Kiva offers a new, sustainable source of funding that’s revolutionizing the lives of borrowers around the globe. Its loans help single parents launch businesses, women gain higher education degrees, refugees rebuild their lives in new communities, smallholder farmers invest in their crops - and much more!
Established by Matt Flannery in 2010, Kiva has rapidly grown to have 95 field partners across 44 countries and become one of the fastest-growing nonprofits globally. Their mission to empower entrepreneurs for a more equitable society continues to evolve and develop.
Mission
Kiva is a social impact organization that brings together donors and entrepreneurs in developing countries, providing life-altering financial opportunities to those who need them most. Their mission is to increase access to financial services, foster economic development and foster more equitable society.
Kiva loans account for over 80% of their funding, giving women access to capital to start new businesses, expand existing ones and invest in education for themselves and their children. These modest but life-altering loans help women create a more secure future, boost their capacity to support their families and contribute to national GDP.
Women micro-entrepreneurs are essential agents of economic growth and socioeconomic transformation. When provided with a business loan coupled with tailored coaching, they have greater chances of succeeding and attaining their financial objectives - especially in countries where cultural norms don’t promote gender equality.
Recently, ESCAP and Kiva collaborated on a research partnership that examines how women access and utilize financing to meet their entrepreneurial needs and obstacles at different stages of the enterprise journey. The findings are pertinent for both borrowers and microfinance institutions around the world.
This research is part of ESCAP’s Center for Women Entrepreneurship (CWE) research agenda, which examines the unique obstacles women entrepreneurs face when seeking and using financing. ESCAP and Kiva are working together to share these insights with microfinance institutions and partners so they can adapt them and create products/services tailored to address women’s specific needs, risks and obstacles.
Kiva needed a centralized work management platform that could enable their global staff to collaborate and deliver faster than ever before. Thankfully, they found it in Atlassian.
Financial Inclusion
Kiva is a global nonprofit that empowers financially excluded entrepreneurs around the world. Through its online platform, lenders from around the globe can fund small loans between $1,000 and $15,000 for those with social impact or who otherwise lack financial stability.
Kiva collaborates with partner microfinance institutions to provide loans to individuals and families who would not otherwise have access to funding from traditional banks. As a result, these entrepreneurs have access to capital and the tools necessary for success.
Kiva is taking several initiatives to increase financial inclusion, such as creating an inclusive identity system that gives unbanked individuals ownership over their data and helps them meet KYC requirements at national scale. The solution will be a blockchain-based digital identity platform accessible to everyone that ensures complete ownership over personal information - making it difficult for unauthorized parties to access it.
One of the primary challenges faced by unbanked people financially is a lack of adequate data about their finances. This can make it difficult for financial service providers (FSPs) to make informed lending decisions, further compounding poverty by not having credit history and thus less likely to qualify for larger loans.
Kiva is testing a new model of flexible repayment to better meet the needs of these borrowers. Instead of standard weekly installments, borrowers can decide how much to repay and when depending on their business requirements. This flexibility will enable borrowers to take advantage of opportunities like increased yields by investing in better seeds or fertilizer, then repay the loan after harvest is complete.
Socially Responsible Startups
In the San Francisco Bay Area, many startups are incorporating social impact into their business models. This could include waste reduction initiatives, responsible employment practices, volunteering activities, donations or involvement with charities.
Kiva offers an efficient process for funding these types of loans. Unlike traditional microloans, which require credit checks and collateral, these are made on the basis of social underwriting. Instead of relying on one lender, Kiva allows you to leverage the support of thousands of individuals to finance your loan.
To get started on Kiva, simply fill out the application. It takes only minutes and it is tailored to your personal values, the type of cause you support and the amount you wish to borrow. If approved, you’ll receive your funds within a few days!
Once approved, your loan profile becomes public on Kiva so anyone can view it and lend you funds. The public fundraising period lasts up to 30 days, during which you can continue spreading awareness about your campaign.
Entrepreneurs with a sound business plan and sufficient financial backing can apply for a Kiva loan. Once accepted, Kiva staff will evaluate your business to determine the amount and terms of your loan.
