Kiva.org - Micro-Lending

[Ookii]

I just got introduced to Kiva.org, I remember reading about it or something similar awhile back but never did any lending.  I thought it might be nice to introduce some of you to micro-lending if you've never heard of it before.

Basically you lend small amounts of money to people in need throughout the world and they repay you back in a specified amount of time.  From their website:

You choose who to lend to - whether a baker in Afghanistan, a goat herder in Uganda, a farmer in Peru, a restaurateur in Cambodia, or a tailor in Iraq - and as they repay their loan, you get your money back.  It’s a powerful and sustainable way to empower someone right now to lift themselves out of poverty.

So if you have some extra cash around that you'd like to lend I would definitely suggest it.  25 bucks may not break the bank for any of us but for some third world small business owner out there it's the difference between eating and starving.  I challenge you not to lend after visiting the site.

I started a team, this link may or may not work.

[Abagadro]

Do I get a first position UCC-1 security statement on the goats?

[Ookii]

Do I get a first position UCC-1 security statement on the goats?

Don't be an asshole. 

That is funny though.

[K9]

That's a pretty awesome initiative, I'll be signing up. The site seems very transparent, and it's not money that I cannot afford to loose. Can anyone spot any obvious holes in their system?

I like the look of this guy

[Oban]

I think most of the less reputable feeder agencies have been weeded out already, so it is probably a lot safer to donate to them now than when they started up.

[Ookii]

I think most of the less reputable feeder agencies have been weeded out already, so it is probably a lot safer to donate to them now than when they started up.

They seem pretty honest when it comes to the risk, they have a default rate of 2.1% on the 27 million dollars donated so far.

Then again if one guy defaults on your 25 dollar loan I don't think you'll be too broken up about it.

[Oban]

Early on they had a few country specific agencies that had a 100% default rate.  Ecuador and Bulgaria are the two I remember off the top of my head that turned out to be scams.

[schild]

Can anyone spot any obvious holes in their system?

Yea, you don't know them, but you know me. Donate to someone that can actually use the money instead of a faceless creature that may or may not exist.

Edit: Ookii, I'm a cold, heartless jerk sometimes, but in this case, I'm dead serious: Are you fucking kidding?

Edit:

Early on they had a few country specific agencies that had a 100% default rate.  Ecuador and Bulgaria are the two I remember off the top of my head that turned out to be scams.

Of course most of them are going to be fucking scams.

Edit:
Atheists, Agnostics, Skeptics, Freethinkers, Secular Humanists and the Non-Religious
Common Interest    Aug 28, 2008    3448    12973    $389,700.00    

Looks like my team is already doing the "good work" for me.

[apocrypha]

Quick question: If you're going to loan someone $25 (or any sum that's small enough for you not to worry too much if it gets defaulted on) then why not just donate that $25 to a charity?

[K9]

I think the loose principle is that loans promote independance, whereas charity promotes dependance. This isn't an indictment of charity; but I think you need to not see these individual as charity cases. Take the guy I linked in the OP, he seems to have his own business and is looking to expand. Giving him $700 of microfinance loans means that he has capital to expand his business, and thereby improve his life and the life of his family, but he's driven to work harder perhaps, as he knows the money will need to be repaid in time. Giving him $700 worth of charity does not provide the same effect. I imagine further that some of these people are proud of what they have made, and would be insulted by charity, but are willing to be treated like serious businessmen, albeit with more forgiving terms than usual for loans. Charity helps people get out of a hole, but it's not going to help them any further really. I think that's the (rough) difference.

[bhodi]

Quick question: If you're going to loan someone $25 (or any sum that's small enough for you not to worry too much if it gets defaulted on) then why not just donate that $25 to a charity?

People like to see specifically where their money goes. If you donate to charity, it goes into a big pot. If you donate to a big charity, it goes into a big pot and only half of it actually comes out again. I suppose it all relates back to the monkeysphere - people don't care unless you can put a face on the suffering, and then when they donate, they sort-of expect that money to go to that face.

There was a story on NPR about a website that specializes in "small" charities ordered by zip code. It became immensely popular for both the website and the charities. This was years ago, so I forget the name. Sorry.

And K9 has the "Why a loan and not a gift" answer.

[Ookii]

So no one has signed up yet?  Really?

[Teleku]

Can anyone spot any obvious holes in their system?

Yea, you don't know them, but you know me. Donate to someone that can actually use the money instead of a faceless creature that may or may not exist.

Are you planning on paying us back for the loans to you?

[schild]

Can anyone spot any obvious holes in their system?

Yea, you don't know them, but you know me. Donate to someone that can actually use the money instead of a faceless creature that may or may not exist.

Are you planning on paying us back for the loans to you?

Should I sign up at Kiva.org and just default on them?

My life is a country song.

[Sky]

So no one has signed up yet?  Really?

If I signed up, I'd be on the schild end, not the Ookii end.

Though schild's callousness and cynicism is almost enough to make me want to loan a bit to someone trying to help themselves.

[Ookii]

Can anyone spot any obvious holes in their system?

Yea, you don't know them, but you know me. Donate to someone that can actually use the money instead of a faceless creature that may or may not exist.

Are you planning on paying us back for the loans to you?

Should I sign up at Kiva.org and just default on them?

My life is a country song.

You won't get defaulted on and you know it.

I seriously hope you aren't making the point that we should gift money to you as opposed to lending it to people in third world countries.

[Oban]

Well, some parts of Texas are almost like the third world.  I mean, did you hear about that hailstorm a few weeks ago?

[schild]

Well, some parts of Texas are almost like the third world.  I mean, did you hear about that hailstorm a few weeks ago?

For reals.

I seriously hope you aren't making the point that we should gift money to you as opposed to lending it to people in third world countries.

