The Case for Kiva

Kiva is a microlender front-end which allows lenders to give interest free loans to designated borrowers. Most of the borrowers are located in third world countries and the loans are typically $600-1500; it is not atypical for the borrower to be a pooled group of people. Most loans are provided by multiple lenders.

The Grameen bank has proven that microlending leads to sustainable economic improvements for the borrowers via allowing entrepreneurial financing within the context of the disciplining effect of debt and incentives. Sustainability has been the weakness of efforts to effect economic improvement via traditional foreign aid, which has been focused on unconditional grants of money or goods. Micro-finance is not a panacea as frequently the funds are used not to build the borrower’s business but to offset certain business costs and allow the borrower to fund things like their children’s education or medical costs. But micro-finance is progress, sustainable, incremental and meaningful progress.

More reading on Microfinance:
What Microloans Miss
The Micromagic of Microcredit

Kiva is an organization that allows an individual to participate in microlending on a granular level. It functions as a coordinator of individual lenders with a distributed network of third party local micro-lending organizations; the process is seamless to the lender. Kiva also provides information and statistics about each loan and each originating organization.

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