Here is our first challenge of the year! For those of us misers who have trouble adjusting to the idea of giving away money, this is a great one to start the challenge with because in most cases, the money will come back to you.
Kiva is a highly transparent micro-lending service to entrepreneurs in countries around the world. I've been a Kiva member since 2008, and I've watched them steadily grow in popularity. Apparently, it was named as one of Oprah's favorite things of 2010. That's for good reason, because it's an easy way for middle-class people to help less privileged (but highly capable) people to help themselves. To date, they've financed over $100 million in loans.
How does micro-lending work?
Entrepreneurs in poorer regions of the world can come up with business plans, either for businesses they already have or ones they'd like to start, and talk to local Kiva partners to ask for loans. After the local partners determine their credibility and likelihood of being able to successfully repay the loans, they finance them, and provide information about the clients to Kiva.
Kiva posts the information about the entrepreneurs (the amount of information can vary depending on the partner), and people like you and me can browse through them and select who we would like to provide funding to back-fill the loans. This can be done for as little as $25, and usually a group of about 15-30 lenders can completely back-fill the loan.
The entrepreneurs have very reasonable repayment schedules and are not charged any interest, only the principle. As they pay the loans back, that money is put back into your Kiva account. You have the option of reloaning that money, or withdrawing it. It's yours to do as you want with it when it comes back to you. There is always the chance of default due to business failure or the outbreak of violence or something to that effect. I wouldn't worry much about that, because they have a 98.91% repayment rate.
I know I said that I'd be asking $10 from you all per month, and that these loans are at least $25. I'm still asking you to contribute $10 to Kiva as an organization to help them continue their work. $10 will more than cover their costs for facilitating one $25 loan for you. You always have the option not to give to Kiva and just pay for the loans as well.
Kiva cards are also great gift options for the person who has everything! It's like a gift certificate and giving in a loved one's name all rolled together, because they get to choose who they're going to finance.
Currently, I am supporting Leiner Rodriguez Olivera and Teofilo Cesario Verdesoto Arevalo. Olivera, 24, is a student in Peru who helps her mother run a grocery store, for which she asked for a $700 loan. Arevalo, 41, lives is Ecuador with his wife and three children. He took out an $800 loan to buy agriculture supplies for the various crops he raises, and his dream is to grow cocoa (which had me sold!). You can click on their names to see their pages and progress, including pictures!
In the past, I've also supported a wholesaler in Azerbaijan, a group of women selling rice in Cambodia, and a man raising livestock in Tajikistan. They've all paid back their loans 100%.
Payment procedures:
You will need to make an account on the Kiva website: http://www.kiva.org/
That way, once you put the money in, they will automatically put it back into your Kiva account as it is repaid so you can easily loan it back out or, should you chose to, withdraw the money for your own use. They will also keep track of your stats and who you've given to the past. You will be informed as payments are returned to you. You can pay via credit card or via PayPal.
Because the loans are made under the assumption you'll get them back, the money you lend out is not tax deductible in the United States. However, money donated to the Kiva organization is! Keep your receipts!
Have fun browsing and picking out whose business you want to support, and happy splurging!