Before receiving your loan funds, you must have access to a bank account that can accept wire transfers, checks or money orders. Furthermore, one or more Kiva trustees must vouch for you before the funds can be released.
Kiva’s business model aims to empower entrepreneurs for a more equitable society. This involves encouraging socially responsible businesses, giving them resources to expand and creating jobs within local economies. So far, this approach has proven successful; Kiva boasts an impressive 96% loan repayment rate as well as an 80% increase in revenue and profitability.
Local Economies
Kiva offers small businesses access to working capital, equipment, inventory and marketing that they otherwise couldn’t afford. Through these loans, entrepreneurs are able to expand their operations and create positive social impacts in their communities.
Entrepreneurs use these loans to launch and expand their businesses, creating jobs, bolstering local economies and contributing to the sustainable development of their communities. Furthermore, entrepreneurs use these loans for health and educational purposes by increasing access to financial services.
Due to this model, borrowers who receive loans are more likely to repay them and remain in business. Furthermore, they’re less likely to take their children out of school for economic reasons.
Additionally, borrowers are more likely to become entrepreneurs themselves. For instance, Pedro Humberto of Mexico - a tour guide in Corcovado National Park - has taken advantage of receiving a Kiva loan and used it as seed capital to launch his own business venture.
His efforts have enabled him to build a sustainable tourism industry in the area and serve as an inspiring example of how microfinance can benefit local economies.
Another illustration of Kiva’s impact on local economies comes from Impact Carbon, an international development organization that finances community energy and safe water projects. Through their work, they improve lives, reduce poverty, and mitigate climate change.
These projects are funded through the sale of carbon credits that result from reducing emissions caused by using energy and water. Field Partners, an entrepreneurial collective of investors and entrepreneurs, distribute these credits to borrowers.
Kiva must create a global network of borrowers, lenders and Field Partners that can scale across countries in order to realize its mission and demonstrate impact in an economically sustainable manner. This is essential in order for the organization to effectively expand and sustainably demonstrate impact.
Gender & Racial Equity
Women are an essential factor in the global economy, yet they often face discrimination and pay inequality due to factors such as race, ethnicity, religion, or sexual orientation. When women have equal access to economic development opportunities and educational resources like healthcare services, communities and families can flourish.
Kiva offers microentrepreneurs in emerging countries access to credit through online crowdfunding1 platforms, an increasingly viable alternative to traditional financing methods. Not only that, but these platforms enable borrowers to communicate about their projects and learn from others’ successes.
Furthermore, social networks can help combat the information imbalances that often characterize financial markets. For instance, when a project proposer has high signalling reach within their network, other funders will have increased faith in its success potential and thus provide additional funding (Colombo et al., 2015).
Our research indicates that latent network capital has an uneven impact across genders: for every increase in project latent network capital, women-led projects experience less benefit in terms of additional funding raised on the platform. This suggests policymakers should prioritize addressing gender-specific barriers to latent network formation as a key policy objective when trying to reduce access to finance.
Constructing a more equitable society can seem like an impossible goal, but there are numerous ways that individuals and organizations can make a positive impact. Engaging in local, national, and international political discussions about gender equality and women’s rights is essential for making progress happen; additionally, policymakers at all levels need to recognize how crucial these issues are for economic development and human progress.
In Conclusion
Kiva’s mission to empower entrepreneurs for a more equitable society has led to numerous successes in promoting financial inclusion, supporting socially responsible startups, and advancing gender and racial equity. Through their online platform and collaboration with microfinance institutions, Kiva has provided life-altering financial opportunities to those who need them most, including women, refugees, and smallholder farmers. Their efforts have not only helped individuals but also contributed to the sustainable development of local economies.
While there is still much work to be done in creating a more equitable society, Kiva’s approach to empowering entrepreneurs has proven to be successful. By continuing to collaborate with partners and adapt to changing needs, Kiva can help create a future where everyone has access to financial services and the opportunity to achieve their dreams.
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