A guy, a girl, and a bunch of their smart-kid save-the-world-type friends from Stanford. A desire to make an meaningful difference in the world by taking a new and more strategic approach to philanthropy. Result = Kiva.
Kiva is an organization based on the idea of connecting regular people from rich countries to poor entrepreneurs in the 3rd world directly through microfinance. Everyone in the U.S. recognizes that pricing and cost of living differences between the U.S. and the developing world are huge, and that the money spent for a run-of-the-mill dinner out at a chain restaurant in the U.S. might be more than enough to start a profitable business in Africa. Sure, banks are normally the primary source for loans. However, banks have rules and systems that often make them unaccessable to regular people in the developing world that don’t need a very large loan. Thus, micro-finance (very small, short term loans). By giving regular mom-and-pop types from Buffalo, Kansas City, and Seattle the opportunity to make direct loans to entrepreneurs, everyone can benefit. The basic approach is that Kiva collects loans of $25 from people in the U.S., bundles them together depending on the entrepreneur’s demonstrated need for financing, and then distributes the loan. The entrepreneur pays back the loan over time (they often have terms of less than a year). Due to the on-the-ground support network and socially supportive environment for loan grantees, the default rate is less than 2%. As the loans are repaid, the original lender gets their $25 back (no interest) and is encouraged to re-loan to another entrepreneur. Kiva makes the whole process very transparent, easy-to-use, and uses a lot of real pictures from digital cameras to make the whole thing very personal, very fufilling, and very effective.
Sadly, I had not even heard of Kiva until a colleague at Notre Dame passed away very tragically, and his family suggested that people get engaged with Kiva as a tribute to his memory. As Kiva grows, it has the opportunity to make old models of philanthropy (like generic save-a-child-in-Africa-type campaigns) obsolete and engage a lot of new people in a very business-like approach to international development. Governments in the 3rd world have repeatedly demonstrated a lack of responsiblity in taking international money. Perhaps by taking a grass roots, one-person-at-a-time approach to building economies, the results can be more long lasting. This is not straight philanthropy, as the donors get their money back. However, through such an approach, the same money can potentially go a lot further. This approach to giving is much more strategic than a simple donor model.
The organization started off as a part-time hobby effort by a Stanford grad and his girlfriend. Over time, they began to realize the potential, and recruited some of their save-the-world type friends and things really took off. Now they have been recognized by the likes of Forbes and TIME and have even been featured on Oprah!