Kiva launched the first person-to-person microfinancing website in 2005 with the mission of alleviating poverty through lending. Since its inception, Kiva has made significant strides in actualizing their goal. As of October 2009, Kiva has distributed $100 million in loans from over 249,000 lenders in 185 countries.
How it Works:
Through strategic domestic partnerships, Kiva identifies those entrepreneurs in need and connects them with the Kiva lending community. The Kiva lending community then donates to the entrepreneurs that most interest them. Through journals and financial feedback, lenders can see the impact of their investment while the entrepreneur creates a sustainable business to support family and community members. After the typical 6-12 month lending period, the entrepreneurs then pay back the loan and the lenders receive their initial contribution.
Pay Forward — Passing on the chance for opportunity and prosperity through entrepreneurship and microfinancing, Kiva embodies many elements of the pay forward trend.
The Real Deal — From the average, real-time users delinquency rates to the average amount lost to the number of defaulting entrepreneurs, Kiva strives to create transparency and cultivate an honest, giving community.
Private Eye — Kiva speaks in numbers. Whether it’s an “impact scrollbar” or an entire Kiva data application, the microfinancing site aims to help users understand the real, tangible impact of the Kiva community.
Background on Microfiancing
Microfinancing shares many principles with crowdsourcing — a small amount of money is gathered from many contributors to create a large impact. Though the microfinancing movement was born in the 1970s, it is gaining momentum as online payments and banking become more pervasive, free online tools make community-building initiatives more accessible for webmasters and there is a renewed sense of innovation in philanthropy.
* In total, the World Bank estimates microfinancing has helped an estimated 500 million people.
* Among 704 microfinancing institutions in 2006, there were 52 million borrowers with a mere 0.9% delinquency rate after 30 days.
* In 2007, there was $25 billion in microfinancing loans according to Deutsche Bank.
* number of defaulting entrepreneurs, Kiva strives to create transparency and cultivate an honest, giving community.
Grameen Foundation — The Grameen Foundation was founded by Nobel Prize recipient, Muhammad Yunus in 1997. The Grameen Foundation’s mission is to empower the world’s poorest people through information and microfinancing assistance. Since its inception, it has made over one million microloans.
Distinguishing Elements — Grameen’s website is very well-designed. The main distinguishing element between the two microfinancing websites are community development tools and tangible impact. In addition to images and stories of the people the support, Kiva takes it a step beyond Grameen by featuring community members (both lenders and entrepreneurs) and providing a developer API (that indexes all of Kiva’s data), and numerous blog promotion tools to spread the Kiva message. This tech-savvy approach has significantly increased Kiva’s digital influence to make it one of the most successful new entrants in the non-profit sector.
In 2005, when Kiva entered the non-profit microfinance market, Grameen Foundation was an established leader. Kiva’s approach was much different than that of the Grameen Foundation. The newcomer took a more creative approach while embracing social technology. Furthermore, Kiva adopted many of the core principles that define Web 2.0. Transparency, community involvement and tangible impact are central components of the Kiva web development strategy that have worked towards achieving significant milestones — such as raising $100 million in just over four years.
Transparency — “We are constantly working to make the system more transparent to show how money flows throughout the entire cycle, and what effect it has on the people and institutions lending it, borrowing it, and managing it along the way.” Kiva has developed a strong, loyal bond with its lenders and entrepreneurs by creating an honest, transparent environment. By reporting refunded…
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