Kiva

Definition

Kiva is a non-profit organization that provides a platform for individuals to lend money to entrepreneurs in developing countries, allowing them to start or expand their businesses. This microfinance model empowers people by connecting them with lenders around the world who want to help promote economic development and alleviate poverty through small loans. By facilitating these loans, Kiva not only supports entrepreneurship but also fosters community growth and social impact.

5 Must Know Facts For Your Next Test

1. Kiva was founded in 2005 and has since facilitated millions of loans across dozens of countries, impacting thousands of lives.
2. Lenders on Kiva can choose specific borrowers to fund, enabling a personal connection to the loan process and outcomes.
3. Kiva operates on a 0% interest basis, meaning all the funds lent go directly to the borrower, making it an attractive option for both lenders and entrepreneurs.
4. The repayment rate for loans on Kiva is typically very high, often exceeding 95%, demonstrating the effectiveness of the microfinance model.
5. Kiva's platform allows for lenders to track the progress of their loans and receive updates from borrowers, creating a sense of community and engagement.

Review Questions

• How does Kiva's model of microfinance contribute to entrepreneurship in developing countries?
  • Kiva's model allows individuals to access capital through small loans that would otherwise be unavailable due to traditional banking barriers. By connecting lenders with entrepreneurs in developing countries, Kiva enables these individuals to start or grow their businesses, fostering local economies and creating jobs. The focus on microfinance ensures that even small-scale entrepreneurs have the opportunity to thrive and improve their communities.
• Discuss the role of technology in Kiva's operations and its impact on the microfinance sector.
  • Technology plays a crucial role in Kiva's operations by providing an online platform that connects lenders with borrowers from around the world. This accessibility broadens the reach of microfinance, allowing anyone with internet access to participate as a lender. Additionally, technology enhances transparency, as lenders can track loan progress and receive updates, which builds trust and encourages more lending within the microfinance sector.
• Evaluate how Kiva's approach to lending can be considered both a business model and a social enterprise.
  • Kiva's approach functions as a business model by efficiently connecting lenders and borrowers through its platform, creating a sustainable ecosystem for microfinance. At the same time, it embodies the principles of a social enterprise by prioritizing social impact over profit, focusing on alleviating poverty and promoting entrepreneurship in underserved communities. This dual focus allows Kiva to address economic challenges while engaging global citizens in meaningful ways.

Related terms

Microfinance: A financial service that provides small loans and other financial products to low-income individuals or groups who lack access to traditional banking.

Crowdfunding: The practice of raising small amounts of money from a large number of people, typically via the internet, to fund a new business venture or project.

Social Entrepreneurship: A business model that seeks to create social or environmental change while also achieving financial sustainability.