean?
It means “unity” in Swahili!
Who founded Kiva?
Who founded Kiva?
It was created by Matt Flannery and Jessica Jackley back in October 2005!
Why did they create Kiva?
Why did they create Kiva?
Inspired by a microfinance lecture they attended, they felt it was a call to action. Flannery’s visits to Africa also made him realize how difficult it was for entrepreneurs to start local businesses.
Why is Kiva so important?
Why is Kiva so important?
It provides small businesses the opportunity to start their ventures.
Where does Kiva receive its funding?
Where does Kiva receive its funding?
It runs only on donations.
Why are there interest rates?
Why are there interest rates?
The founder believes that it empowers the borrower’s relationship with the lender by presenting them as business partners rather than charity aid receivers.
Bibliography
Bibliography
Ames, Ella. “What Is a Microloan?” The Balance, The Balance, 10 Dec. 2021, https://www.thebalance.com/what-is-a-microloan-5212735.
Hayes, Adam. “What Is Microlending and How Does It Work?” Investopedia, Investopedia, 13 Apr. 2021, https://www.investopedia.com/articles/personal-finance/040715/what-microlending-and-how-does-it-work.asp.
Kiva. “About.” Kiva, Kiva, 2022, https://www.kiva.org/about.
“Kiva.org Logo 2016.” Wikipedia, Wikimedia, 1 June 2016, https://en.wikipedia.org/wiki/File:Kiva.org_logo_2016.svg. Accessed 18 Apr. 2022.
Miller, Talea. “Part 1: The Story behind Kiva’s Brand Refresh.” Medium, Medium, 17 June 2016, https://medium.com/@Kiva/the-story-behind-kivas-brand-refresh-b949518fc3f4.
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