Kiva: Loans that Change Lives

My neighbors are really nice people and they do a lot of charity work - something that is absolutely commendable. When they've sent out their letters requesting donations to the various causes they support, I usually haven't had a problem forking over a Jackson or so. I don't know if it's just because they feel that I'm a reliable donor or if they hit everyone with the same frequency, but it feels like every other week I receive a letter from them asking for more money. That is just too often, especially for a soon-to-be-jobless college student like me!

I'm not saying I'm hard up on cash, but, maybe it's...donor fatigue?

However, that said, I still "donate" monthly to Kiva, a microcredit lender. Microcredit was big news last year because Muhammad Yunus, the founder of a major microcredit institution in Bangladesh, won the Nobel Prize for his efforts. The idea is that you provide a small sum of cash (interest-free) to entrepreneurs in third-world countries. While the sum of cash is rather insignificant to us, when pooled with other small sums from other people, it can really help people in poorer countries get up on their own feet. For Kiva, the time horizon of these loans are usually about 1 to 1.5 years, at which time, you can withdraw you money or, as most people do, re-loan the funds to another entrepreneur. Again, these loans do not pay interest, and do carry a significant threat of default. But the amount, starting from $25, is so insignificant, you can basically write it off as charity.

That, however, is not to say you should expect default; Kiva loans have had a historically high rate of repayment. This is so much different than charity (which does have it's place, too) because it helps people in poorer countries break their dependence on the largess of developed countries. These loans allow people to start their own businesses or expand existing ones, giving them a sense of accomplishment and responsibility. This in turn creates long-term benefits for both the loan recipients and their local economies.

Here is my lender page at Kiva: https://www.kiva.org/lender/bobby2759

Here is a stock letter from Kiva for you to peruse, if you are still interested:

I wanted to let you know about Kiva (http://www.kiva.org/), a non-profit that allows you to lend as little as $25 to a specific low-income entrepreneur in the developing world. You choose who to lend to - whether a baker in Afghanistan, a goat herder in Uganda, a farmer in Peru, a restaurateur in Cambodia, or a tailor in Iraq - and as they repay their loan, you get your money back. It’s a powerful and sustainable way to empower someone right now to lift themselves out of poverty.

If you need more "reputable" validation than my recommendation, know that they have received great press in publications ranging from The Wall Street Journal to NPR to BusinessWeek. Thanks for reading!