Kiva.org: Beating Global Poverty with a Click

Unlike most charitable organizations Kiva.org doesn't give away anything to anyone. They exist to create connections between entrepreneurs in impoverished countries and the people in the developed world who are willing to lend them money to expand their operations. This is a revolution in lending. No longer is the micro-lending process tied up in bureaucracy (i.e. the United Nations). Kiva makes it simple. If you are willing to lend, Kiva has an established way to administer the distribution of your funds to credit worthy borrowers in many impoverished countries all over the world. This isn't some internet scam...Kiva.org has received positive media coverage from the Wall Street Journal, NPR, and BusinessWeek.

There are various estimates of the size and growth potential of the microfinance industry worldwide. Unfortunately, the demand for micro-credit services among the world's poorest is still largely unmet. Estimates show that donor agencies spend between $800 million-$1 billion per year, serving 13-16 million poor -- just 4-10% of the potential market. There is a lack of capital being directed to microfinance institutions, and therefore a significant opportunity to redirect this capital to distribute as micro-loans, which have default rates of 5% or less. The microfinance industry has grown 25-30% annually over the last five years, and is expected to continue to grow.

What is unique about the Kiva.org story is that Kiva is the first micro-lending Web site designed to connect people with people. Founded in 2004 by Matthew and Jessica Flannery, Kiva's goal is to reduce poverty in developing countries by giving entrepreneurs the ability to build their businesses through flexible loans with six-to 12-month terms. Kiva allows individuals to act as a "micro VC" by loaning directly to entrepreneurs with feasible business plans. In other words, they have democratized the lending process. They are looking into expanding into the US market but, as I understand it, there are legal roadblocks to their providing micro-loans in the US at the present time.

Making a loan through Kiva is easy, secure and personal. A potential lender simply goes to www.kiva.org, registers in a password-protected section, browses through the business section to review available enterprises in need of funding, learns how much funding the enterprises are requesting, and then chooses one or more businesses to which to loan. Loans are made via PayPal, a globally recognized online payment service. Kiva accepts loans as small as $25 and can congregate funds to customize loan sizes. Lenders can stay abreast of the progress of creditor businesses via a blog-site regularly updated on the Kiva web site. Lenders can even correspond directly with the business owner through a Kiva partner representative in the native country.

If you have ever sat and wondered how you can impact global social change, Kiva.org provides a way. Helping people help themselves is a fundamental principle of democratic freedom. What better way to show the world just what we, as Americans (and our capitalist system) are really about than by demonstrating our generosity through Kiva. I really believe that Kiva.org has the potential to change the world. Ordinary people helping other ordinary people without the insulation of an entrenched bureaucracy.....We no longer require the services of bureaucrats, the internet provides us with the ability to direct connect in a way that would have been inconceivable even 5 years ago. People can now unite and work together for real global change without even leaving their home office!

The take away from this: With the power of global communications, and electronic distribution, we can conquer global poverty ourselves, person to person, one click at a time.

The material for this article was obtained from: www.kiva.org