The Issue: Lack of Financial Services in Remote Areas
$500 would allow a man in El Salvador to install a potable-water system in his home. $900 would enable a woman in Pakistan to buy a dairy cow, whose milk could raise enough money for her eight children to attend school. $375 would assist a man in Kenya in buying a stock of flour, sugar, and salt to sell in his store. But these people don't have access to ATMs or loans. They're part of the more than two billion people across the globe who, according to data from the Gates Foundation, live on less than $2 per day and have no access to financial services. But loans in this environment can have ripple effects, not only lifting the borrower's family out of poverty, but improving the life conditions for the people around them.
The Campaign: Funding Microloans for Entrepreneurs Across the Globe
If you give $25 to this Grassroots campaign, then you will receive two $25 credits to fund microloans through Kiva's website. Lenders fund loans in $25 increments to people and projects of their choice, whether it be a student's tuition in Mongolia or the startup for a small business in Bolivia. They will then receive periodic updates about the progress of the loan, including how the borrower's project is progressing and the percent they've repaid of the initial loan. As borrowers repay, Kiva returns the funds to each lender, who can then make another loan, donate to Kiva's operational costs, or withdraw their funds via PayPal. Any repayments by borrowers over the $25 purchase value will be returned to Kiva.
Microloans must be made in two separate transactions – the $25 you paid is known as the Standard Kiva Card, and the additional $25 matched by the Kiva donation pool is known as the Promotional Kiva Card.
Kiva started small. In April 2005, founders Matt Flannery and Jessica Jackley funded seven Kiva loans, totaling $3,500, to entrepreneurs across the globe. By September, all seven borrowers had repaid in full. With this success in hand, Flannery and Jackley expanded, transforming Kiva into a full-fledged nonprofit, operating under the belief that a relatively small amount of money can make a big difference in alleviating poverty. And also that there were people who wanted to lend money to underserved people they'd never met. All it took was establishing a link.
Now more than one million lenders have funded more than $600 million worth of loans to people in even the most remote areas of 80 countries to build businesses, fund home construction, and pay for school tuition. When lenders fund $25 microloans on the website, field partners distribute that money to highly motivated, low-income borrowers in developing areas. Once their efforts come to fruition, the borrowers repay the capital—at an average repayment rate of more than 98%—giving lenders the opportunity to relend to a different project.
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