Kiva Personal Finance Team

[jeffrey]

If you have given micro-loans in the past through Kiva or are planning to in the future, consider joining the Kiva personal finance team - if you don't know anything about Kiva.org, I highly recommend you take a look. Also feel free to ask any question here - I have been an active participant with them for awhile now.

[Lori63]

It is a wonderful program!

[kork13]

I've actually considered this, and seeing it again makes me strongly consider it again... I came across it a year or two ago, but I just don't understand quite how it works... I understand that you give Kiva money, they give the money to an entrepreneur (sp.? sorry) in some poor region, then over time we get repaid our money.

But what happens in the middle of that? Do those individuals pay interest on the loan? If so, where does it go? If to the original loan-giver, how does Kiva sustain itself? Also, if I were to participate, how would this impact my already-messy (IMO) taxes, if at all? Those are mostly the financial questions...

Also, how does Kiva find these people, or how do they find Kiva? Is there non-Kiva evidence/research to show that this program is beneficial? How do we know that their small businesses survive beyond the time frame that they have the loaned money available to them? I do like the fact that (according to their website), we're able to recieve news about how things are going... does this continue at all? Again, back to my former question, how do we know it caused a long-term benefit rather than a temporary boost followed by a crash?

[jeffrey]

I understand that you give Kiva money, they give the money to an entrepreneur (sp.? sorry) in some poor region, then over time we get repaid our money.

That is correct.

But what happens in the middle of that? Do those individuals pay interest on the loan?

Yes, they do.

If so, where does it go?

It goes to the lending institution in the country that makes the loan to them. The interest rates are much lower than these people could get in any other circumstances[/b]

If to the original loan-giver, how does Kiva sustain itself?

It is a non profit. It asks (but does not require) that you also support the organization when you make a loan which goes to their everyday operating costs

Also, if I were to participate, how would this impact my already-messy (IMO) taxes, if at all?

Not at all. You do not earn anything on the loan made and the loan is not a qualifying tax deductible contribution.

Also, how does Kiva find these people, or how do they find Kiva?

Kiva works with local organizations in the countries where the loans are given out - these organizations find the people in need of the loans.

Is there non-Kiva evidence/research to show that this program is beneficial?

Yes...although I don't have it at my finger tips as I respond.

How do we know that their small businesses survive beyond the time frame that they have the loaned money available to them?

You don't. There is a risk that the loan will not be repaid and Kiva gives a 1 - 5 star ranking on what they feel the likelihood of the loan being repaid will be. Of the 170 loans I have made, one defaulted after partial repayment due to war in the region starting again.

I do like the fact that (according to their website), we're able to receive news about how things are going... does this continue at all?

This is limited, but you can communicate and ask questions if you want. Many of the recipients don't speak English, but their updates are often translated.

Again, back to my former question, how do we know it caused a long-term benefit rather than a temporary boost followed by a crash?

Most are already established business that need capital to expand, but can't qualify from traditional bank sources since they are so small. They would normally have to go to the black market to get the loan, but that comes with huge interest rates. These loans allow the small business to get capital they need to expand to make a better living for themselves.

[kork13]

Thanks for the answers, that helps alot. Looking around, it seems that the standard loan is $25? Or is that just a minimum? Is there a "normal" loan amount, or is it just pretty much what you want to loan out? Is there a maximum (just out of idle curiosity)? What is normally the timeframe for repayment?

sorry for all the questions, but I appreciate it. I think I may end up helping out with this, it seems interesting.

[jeffrey]

Looking around, it seems that the standard loan is $25? Or is that just a minimum? Is there a "normal" loan amount, or is it just pretty much what you want to loan out? Is there a maximum (just out of idle curiosity)?

$25 is the minimum amount. You can loan as muchas you want, but snce there is a small risk of default, it makes sense to spread the loans around. There isn't a maximum.

What is normally the timeframe for repayment?

It varies and the time persion is listed on each loan. It typically ranges from 4 months to 18 months