My favorite way of making charitable contributions is to make small loans to disadvantaged people in many parts of the world through Kiva.org.
Whilst bank interest rates on savings have been at record lows for several years, keeping money in the bank hasn’t made a lot of sense so I made the decision in December 2011 to put some of my savings to good use rather than having them sit idle.
Kiva, a non-profit organisation, was founded in 2005 with the aim of helping to alleviate poverty through lending via the internet. Kiva is based in San Francisco, California, USA.
The way it works is a borrower requests a loan through a local organisation which is connected to Kiva. Loan requests range from around $250 to $1000+. Lenders, such as myself, choose which person or group of people they want to lend to.
The loans are put to many uses such as helping a student through college, increasing a shopkeepers supplies, ingredients for restaurant food, buying or maintaining personal transport, buying solar panels, improving housing, buying livestock and livestock feed, and so on.
The most recent loan I’ve made was to Jennifer in the Phillipines to help her buy items to sell in her store like canned goods, personal care products, noodles, spices, milk, coffee, drinks and other snack foods.
Women have been the main beneficiaries of Kiva’s micro-loans and Kiva emphasizes supporting women who so often lack access to funds to improve their lives and those of their children.
Loans are not guaranteed to be repaid. One of the borrowers I lent to failed to complete their repayments and in that event I lost $15.31. Given the poverty and challenging conditions in which the borrowers live, a few defaults are to be expected.
The minimum amount a lender can loan is $25. Loans are scheduled to be repaid over variable amounts of time usually between 6-36 months. Loans of $25 (or more) from several lenders are pooled to make up the amount the borrower requests. Transactions are processed through Paypal.
In addition to the loan, Kiva invites donations from lenders in order to cover their costs. I usually donate 10% i.e. $2.50 with each $25 loan. I like this arrangement. Unlike usual donations to charity, with Kiva I can see where the money I am contributing is going, exactly who is benefiting, and how much is being used for administration costs. As the loans are repaid, the funds become available to re-lend assuming I don’t yet need the savings to be returned to my bank.
To date I have made 29 loans totalling $725 to individuals in Azerbaijan, Chile, Haiti, Liberia, Phillipines, Cambodia, Columbia, Iraq and Palestine, and I plan to make more.
I highly recommend Kiva to anyone wanting to make a positive difference to the lives of disadvantaged people in many parts of the world.