Pop!Tech Notes: Jessica Flannery of Kiva.org on Microfinance
Speaker: Jessica Flannery, founder of Kiva.org. (My comments in parantheses.)
(I am a tremendous fan of Kiva and have a few hundred dollars wrapped up in microloans myself. It is one of the only things I do in my life that I actually feel good about. I've been putting money in Kiva for about a year and have yet to have any bad experiences, yet several positive ones.)
Flannery's presentation begins with a clip from Oprah describing microloans and Kiva. 99.7% of the loans have been repaid in full. Flannery intends to give a behind-the-scenes look and some plans for Kiva's future. (This is goofy, perhaps, but Flannery is one of the major reasons I agreed to come to Pop!Tech.)
Microcredit == small loans for the poor. Average credit borrowers are women and the amount is around $500. That re-payment rate of 99.7% is generally consistent around microfinance organizations, not just Kiva.
Flannery is from Pittsburgh. A self-described "white, middle-class girl." She travelled around to villages and talked to goat-herders and farmers about the microloans they had received before she started Kiva. "If other people could have face-to-face experiences with the people I was meeting... If you take one person and connect with them and hear their story the world would be a different place." Her husband is a tech geek and wanted to move to Silicon Valley and do tech start-ups, while Flannery wanted to do microfinance in Africa. Kiva is the product of compromise.
Kiva allows their partner microfinance outlets to keep their interest and only re-collect the principal. Kiva is a non-profit, though they "could be a for-profit." They raised money from grants from foundations and individuals to bootstrap Kiva. They are now funded by additional donations given by individual loaners. They try to generate enough money to function within the old system without getting loans.
Statistics about poverty often made Flannery feel "paralyzed." Unlike some charities, where archetypes are presented—"Help someone like Jane"—Kiva tries to actually connect you with the recipient of the loan. "Help Jane."
Most lenders are individuals. Funds have moved some operations to Kiva. (For charity, not money-making, obviously.) Businesses are trying to create "socially responsible movements in a box" using Kiva. Schools are pooling money to sponsor microloans though Kiva.
There are 400 million people who could put a microloan to use right now, estimated. 300 volunteers log in from around the world and give free translation services. The interest rate is usually 1 to 1.5% for the borrower. (I presume on a yearly term.)
There are "9,000-some microfinance institutions." Kiva tries to work as a meta-layer over many of these local institutions.
Kiva has been around about three years. When they started they worked with institutions that may or may not have been so great just to get started, but they've been able to track and rate those people and focus on the ones with good returns.
Bad photographs from potential loan recipients can make it take longer for their loan to be raised. A proud Bulgarian with his taxi cab looks perhaps too affluent compared to an Africa fruit vendor.
$13 million out in loans. They're the first non-profit to get free Paypal processing. (Paypal has a history of being bastards to charities and non-profits.)
See also: Ethan Zuckerman
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This is awesome, never heard of Kiva but it seems solid - I am going to spend some time checking it out and will donate some cash.
Also, a small edit to the post:
"They're the first non-profit to get free Paypal processing. (Paypal has a history of being bastards to charities and non-profits.)"
Shoot, apparently HTML strikethroughs don't work. I tried to strikethrough the "to charities and non-profits" part. Paypal are bastards in general.
This reminded me of the peer to peer lending site I use. Basically, Prosper lets lenders bid on portions of borrower's loans. The lowest interest rates win.
Of course, Prosper is a for-profit company, and the loans go out to all sorts of people, and with higher rates than the 1% on Kiva. It is designed to be a good investment for lenders, while offering competitive rates for borrowers.
Here's a link. (Mods, feel free to remove the referral part of the URL if you don't like it there)
http://www.prosper.com/join/jonathan_ryan
I made a loan on Kiva last night - I really like their system. I had a support structure over the last 5 years that allowed me to get a business off the ground; if I can extend that opportunity to other people, I am more than willing to do so.