Sunday, December 13, 2015


My friend Meg and I have developed a fun gift giving tradition in recent years. She gives me a Kiva gift card and I give her one right back. It was her idea and she's the proactive one, but I'm happy to take part in the exchange.

Odds are, you've heard of Kiva. It's a microlending organization where people crowdsource loans to people around the world who otherwise would't have access to them. Mostly these are in places where the offical lending institutions aren't set up, or aren't set up for people at their tier of the economy. There are some U.S. loans available too.

I've heard some criticisms of Kiva: the loans can be at a pretty high interest rate to the borrowers, but that's not because the lenders get anything back. It's often because of what it takes to administer these loans where the infrastructure for them isn't good. I've also heard the complaint that microlending isn't the panacea for world poverty that it was once vaunted to be. So I was interested in the section of the Challenges of Global Poverty course I took online that addressed this. On balance, their conclusion was that though microlending had its limitations, a good way to think of it was that it offered people a way to improve their life a little. I think sometimes people get a little outraged if someone is borrowing to pay for a wedding or to buy new furniture, instead of improving their farm or whatever, but if you think of it as giving people a way to afford some of the pleasures of life that we take for granted, even the little luxuries make sense.

Although the risk is all yours and people do occasionally default, my own experience is that the only time anyone every defaulted on a loan I'd made was because he had unfortunately died. And even then it was only a part of the loan. There can be some currency exchange loss and that's happened to me more frequently. Frankly, though I'm not in this to get a full return. The best thing about people paying back is that you can turn around and lend it to someone else. So even some very poor people have a way of paying it forward.

Once you join, you can affiliate with a team of your choice, but only if you'd like to. I'm on a few. My personal pitch is for the Late Loan Lenders, as the whole aim of this team is to keep loans from expiring (they only have 30 days to get fully funded, so it's a problem, though more for the field partners than for the borrowers themselves). So, though of course I'm all for empowering women, in practice women's loans tend to get funded faster than those to lone men, so I may have a disproportionate amount of Tajikistani cab drivers in my portfolio. I'm also on the Electric Animal Enthusiasts team, which you'll be glad to know isn't a team that enjoys electrocuting animals, but instead enjoys the crazy way some animals eyes glow in the dark in their pictures.

Anyway, if you need a 25 dollar gift for someone who has everything, maybe Kiva is just the place for you to shop. Or maybe just invest it for yourself. It turns out that it's pretty fun to be a financier.


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