Anyone use Kiva.org?

  • #26
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After looking further into this I do not think that this is helping ANYONE who needs help out. It makes it appear as though you are donating money to poor Hassan who needs money to buy a refrigerator for his restaurant:
http://www.kiva.org/lend/182857?_tpos=2&_tpg=1
And the field partner (I assume) writes a pretty touching description of Hassan and his life. They make it look like if you donate money it'll go towards loaning him a part of his $1,675 loan.

REALLY what you are doing is paying the loan company on his behalf... in full! The microloan agent has already given Hassan his loan and the money they collect from Kiva is JUST FOR THEM. None of your money goes to Hassan, or even to help any other person, and the microloan company didn't really need that money to make a loan to him, they have already MADE the loan... They keep that money as 'backfill' aka you have just paid Hasans loan and when he pays the loan partner back with interest they inform Kiva and Kiva pays back the lenders.

The only people getting help here are the partners, they are giving out RISK FREE (for themselves..) loans. If Hasan decides not to pay then the loan partner has lost $0 because it's already been paid for from Kiva funds, they just possibly lose out on the profits. You however get none of your money back. This seems like a freaking criminal organization to me...

I wish I could operate such a partnership here in Canada... I could make millions off it from the looks of it. Just loan out all my money and fundraise the money 'in loans' from people over the internet. (telling the people that the loans are FOR the actually person I had already loaned money, in reality it all goes into my pocket... and I can loan it out also now) Now I'm back at my original amount of money I started with! If the people pay me back then I pay back the lenders and now I have gained MORE money... 20% INTEREST! WOW! If they don't pay me back then I just explain to the people that this person is not paying be back and KEEP THEIR MONEY UNTIL I COLLECT THE FUNDS! Meanwhile I can use their funds to loan MORE money and now I'm stuck in a perpetual money making system. The more money I loan the more I potentially make with assuming 0 risk! This is bloody brilliant!

EDIT: I just noticed that this thread is no longer stickied???
 
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  • #27
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Obviously Greg thinks it needs to be stickied. And I must say - while I have my doubts - I like the idea and I am thinking about putting few bucks in. Not for the profit.

You, as the initial lender, Borek, don't receive a profit at all. The intent is that you get your $25.00 repaid without interest. What we're exploring is the possibility that other people are earning interest off of your money and you're just trying to help out small entrepreneurs.

There's an interesting article and subsequent discussion on this page at Kiva's site.

http://fellowsblog.kiva.org/2010/01/07/bad-roads-interest-rates-and-mfi-sustainability/"

There are certainly valid arguments on both sides. Some people are disillusioned because they feel duped thinking they were providing interest-free loans. Other people are okay with the rationale that micro-loans are expensive to do (and that's certainly true of lending institutions here -- they'd as soon lend you hundreds of thousands of dollars rather than hundreds because the effort and overhead involved is the same) and the local institutions who are administering the are also employing local people. And some people can't easily reach their lending institution so the loans representative comes to them, and in a lot of places, the person travels out weekly. And that improves repayment. I understand that too. It's easier to come up with $5.00 a week than $20.00 a month.

36% sounds like a lot of interest (the percentage is certainly high) but if it's a $100.00 loan over six months, that's, what? $18.00? Is that a whole bunch of money to ask for someone to drive out to see you, sign up the paperwork, keep track of your repayments, drive out every week (and we're not talking across town in some places, here) to see you so you can make a payment? Doesn't seem that way.

And, no, most established financial institutions have no interest whatsoever in these types of loans. These people wouldn't ever have access to this kind of opportunity.

Then other people argue that they'd gladly have the admin fees tacked onto their loan amount rather than have interest charged to the borrower. Then other people argue that the local small lender (MIF) needs to learn to be a sustainable business interest too. If they know how to control their costs and maintain a working business and employ local people, they'll become self-sustaining too and continue to (in principle) support the local economy but on their own initiative.

The arguments are decent ones.

It seems that most people seem upset because they thought that they were specifically loaning Asbar money with which to purchase a goat when in fact they're funding a local lender who in turn loans to Asbar or someone else. That's what seems to be upsetting most of the people who posted in the very lucid discussion.
 
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  • #28
Borek
Mentor
28,816
3,321
I know. I was aiming at the fact that I believe low level help (as in microfinancing addressed to Mngh-In-Need, Lower Backwater near Kzdupu) makes sense and I am ready and can afford to participate. And I don't know if Kiva is OK or not, but I don't know of any other type of organization involved and offering better approach. At least Kiva does it for several years and its HQ is civilized, democratic country (unless I am missing something important about California).

Which doesn't mean much, but it is better than nothing.
 
  • #29
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I'm glad Greg posted this because it's an interesting area to explore. I've had this discussion with people I know who've been upset when they find out that charities such as The Food Bank have paid employees and admin costs. Not everything is donating. They need to pay for space to operate, even it the space is deeply discounted. Some people are volunteers but an organisation that large needs full-time people, who have expertise in running such a large organisation, working to make it happen. Who can afford to do that, full time, strictly as a volunteer? But wow people get upset.

My father gets upset at charities such as the Christmas Bureau because, according to him, there used to be a time when there was "one widow with a couple a kids" in a city. (Which, right, okay.) And some local interests would donate a few toys and put together a food hamper for said widow and a good thing was done. He refuses to believe or understand that there is need greater than "one widow with kids" per city at Christmas time.

I'm sorry this thread got derailed a bit, Greg, but it's interesting and fascinating and enlightening to be able to take a look at a charitable organisation with other people who can examine it dispassionately. As best as I can tell, Kiva appears to be doing a good thing. I admit to being a bit irked, initially, at the presentation that doesn't really represent what they're doing. Although I understand that marketing appeal. Help this lady with her weaving business as opposed to support a local lender to loan money to this lady with her weaving business. The human face and real story makes the enterprise more tangible and easy to understand.

Something I'm reading recently talks about how charities appeal that way by presenting one person to you, because people can relate to one person and that level of need and envision how they can help. If you present it as millions of people are starving, then the numbers become overwhelming, the problem becomes too immense to even try to help, plus, there's no human face on the problem. There's a number.

Anyway, so far, it sounds good.
 

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