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peer to peer lending kiva

Kiva – Closing the Poverty Gap Through Peer-to-Peer Lending


Kiva‘s niche approach to peer-to-peer lending includes a true partnership of ideas, and all the crowdfunding appeal of good-cause donations. Whereas some funding websites seem to be all business, Kiva networks with third-party organizations (Field Partners) such as these: microfinance organizations, non-profit businesses, schools, and social businesses. Some of the bigger names include the Negros Women for Tomorrow Foundation, Mongolia’s XacBank, KREDIT Ltd, and VisionFund Cambodia. The goal is poverty alleviation, including buying from and lending to those in need. According to, Kiva has been instrumental in making $400 million dollars’ worth of microloans happen across the globe, with the help of 900,000 lenders offering around $1.5 million in weekly funding.

Lending risk is alleviated by the common Field Partner practice of requiring the borrower to show a certain amount of savings. Field Partners also have the unique option of either giving the requested loan amount to the borrower, 30 days before posting the loan details on Kiva (along with the borrowers’ stories and pictures), or taking on the loan request 90 days after Kiva has posted the borrowers’ details. Some Field Partners have been established with Kiva for over 5 years, and maintained a 0% default loan rate. Out of 230 Partners, only 13% have a delinquency rate of over 10%, and only 11 Partners show a default rate of over 5%.

Like many peer-to-peer lending websites, Kiva offers a base minimum of $25 for investors to get started. Unlike many peer-to-peer lending sites, Kiva does not offer interest rates back to the lender, and does not collect on the amount borrowed or its interest (that’s up to the Field Partner). However, there are three options open to lenders who gain back the donated amount: withdraw funds via PayPal, fund another borrower’s request, or donate funds to Kiva. (Though Kiva is a non-profit, the contributions are considered as loans and not as donations, so there is no tax benefit as when contributions are given outright to other tax-exempt charities.)

Donations are a way to cover Kiva’s costs. While it may be socially responsible for Kiva to act as a microfinance method of crowdfunding, that doesn’t pull in the same fees as an institution bent on increasing interest payments. Those who believe in the cause of addressing poverty should be glad to know that Kiva accepts donations from checks to gifted stocks to Amazon wish list items, while following the time-honored non-profit practice of publicy displaying its tax filings and financial records. Charity Navigator has awarded Kiva with an ‘80% organizational efficiency’ rating, which is displayed on the website. Eager volunteers will be glad to know that the unpaid Kiva Fellows Program opens opportunities to liaise between Field Partners and communities in 60 countries, and assignments last between four to 12 months. Those who can’t afford this kind of time commitment might want to look at translation and editing work through Kiva, volunteer at the San Francisco company base, or just give a Kiva gift card.

One of the newer pilot programs that bears watching is Kiva Zip, in which microloans are made only to borrowers in the United States and Kenya, and direct conversations are made possible between borrowers and lenders. (Of course, the Zip team reserves the right to regulate conversations, and remove posts that are not appropriate.) So far, 15,000 lenders have contributed toward the causes of 1,400 Zip borrowers.