I lent $25 to a businesswoman who runs a food stand in Cambodia through Kiva.org. At least I thought I did.
As it turns out, the money didn’t go directly to Mao Yan whose grown children work in garment factories. Yesterday I learned this in a column by Ron Lieber in the NY Times:
KIVA When you sign up to be a lender at Kiva, your money does not go directly to the entrepreneurs whose requests appear on the Web site. Instead, a microfinance institution administers the actual loan.
Often, these Kiva partners engage in what a Kiva founder, Matt Flannery, refers to as “pre-disbursals.” In plain English, that means that borrowers get their loans before their appeals appear on Kiva’s site. So what happens to your money if you lend it through Kiva and direct it toward a particular project? It’s often used, according to the site, to “backfill” the money that Kiva’s local partners have already lent.
However, whether or not I get paid back depends solely on Mao Yan’s ability to repay. So far I’ve received $16.80 back. Go Mao Yan!
I’m a little disappointed that this is the way it works, but, more so, I’m embarrassed that I believed I could hand a worker in Cambodia money with a few clicks. I guess I never thought about the logistics that this would require.
Lieber writes, “…to fulfill such a promise completely, people would have to collect requests for loans by hand, translate and post those requests on the Web along with any supporting photos or videos, wait to see if lenders finance them, distribute the money to the field partners and then wait for the partners to make loans to the people who requested them, many of whom live far away from one another.”
If you’re interested in Microfinance, give Lieber’s column a read. He highlights several groups that run somewhat differently:
KIVA – You don’t really get to choose who your money will got to, but who be repaying you.
MICROPLACE – You could actually sell this one to your significant other as an investment. A return is possible.
MODEST NEEDS – Doesn’t accept loans but donations. This is a tax write-off (remember when people actually needed those?)
DonorsChooose – Choose a classroom project in a public school to fund.
Neither barrower nor lender be? Bah humbug! Lend away!