Why? Because the karma police will get me?

Edit: There's a shockingly large number of people on this site trying to set up banks and credit unions.

[Mrbloodworth]

I appreciate the idea behind this site.

[Viin]

I make a few dollars on referring folks to EVE game time cards (for some reason), so I'll loan those dollars out and see what happens. You never know, this might be the new hedge fund!

[schild]

I make a few dollars on referring folks to EVE game time cards (for some reason), so I'll loan those dollars out and see what happens. You never know, this might be the new hedge fund!

I don't think they pay you back the loans with interest.

[Tale]

The original microcredit lender is Grameen Bank, whose founders won the 2006 Nobel Peace Prize for the idea. I don't think they take your money over the web. Kiva took their idea and webified it.

Re whether they charge interest on your money - Wikipedia says the following about Kiva's interest rates:

According to its web site, Kiva quotes interest rates as the "self reported average, annualized, flat interest rate in real terms charged by the Field Partner to the enterpreneur."[4] This means that interest rates are quoted using the flat calculation method. Flat interest rates are somewhat controversial in microfinance. Chuck Waterfield, designer of Microfin, a widely used financial modeling tool for MFIs, asks "Why did such a system appear in {microfinance} lending? The answer is obvious and cannot be debated: it allows the institution to charge nearly twice as much interest for the quoted interest rate as with the declining balance method."[16]

Kiva defends the interest rates of its lenders, however, saying its field partners provide much better rates than local alternatives, but must charge what they do because "the costs of making a micro-loan in the developing world are higher versus larger loans in the West."[5]

[Abagadro]

I actually couldn't see how you get paid interest.  The payback schedules of the loans were just return of principal.  So are we providing the capital for no interest and the feeder administers the loan and keeps the interest?  I'm confused on that point.

[bhodi]

That's how I thought it worked. They keep the interest for the overhead.

[Salamok]

[I seriously hope you aren't making the point that we should gift money to you as opposed to lending it to people in third world countries.

Maybe not to him, but I am a very strong believer in charity begins at home.  In my book the only single redeeming quality of this idea is that $20 can have a much larger impact on someone in a 3rd world economy.  I'm sure the nigerian email scammers will be working night and day on how to hook into this.

I genuinely feel sorry for someone living this quality of life but at the same time there is a genuine fear that the guy you help out today will be bringing his economy to your workplace tomorrow.  I guess this (among many other things) makes me an asshole but don't blame me I am just another product of the system.

[Oban]

They keep the interest for the overhead.

[Tale]

Hmm. Here's a Kiva partner who has made 330 loans since 2007. They claim default and delinquency rates of 0%. Not even $1 has gone missing? Even this guy repaid his loans and is ready to borrow again?

This will be Abdulmagid’s third loan from Tujijenge Tanzania. He used the previous loans to buy four welding machines which were stolen on the same day. Adbulmagid (leave alone the disaster) has repaid the loans successfully. He hopes for a third loan to buy a new welding machine.

And it's war! Atheists vs Christians vs Mormons in a contest to see who is the generousest.

[Viin]

They keep the interest for the overhead.

Well crap, where's the capitalism in that? Good for Kiva, bad for small time loan shark.

Edit:

Isn't there a similar site that does micro-loans but you actually get some of the interest?

[Teleku]

And it's war! Atheists vs Christians vs Mormons in a contest to see who is the generousest.

Uh, the Mormon's aren't even in the same league as the other two, total amount loaned wise.

[K9]

There's more atheists making loans, but religous folk make more loans.

That's all I got from that.

[Merusk]

More loans and more money per lender.

Atheists: $113.01 per lender
Christians: $197.31 per lender
Mormons $138.22 per lender.

Team Europe: $197.50 per lender
Australians: $127.03 per lender
Crazy Canada: $118.81 per lender
Team Canada: $163.08 per lender (Canada Average: $140.95)
Team USA: $57.89 per lender.

GO USA!

[Ookii]

Three members in the f13 group now!  Don't be shy, sign up!

[Abagadro]

If I was actually receiving the interest and it was a reasonable rate, I would be interested in this. Not because I'm greedy, but at least then I could have some say in the rate.  From what I can tell, the lenders are merely providing capital for local lenders, who then lend it out at pretty high rates (flat-fees wildly inflate the interest rate). Call me crazy, but this thing looks like good-hearted people essentially subsidizing local usury.

[Ragnoros]

If I was actually receiving the interest and it was a reasonable rate, I would be interested in this. Not because I'm greedy, but at least then I could have some say in the rate.  From what I can tell, the lenders are merely providing capital for local lenders, who then lend it out at pretty high rates (flat-fees wildly inflate the interest rate). Call me crazy, but this thing looks like good-hearted people essentially subsidizing local usury.

This.

[Ookii]

This.

Make your own intelligent post or go back to the wow subforum.

If I was actually receiving the interest and it was a reasonable rate, I would be interested in this. Not because I'm greedy, but at least then I could have some say in the rate.  From what I can tell, the lenders are merely providing capital for local lenders, who then lend it out at pretty high rates (flat-fees wildly inflate the interest rate). Call me crazy, but this thing looks like good-hearted people essentially subsidizing local usury.

Anyway if you're concerned about the interest rates there is a pretty in-depth discussion over here:

http://www.kivafriends.org/index.php/topic,368.0.html

Not all of the MFIs are the same, some have a high flat while others have a lower or normal interest rate.  If you're concerned you should find an MFI that fits your standards, a bad apple or two shouldn't get in the way of you helping someone out.  It really just seems as if you looked at it for a minute and dismissed the idea without doing the research.

Anyway, you're afraid of being bilked out of 25 bucks?  If you don't want to do it that's fine, just say you don't want to do it.  You don't have to justify it first.