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Little loans for big change

Amelia Carpenter

Among gaining 15 pounds freshman year, drinking more beer than water and eating out of vending machines rather than off plates, the major stereotype of college students is that they're poor. The average college student doesn't have a steady income nor the money or time to create a living. It could be fair to say loaning money to a stranger in another country is an expense most college students would decline. Kiva.org, the world's first micro-lending site, has proved this general truth false.

Microfinance 101

Matt Flannery and Jessica Jackley founded Kiva in 2005, according to Fiona Ramsey, public relations director for Kiva. They had the idea after visiting Africa in 2004 and were introduced to microfinance, Ramsey said. At that point, there was no way to lend to a person in another country.

Kiva allows people to loan as little as $25 to entrepreneurs across the globe to help bridge the gap of global poverty, all from a home computer. According to the Consultative Group to Assist the Poor (CGAP), microfinance is the supply of loans, savings and other basic financial services to the poor. This differs from loans individuals might receive from a bank in that they are typically small loans or savings that are generated from informal sources - like Miami University students.

Kiva's mission is to connect people through lending for the sake of alleviating poverty, according to the site.

Kiva has more than 100 microfinance partners that seek out entrepreneurs who may not have access to obtaining approval for a profile on Kiva, or entrepreneurs find partners in which to enroll, according to Ramsey. Each entrepreneur goes through an approval process before they are uploaded onto the site. Then, lenders may choose to lend to those people, and how much they'd like to contribute. All contributions go through Kiva and then are distributed by Kiva field partners to entrepreneurs across the globe.

"Our field partners are a really critical element," Ramsey said. "Without wires ... bank wires ... we wouldn't be able to find many of (the entrepreneurs) ... some don't have addresses."

During the repayment period (given by each entrepreneur), lenders on Kiva have the option of lending again to another entrepreneur, or they may withdraw their money from Kiva, according to Ramsey.

"The money is completely theirs," Ramsey said. "They can do whatever they want with it."

Another element of Kiva is a volunteer opportunity called Kiva Fellowship. According to the site, Kiva "fellows" have the opportunity to travel abroad and witness the impact of microfinance firsthand by working directly with a host microfinance institution. To become a Kiva fellow, you must complete an application on Kiva's site.

"We have a lot of (university) students who apply for fellowship," Ramsey said. "Last week we just had the biggest yet fellows group going out to the field for 10 weeks."

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Miami lends together

For college and university students looking for a more subtle role in the Kiva community, lending groups are an accessible option.

Six hundred and eighty-five colleges and universities have created lending groups on Kiva, and Miami University is one of them with a total of 14 members and 12 loans amounting in $325.

Senior Adam Harris created the Miami lending group May 2 after learning about Kiva through a capstone class focused on food, energy and sustainability.

"(I'm) very interested in international development and the whole mantra of 'trade not aid,' empowering people to make their own decisions, (and to) create their own features," Harris said.

The site is free to join, and lending is not a requirement. To begin, users create a profile with their name, a photo, occupation, description of why they loan, their work and Web site URL. Kiva users also have the option to remain anonymous. Users can then create or join lending groups based on interest, college/university, businesses, clubs and a variety of other categories. Users may browse entrepreneurs on a number of categories including region, gender, sector, status, and popularity before making a loan. Kiva loans can be made through PayPal and by credit card. The loan is distributed by field partners - microfinance institutions - to the respective entrepreneurs. Melanie Ziegler, international studies interim director, described field partners as small non-profit, non-government associations located across the globe whom take the lender's money and distribute it to the people.

All loans are recycled back to the user in varying amounts and periods of time. When the loan is repaid, users can make another loan to a different entrepreneur of their choice.

"I had known of Kiva's outstanding record, and I was encouraged that the money gets recycled back," Harris said.

Harris started by lending $25 to a man in Uganda who was starting his own medical clinic.

"I wish I could give more," Harris said. "I don't have a lot of disposable income to throw around."

This inspired Harris to recruit other people to lend.

"If I can't give $100, I can probably find three other people to give $25," Harris said.

Find the right loan

All lending information is available on Kiva with an exception of the amounts members lend.

Ziegler became aware of Kiva in 2007 and has since given to five entrepreneurs in Latin America.

"I generally look to help someone with whom I identify," Ziegler said.

Ziegler looks to lend to women her age living in a country she's visited or plans to visit.

"I look through pictures, (and look for) something about the persons appearance or what they're doing that strikes a cord and I lend to (them)," Ziegler said.

Currently, Ziegler is lending to a woman in Nicaragua named Cheyla Luz Perez Montalban. Montalban asked for $700 to buy rice, sugar and cooking oil for her small grocery store. Ziegler said that she contributed $25 to Montalban.

Ramsey said with more than 564,000 lenders on Kiva, there is no sign of a generalized demographic with their lenders.

"The people that are contributing to Kiva - it's such a wide variety and that really demonstrates how inclusive we're managed the model," Ramsey said.

Ramsey explained that people contribute for all different reasons, but the sentiment is the same - they want to help.

"We have people that lean to the left, lean to the right, older people that lend, children - a lot of kids," Ramsey said.

Ramsey suspects children are lending because of exposure they've had in the classroom to Kiva. Because Kiva relates to international development and microfinance, there is a lot of business lending, according to Ramsey.

As far as areas of interest for Kiva lenders, Ramsey said Africa is a popular region, and women are more of a target for lenders.

Kiva measures this popularity by looking at the loans that are funded most quickly. In addition, speculations are that entrepreneurs who seem more in need of money are given money more quickly than others. For example, someone raising livestock may see a loan sooner than an entrepreneur who owns a retail shop.

Harris and Ziegler alike felt positive about their contributions to Kiva.

"It's really easy and you can see a direct impact with where your money's going and how it's going to be spent," Harris said. "It's a great way to make a difference."

Ziegler agreed.

"It doesn't take much money, (you can) start as little as $25, but it makes such a big difference in lives around the world," Ziegler said. "(This is) something that can really increasingly make more and more of a difference."


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