Pioneering microfinance crowdfunding platform provider Kiva reached a milestone yesterday, announcing that $400 million in microloans have been made since opening for business in 2005.
Founded based on the idea that a “social lending” network could help alleviate poverty and expand economic opportunity, Kiva’s microfinance loans have now reached more than 1 million people in more than 65 countries, according to Kiva’s press release.
Crowdfunding for collective good
Kiva crowdfunded nearly $500,000 in microloans in 2005, its first year of operations. Its microfinance community has now grown to some 900,000 lenders who crowdfund more than $1.5 million in microloans per week.
Starting off as small as $25, Kiva microloans fund a tremendous diversity of small businesses and other socially beneficial activities, including helping fund education, home improvements, and installations of cleaner, more energy-efficient equipment.
To date, Kiva has proven exceptionally adept at managing the credit risk of borrowers. Its loan repayment rate comes in at 98.9 perecent, the San Franciso-based company noted.
“Fundamentally, Kiva is about recognizing and supporting the potential that each person has whether they live across the street or across the world,” Kiva co-founder and president Premal Shah was quoted as saying.
“When we recognize and act on the potential in ourselves and others, as lenders or borrowers, powerful things can happen.”
Microfinance, lending & social performance
Kiva works through a network of 150 Field Partners in more than 65 countries – from the U.S. to Sierra Leone and East Timor – to qualify and acquire microloan applicants. Most are non-profit microfinance organization, which administer microloans for borrowers.
Kiva Field Partners go through an initial “social performance” vetting process and annual review which are based on criteria Kiva management has developed “through careful research into best practices across the microfinance industry.”
Kiva Social Performance Badges were created to recognize a “demonstrated commitment” on the part of partners to one or more of the following social performance categories:
- Anti-poverty focus
- Vulnerable group focus
- Client voice
- Family and community empowerment
- Entrepreneurial support
- Facilitation of savings
The power of collective good & new technologies
As its microloan crowdfunding portfolio has grown, Kiva has been broadening its reach by partnering with universities, social enterprises, and non-governmental organizations (NGOs). Such initiatives continue to enable Kiva to leverage “the power of collective good and new technologies to push the boundaries of economic opportunity in unique ways…and reach people on a local level – including some of the most remote places on earth,” according to the press statement.
“This has been an amazing journey over the last seven years,” said Matt Flannery, Kiva Co-founder and CEO. “I want to thank the 1 million borrowers who have proven to the world that it was worth taking a chance on them. You have made Kiva possible.”