What's The Diff?

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Small Loans Can Make a Huge Impact

The DIFF loves Kiva.orgBy Jen Romanowski

This afternoon I ran across a post on Twitter that talked about this year’s Webby Awards. Being the internet geek that I am, I decided to cruise on over to the Webby Awards website to take a look at this year’s Webby
Awards winners

Talk about some amazing websites. There were a number of websites that I knew of and have admired myself.  But there were also websites that I’ve never heard of.  Because we are in the financial industry, I decided to check out some sites that sounded like they might give me some great ideas.

My exploration took me to kiva.org, which won the Webby People’s Voice Award for Charitable Organizations.  According to Kiva’s about page, their mission is "to connect people through lending for the sake of alleviating poverty."  In other words,
this website allows people to loan money to small businesses in developing countries so that the people borrowing can work hard to make something for themselves.

Many of the loan amounts are under a thousand dollars.  And you can lend in $25 increments, so it’s your choice if you want to lend a little or a lot.  For each loan there is a percentage tally that shows how much money has been raised for that particular loan.  There is also a journal that will show updates about the loans and the entrepreneurs that are repaying it.

Recently I have heard more and more about social lending, but this social lending network has a socially responsible heart behind it which makes it "The DIFF."

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  1. So wait, I donate…err lend… money to someone half the world away in hopes that they repay me? Is there even a tax advantage to this since it is technically a loan? What about gift tax (although I doubt the loans are large enough to qualify).
    Aren’t we better off supporting home-grown charities where we help our neighbors with the added benefit of a tax deduction?
    Interesting concept, just seems like a good way to lose money.

    Posted by: Frank Rizzo | May 7, 2008
  2. Frank, good point. I initially thought about my neighbors, especially with the big local push around Greenville to shop local.
    But, I think there’s space for both types of giving. It just depends on your passion. While I usually choose to shop at the local merchants downtown, rather than the big-box strip, I also know people who are visiting the rural areas of South Africa twice a year to help treat AIDS patients, educate kids and feed what’s left of many families. That’s their passion, and I like to help them out when I can, too.
    I’d love to find out the tax side of Kiva that you brought up… I wonder if this is one of those “pay it forward” things that you just do because it’s the right thing, and not because I would get a personal benefit.
    After all, isn’t that what it’s about? Doing the right thing?
    Just my $0.02. Thoughts?

    Posted by: Christy | May 8, 2008
  3. SO.
    Where do I go if I want to go a “social loan?” Africa seems a bit too far away.

    Posted by: Mark | May 8, 2008
  4. Christy -
    You make very good points. I guess my take is that there is significantly larger benefit to our local community by giving local and helping our neighbors. you get to see the benefits of your gift up close, and you get the added bonus of a tax write-off.
    I’m not saying that $900 to buy a guy in Malaysia a cab isn’t worthwhile, I am just saying perhaps we can do something to effect change and improve Detroit, Flint, or other troubled areas before we go trying to solve the rest of the world’s ills.
    It very well could be that I am short sighted, but just my take.
    But more importantly, what a good topic. Spurring some great comments.

    Posted by: Frank Rizzo | May 8, 2008
  5. Frank, I somewhat have to agree with you. I’ve spent a lot of time looking at Detroit in the past and other cities around our country that are in dire need of help…sometimes I think we’re focusing on the rest of the world maybe more than we should? Maybe we should put on our own oxygen mask before we assist others around us?

    Posted by: Christopher J. | May 8, 2008
  6. Of course when I saw the site I had to dig deeper into it. And from the information they offer on the site, this is not a donation site, but rather a social lending site.
    Are there going to be risks involved? Of course there will be, as there is with any lending.
    But Kiva does state that in order for these small businesses to be in the program, they must qualify. (What that takes, I don’t know.) But they are screening these individuals in a hope that they can minimize the risk.
    So should we donate our money to local areas? Sure…I agree with this wholeheartedly. But coming from someone who has a passion for business, I enjoy the thought that I could lend to individuals who may be less fortunate then I, but who have a dream to see their business succeed.

    Posted by: Jen R | May 8, 2008
  7. Cool! So, it looks like we have a healthy mix of “here” and “abroad” supporters responding to this post. I think it takes both. If we neglect one, the other won’t matter nearly as much.
    That said, I think as a whole, there’s *so* much work to be done here, too. It’s really overwhelming, no matter how you look at it. Hungry people here, hungry people abroad. We’re so lucky, but it’s a shame that people still go hungry amongst all the luck. But I think that the more people we can get to just _do something_, the better. Here or there.

    Posted by: Christy | May 12, 2008
  8. Hi all…I wonder if there’s still steam in this thread.
    Couple of points about kiva and microlending. As far as repayments go, most ‘loans’ are repaid…the repayment rate is up around 99%. (You generally have to wait a year to get your money back…or you just recycle it to another borrower). Apparently, when someone who’s never had access to credit has a chance to get some…they don’t mess around. Similarly, the thousands of microlending organizations around the world have learned that it often makes sense to lend to women who are part of a support group, helping each other if one runs into trouble.
    Also, because the loans are so small, there’s no reason to think it’s either or, here or there. It just so happens that a site like Kiva gives you the chance to support someone on the other side of the world and watch their progress for as little as $25…the gift certificates last longer than flowers too.
    There are, by the way, more and more microlending organizations popping up in the US…there’s just not an easy way to participate just yet.
    Kiva is really cool. The bank I work with just launched a project with them…worth checking out.
    KivaB4B.org and the blog is at B4BCommunity.org.
    Nice post, by the way.
    Erick B

    Posted by: Erick B | May 28, 2008

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Monday, January 22, 2018