Give the gift of micro loans

Looking for a holiday gift that will really keep on giving? How about turning a loved one into a humanitarian financier by giving them a Kiva.org gift certificate?

Recipients redeem their certificates to make “micro loans” directly to small entrepreneurs in 37 developing countries. Once the loan is repaid, the lenders can re-lend or withdraw the money, ultimately using it for that MP3 player or anything else they want.

It’s all done through the San Francisco non-profit group’s Web site, which features a profile of every entrepreneur seeking to raise him- or herself out of poverty.

Take for example Jorge Romero, who recently requested a 6-month, $650 loan to buy shampoo, conditioner, and other supplies for his beauty salon in Paraguay. Or Betha Auma of Kenya, a wife and mother of six seeking an 18-month, $800 loan to buy 20 sacks of grain to sell in her cereal business. Or Sun Channy of Cambodia, asking for $1,200 over 18 months to buy more ducks for her retail egg business.

Generous Kiva lenders quickly granted those three loan requests. In fact, due to huge media attention the organization has received from the Oprah Winfrey Show, PBS’s Frontline/World, and even former President Bill Clinton, the average wait for a Kiva loan is an incredibly short 1.5 days. The most popular entrepreneurs are African women, whose loan requests are filled almost immediately after being posted on the site, says Kiva spokeswoman Krista Van Lewen.

Recipients redeem their $25 to $5,000 Kiva gift certificates to set up a lending account. They then decide when to make a loan, in what amount and to whom.

Although account holders can lend the entire amount to a single entrepreneur, they most often divide the money among more than one borrower. Usually, each loan is made up of money pooled from numerous lenders, with each lender kicking in, on average, $25, the minimum loan amount. Kiva lenders typically have a total of $100 in their accounts or on loan at any one time. Lenders can track the entrepreneur’s progress through updates posted on the Web site or sent by e-mail.

Once the entrepreneurs repay their loans, the money is returned to the lenders’ accounts, where it can be lent again, donated to Kiva itself or withdrawn, all without fees.

Lenders don’t earn interest, and there’s even a small chance that they could lose part or even the entire amount they lend. But, of the more than $2 million in loans completed since Kiva was founded in 2005, only about a quarter of 1 percent are in default. Outstanding loans currently total more than $13 million. Because lenders expect to get their money back, Kiva loans are not tax-deductible. However, lenders may be able to take a capital loss deduction for any money they lose through default.

To purchase gift certificates, you must first create a Kiva account. The certificates are purchased through the Web site using PayPal, which accepts major credit cards. PayPal waives its transaction fees for Kiva members. The certificates can be sent directly by e-mail or printed. They must be redeemed within a year, or the proceeds will convert to a donation for Kiva’s operating expenses. The company will e-mail two warnings before that happens. Certificate givers can use the Web site find out if a certificate has been redeemed. —Anthony Giorgianni

Comments

[Creditcard Genie]

This is a fantastic idea for a gift, and very novel. Thankyou for posting about it.