Saturday, 19 January 2019

Kiva – a different kind of Peer to Peer Lender



Kiva is a non-profit organisation that facilitates Peer to Peer Lending to low-income entrepreneurs and students the world over with the intent to help people help themselves build a better life.  The great thing about Kiva is rather then one off donations to charity, as loans are paid back you can continue to help others by loaning your money again.

I’ve been a member of Kiva since 2011 when my brother gave me a gift voucher for Christmas.  Since then, I’ve been making ad hoc loans as they are repaid.  During that time I’ve periodically added additional funds.  Surprisingly, I didn’t make the connection to Peer to Peer lending until recently when my wife pointed it out…  So as it turns out, I’m an old hat at this peer to peer lending thing.

Kiva is a US based non-profit organisation with all transactions in US Dollars.  Loans are broken down into $25 USD portions.  Kiva typically work with a number of field partners around the world to facilitate loans where they are needed.  Kiva do not charge interest on loans funded, thus fund their operations through donations of investors like you and me.  Typically when you make a loan Kiva request a donation (currently defaults to 15%) to go towards the running costs of the non-profit organisation.  These donations are only tax deductable in the US.  While the system automatically sets the amount for donation you can change this from nothing to more than the recommended amount.  According to the website the recommended amount is to cover their costs (which are not passed on) to lend out your money.  Personally I do like to make the donation as I would hate to see the platform not be able to continue the great work it currently completes.

While Kiva do not charge interest, most borrowers will pay interest to the field partner for the loans to cover the necessary cost of operations.  Kiva selects their field partners based on partners having a social mission to serve the poor.   As part of this mission some partners also provide additional services such as training and financial literacy classes as part of the loan process.  Kiva monitor field partners to ensure fees are not excessive.

From a user experience the website is super easy to use.  To sign up you actually need to click Sign in and it has Sign up for Kiva link.  Once you click on this you can sign up with Facebook or you can enter your first and last name, an email and a password.  You can use this link here.

Once your account is created, funding is easily done by clicking on the Add Credit link on your Portfolio home screen.  You either enter the amount of US dollars you want to add to your account or set up a monthly deposit.  Either way payments are processed by Paypal making it an easy transaction to complete.  Likewise you can withdraw your available funds to your Paypal account by clicking the Withdraw credit from your portfolio home screen.

To lend money you simply browse the many loans and categories available and select who you want to lend to and away you go.  Like all lending there is risks.  Late payments and defaults are the standard risks we take and given the lending in foreign currency there is also a currency loss risk.  While these risks exist, I take them with a grain of salt as I consider this part of my portfolio is a portion of my charitable donations.

An added feature of Kiva is the ability to create teams to show the impact all team members have through their pooled individual lending.  With this feature I thought it would be great to set up our own team called Pete2Peer.  You can search for it in the teams section or click the link here and sign into your account to join our team.  Overall I like Kiva with its user friendly platform and unique twist to your peer to peer lending portfolio.

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