Kiva: Become a Micro Venture Capitalist
Kiva means “Agreement” or “Unity” in Swahili. Kiva.org is a California based microfinance organization that offers you a unique opportunity to become a micro venture capitalist of a different kind!
For the novice, microfinance quite simply put is the provision of very small loans that are repaid within short periods of time, and are typically used by low-income individuals or businesses that have few assets which can be used as collateral.
Currently, the website lists all the business located in villages of Uganda, East Africa that are in need of finance. You can choose to finance a business of your choice and lend money online to that enterprise using your credit card or Paypal account, in increments as low as $25 toward the loan needs of a business. The duration of the loan is typically 6 to 12 months. As the loans are repaid, you will get your original loan money back.
As far as ROI (return on your investment), you can expect to receive monthly email updates in form of photos of new capital equipment, narratives on business growth and standard of living improvements that let you know about the progress being made by the small business you've sponsored.
What are the chances of getting back your loan amount you ask? The website claims that till date Kiva businesses have repaid a 100% of the loans or are on their way to doing so. The microfinance industry as a whole claims as high as a 97% payback rate.
But there is no guarantee that every loan will be returned successfully so this organization typically looks for charitable minded individuals to finance loans as opposed to business minded people.
Simply put, this is a different form of charity. At the end of the term you have the option of withdrawing, re-loaning or donating your loan amount. You can also opt for a combination of any of these options.
Kiva has been operational only for about 2 months but according to the website, it has already funded about 13 businesses. The organization is still in the process of getting its non-profit status after which it will also accept online tax-deductible donations.
But, according to co-founders, Matthew and Jessica Flannery, when you receive your original loan amount back, you are more likely to loan again than if you simply made a donation. So go ahead, with as little as $25 you can become a charitable venture capitalist!
Find out more about them here: www.kiva.org