28 February 2012
Kiva - an invitation
Some people are worried by microcredit because the institutions that arrange loans and collect the repayments make a profit from doing so. To me, so long as the lending terms are fair and not usurious, I have no problem with that at all. It's all part of the development of an entrepreneurial business culture, and I think it should be applauded.
The process is fairly simple. The lending screens enable you to see the headlines of (usually) the thousand or so loans that are currently fund-raising, and filter them or order them by country, duration, purpose, male/female, individual or group, and so on. Then click through to see full details and make a loan. You can fund your account through PayPal which in turn can be funded from a debit or credit card, or a bank account. The minimum loan amount is USD 25.00, about GBP 15.77 at current rates, less than a few beers at my local pub.
When you make a loan, the process allows you to make a donation to Kiva's running costs. This is deductible in some way that I don't understand for US taxpayers, but there's no Gift Aid deduction for UK taxpayers and so I decline the opportunity. When I eventually stop doing this, I'll simply donate my whole balance instead.
My experience has been pretty good. Two loans out of 79 so far have ended with a loss, one of USD8.70 when the borrower defaulted, and the other a currency exchange loss of USD0.10. Two more are delinquent, very late with payments but both have paid back more than 80% of their loans.
I don't know of any equivalent that's Gift Aid-efficient in the UK, but I'd recommend this as a relatively low cost way to make a real difference to people that are doing their best to improve their lives and the prospects for their families. Here's a personal invitation link.