VodaHost web hosting has joined the Kiva Micro-lending program to fight poverty and help promote entrepreneurship in the developing world.
Click Here to learn more about Kiva.
What is Kiva
Kiva is an organization that allows people to lend money via the Internet to microfinance institutions in developing countries around the world and in the United States, which in turn lend the money to small businesses and students. It is a 501(c)(3) non-profit organization headquartered in San Francisco, supported by loans and donations from its users and through partnerships with businesses and other institutions. Kiva itself does not charge any interest; the loans made by Kiva members are passed interest-free to the independent field partner indicated for each loan. These interest rates are disclosed and are discussed in the relevant section on the Kiva website and in this article below.
The Kiva Lending process
Kiva allows microfinance institutions around the world, called “Field Partners”, to post profiles of qualified local entrepreneurs on its website, www.kiva.org. Lenders browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to the appropriate Field Partners to disburse to the entrepreneur chosen by the lender. As the entrepreneurs repay their loans, 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.
Lenders’ funds are transferred to Kiva through PayPal, which does not collect its usual fees in this case. It is possible to pay by credit card through PayPal’s website, even without a PayPal account, but a PayPal account is needed to withdraw funds. Field Partners charge interest to their borrowers, although Kiva keeps track of how much interest is charged and will not work with those charging unfair interest rates. Kiva lenders do not receive any interest because Kiva is not registered with the US Government as a broker.
Kiva was founded in October 2005 by Matt Flannery and Jessica Jackley. The couple’s initial interest in microfinance was inspired by a 2003 lecture given by Grameen Bank’s Muhammad Yunus at Stanford Business School. Jessica Jackley, formerly Jessica Flannery, worked at the school and invited Matt Flannery to attend the presentation; this was the first time Mr. Flannery had heard of microfinance, but it served as a “call to action” for Jessica. Soon after, Jessica began working as a consultant for the nonprofit Village Enterprise Fund, which worked to help start small businesses in East Africa. While visiting Jessica in Africa, Matt and Jessica spent time interviewing entrepreneurs about the problems they faced in starting ventures and found the lack of access to start-up capital was a common theme. After returning from Africa, they began developing their plan for a microfinance project that would grow into Kiva, which means “unity” in Swahili. Kiva is run by a team with experience in business, microfinance, and technology.
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