Kiva Microfunds (also known as Kiva.org)
|Tax ID no.||71-0992446|
|Location||San Francisco, California, United States|
- Kiva is a 501(c)(3) non-profit organization that allows people to lend money via the Internet to low-income entrepreneurs and students in 77 countries.
- Kiva's mission is “to expand financial access to help underserved communities thrive.”
- Lenders do not receive interest on the money they lend.
- Kiva includes personal stories of each person who applies for a loan so that lenders can connect with borrowers on a human level.
- Kiva relies on a network of field partners to administer the loans.
- These field partners can be microfinance institutions, social impact businesses, schools or non-profit organizations.
- These partners are local organizations working in communities to vet borrowers, provide services and administer loans.
- Borrowers pay interest on most loans to the field partners.
- Kiva itself does not charge interest on its loans;
- These microfinancing institutions lend out money with high interest compared to bank finance in mature markets, averaging a portfolio yield of over 30%.
- Operating costs
- Kiva cover most of its operating costs through voluntary donations made by Kiva lenders.
- The remainder of our costs are covered through grants and donations from foundations and supporters.
- Additionally, select Field Partners contribute small platform fees.
- Kiva never takes a fee from lenders. 100% of funds lent on Kiva go to funding loans.
- Lending process
- Kiva works with more than 300 microfinance institutions, social impact businesses, schools and non-profit organizations around the world, called “Field Partners”, that post profiles of qualified local entrepreneurs on the Kiva website.
- Lenders browse borrower profiles on kiva.org and choose an entrepreneur they wish to fund.
- The lenders transfer their funds to Kiva through credit card processing or PayPal, which waives its transaction fee in these cases.
- Lenders can loan money in increments of $25.
- After receiving lenders' money, Kiva aggregates loan capital from the individual lenders and transfers it to the appropriate Field Partners, which disburse the loan to the borrower.
- Kiva does not charge interest on the capital sent to Field Partners, but often Field Partners do charge some level of interest to borrowers to cover administration costs.
- Interest is typically higher on loans from microfinance institutions in developing countries than interest rates on larger loans in developed countries because of the administrative costs of overseeing many tiny loans, and the increased risk.
- As the entrepreneurs repay their loans with interest, the Field Partners remit funds back to Kiva.
- As the loan is repaid, the Kiva lenders can withdraw their principal or re-lend it to another entrepreneur.
- Loan use
- Female-owned businesses
- Green loans
- Support for higher education
- Medical loans
- Support for refugees
- Kiva U.S.
- In 2011, Kiva launched Kiva U.S. , a 0% interest peer-to-peer lending pilot program for entrepreneurs in the United States, as part of efforts to “cut lending costs through technology”.
- The loans posted to Kiva U.S. are often from borrowers who have been rejected for loans by traditional banking institutions, but on Kiva U.S. they do not need to be able to produce high credit scores or collateral.
- Kiva U.S.uses a system of trustees, who vouch for the borrowers.
- Kiva U.S.trustees can be local non-profits, service organizations, businesses, faith organizations or community leaders.
- The average loan size for US borrowers is $5,000. US borrowers average about two years to repay loans.
- Kiva City
- Kiva City provides local business owners and entrepreneurs in U.S.cities with the opportunity to crowdsource loans.
- It was launched by Kiva and former US President Bill Clinton at the Clinton Global Initiative America conference in Chicago in 2011.
- Kiva City locations include: Detroit, New Orleans, Los Angeles, Washington D.C. , Newark, Richmond, Little Rock, Pittsburgh, Philadelphia, Milwaukee, Louisville, San Francisco, New York City, and Oakland.
- Kiva launched a more direct peer-to-peer microlending platform, called Kiva Zip, in 2012.
- Kiva Zip transfers funds directly to borrowers without outsourcing disbursements and repayment collection to field partners.
- Instead, Kiva Zip partners with local institutions called Trustees, who vet loan applicants, provide mentorship, and may post profiles and updates on their behalf.
- Currently, Kiva Zip borrowers do not pay any interest or fees.
- Lenders are protected from currency risk but do not earn interest.
- Kiva Zip is considered an experimental platform, and offers loans in the United States and in Kenya.
- Kiva Labs
- Google awarded a $3 million Global Impact Award to Kiva in 2013 to fund the Kiva Labs project.
- Labs initiatives include lowering interest rates, providing more flexible repayment terms that accommodate issues like seasonal profits in farming, and offering longer-term loans for investments like education.
- Labs also focuses on providing access to clean energy technology and using mobile technology in ways that will bridge the knowledge gap.
- At the time of the lab's launch, Kiva lenders had crowdfunded “132,000 agricultural loans; 4,600 green loans, and 670 mobile tech loans.