GreatNonprofits: Find non-profits and charities to review, donate, or volunteer.

Oops! You must enter a search term greater than 3 characters.

Antonio3

Antonio3 - charity reviews, charity ratings, best charities, best nonprofits, search nonprofits
78 Profile Views
1 Reviews

Login to send private message
Click here to get your favorites badge.
Kiva.org: Loans that Change Lives
August 27, 2013

After supporting two Kiva loans in South Sudan, I began thinking about the interest rate. Of course, the loans had been pre-disbursed, so I was supporting the Kiva field partner and not the borrowers. I didn't mind that. What I did mind was the staggering interest rate (61.5%).

Okay, so microloans are expensive to administer, but in 2011 the average worldwide was just 26.9%. [1] Take away the cost of capital (7.8%), which Kiva provides free, and you get 19.1%. This is what you might expect of a for-profit Kiva field partner, and the 61.5% now seemed extortionary. Also take away the profit (2.6%) and you get 16.5%, what you might expect of a non-profit Kiva field partner.

So, why does Kiva fail to crack the whip on the interest rates of loans that use the capital it provides for free? It surely has some leverage there. I have contacted Kiva, and was told they have no plans to address what to them I have contacted Kiva, and was told they have no plans to address what to them appears not to be an issue. This is unfortunate because high interest rates are one of the main reasons microloans haven't made much progress in alleviating poverty. I suspect that, like too many charities, Kiva is more interested in growing than in furthering its stated mission.

I am staying with Kiva for now, but will make the interest rate a top criterion in selecting the loans I support. There are plenty of reasonable field partners to choose from, in a variety of countries. Here are some: Cooperativa San José (Ecuador) 15.7%, FATEN (Palestine) 18.3%, WAGES (Togo) 18.5%, CIDRE (Bolivia) 18.8%, FPW (Vietnam) 23.1%, Soro Yiriwaso (Mali) 23.1%.

If you want to dig deeper, see [2,3].

[1] www.microfinancegateway.org/p/site/m/template.rc/1.26.23685/
[2] strom.wordpress.com/2009/11/09/kiva/
[3] blog.microfinancetransparency.com/what's-wrong-with-kivas-portfolio-yield-statistic/

Ways to make it better...

If I had to make changes to this organization, I would...

Use the leverage of the capital Kiva provides for free to get field partners to lower interest rates.

More feedback

Was your donation impactful?

Likely

How likely is it that you would recommend that a friend donate to this group?

Likely

How likely are you to donate to this group again?

Likely

When was your last experience with this nonprofit?

2013

MY ROLE:
Donor

Review from Guidestar