Kiva Presentation for Foothill College Microfinance Club

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Kiva.orgFoothill Microfinance Club

February 23, 2011Zack Turner

@wzt

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Who am I?

Kiva Fellow in Kenya 2008

Kiva Staff 2008 - 2010

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Who am I?

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Who am I?

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What is Kiva?• Kiva.org is a

website which allows you to lend to an entrepreneur who needs a loan

• Lend as little as $25 to an entrepreneur at 0% interest

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What is Microfinance?Half the world lives on <$2/day

Microfinance is the provision of financial services to the poor

Microfinance =Savings, Insurance, Credit

Microfinance =Savings, Insurance, Credit

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Microfinance is the provision of financial services to the poor

For many in the developing world, savings accounts take the form of livestock

Give a man a fish, feed him for a day.Teach a man to fish, feed him for a lifetime.

What if he knows how to fish, but just can’t afford a fishing net?

Give a man a fish, feed him for a day.Teach a man to fish, feed him for a lifetime.

What if he knows how to fish, but just can’t afford a fishing net?

The poor are typically excluded by financial service providers:• No collateral• No credit history • Illiteracy

The poor need financial services, and already use them informally:• Borrowing money from loan sharks with interest rates so high

that it may be impossible to ever pay back• Savings accounts kept in the home, vulnerable to theft• Investing in livestock which is vulnerable to disease

Microfinance works to provide the poor with these financial services, in a safe and controlled environment, through a microfinance institution

What is Microfinance?

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Microfinance Institutions

• Some focus on women in places where women don’t have the same rights as men and so have no economic empowerment

• Some focus on the rural population in areas where people are isolated and cannot travel to cities to access services

• Some focus on a comprehensive program which includes business training with financial products

• Some focus on women in places where women don’t have the same rights as men and so have no economic empowerment

• Some focus on the rural population in areas where people are isolated and cannot travel to cities to access services

• Some focus on a comprehensive program which includes business training with financial products

There are thousands of microfinance institutions around the world, and they all vary a little depending on the

region they are in and people they are targeting to help

What ties them all together, however, is a desire to help the poor by providing them with financial services

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Kiva’s Story

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How Does Kiva Fit in?

Microfinance Institutions

Microfinance Institutions

EntrepreneursEntrepreneurs

Banks and NGOs

Banks and NGOs

• Microfinance institutions typically get the money that they lend, from banks or non-governmental organizations, or both

• This can be expensive, as it is often borrowed with interest

• There may also be difficult application procedures to access debt capital from non-governmental organizations

• Some organizations can even find themselves shut out due to the region they operate in, particularly post-conflict regions

• Restrictions that microfinance institutions face ultimately affect the entrepreneurs, who rely on microfinance institutions to serve them

The Traditional Microfinance Lending Process

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Individual lenders and donors

Gifts-in-kind, Commercial Lenders

Government grants

Major Donors, Churches, Foundations, Corporations Provides Capital for MFI

Sources of Funding

How Does Kiva Fit in?

InternetLender

Online marketplaceLocal Partner

(MFI)Entrepreneur

Money

Information

How Kiva works

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“Kiva in a Box”: The Big Picture

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Borrower

MFI

Lender

Kiva

Mutual Value

Why Does Kiva Matter?Value for all Stakeholders:

More Borrowers Receive LoansMFIs have more capitalLenders have easy and effective ways to give

Changing perceptions of the developing world

Breaking the bottleneck of wealth / poverty

Doing this at scale

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884,779+ social investors have lent $194,979,000 million in 54 months

Other Key Stats• Growth: $1.8 M loans every 7 days or $6 million per month• Risk: 98.95% repayment rate / $381 avg loan size• Traffic: 250,000 site visitors a week.• Organization: 60 employees and 500+ volunteers • Leverage: Platform raises $10 in loans for every $1 donated.

Other Key Stats• Growth: $1.8 M loans every 7 days or $6 million per month• Risk: 98.95% repayment rate / $381 avg loan size• Traffic: 250,000 site visitors a week.• Organization: 60 employees and 500+ volunteers • Leverage: Platform raises $10 in loans for every $1 donated.

5yr goal = $1

Billion

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Where is Kiva today?

Mexico

GuatemalaHondurasNicaragua

HaitiDominican

Republic

SamoaEcuador

Peru

BoliviaParaguay

Senegal

Sierra Leone Cote

d’Ivoire

Ghana

Togo

Nigeria

Cameroon

DRC

Mozambique

Tanzania

KenyaUganda

South Sudan

Indonesia

VietnamCambodia

NepalPakistan

Afghanistan

Tajikistan

LebanonGaza Iraq

Azerbaijan

Ukraine

MoldovaBosnia

Bulgaria

Kiva has lent over $ 194 million in loans through126 Microfinance Partners in 58 countries and is still growing

United States

Chile

Mongolia

South Africa

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Why Does Kiva Work?

It is about connecting people

Stories

Technology

Viral

Accessible

Press

Crowdsourcing

Transparency & data

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New loan categories

Scale Break Even Innovate

$1 Billion for 2M borrowers

Self-sufficiency at scale

The next 5 years: 3 aspirations

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Interesting FactsKiva is international (lenders from 210 countries)

Equal playing field

High Risk Areas: Iraq, DRC, Palestine

Unique Loan Products

Proliferation of Technology

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1) Make a $25 Loan

1) Give a $25 Kiva Gift Certificate

1) Spread the Word! (email footer, add Kiva to your blog, join Facebook cause, follow Kiva on Twitter)

2) Start a Lending Team (join an existing team, start your own team with family and friends)

Get Involved Today!

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Become a Kiva Fellow!- Work overseas with one of Kiva’s Field Partners to help facilitate connections between Kiva Lenders and Borrowers

http://www.kiva.org/fellows

Join Kiva’s Loan Review & Translation team- Volunteer your time remotely to help review and translate loan profiles that are posted by our Field Partners

http://www.kiva.org/volunteer

Intern in Kiva’s San Francisco Headquarters- Volunteer with Kiva in a part-time capacity for 4-8 months, it’s a great opportunity to learn more about Kiva’s model

http://www.kiva.org/volunteer

Join Kiva’s Developer Community- Are you a developer, designer or tech-fanatic? Learn more about our API and join our awesome developer community!

http://build.kiva.org/

Take it to the Next Level: Want to get more involved or know someone who might?

Zack TurnerKF5

@wztwww.kiva.org

Loans that Change Lives

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Questions?

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Additional Slides

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Result: 30,245,763 loans found

Kiva and “Increasing Returns on Data”

World’s largest DB of microfinance investments

Long Term: Entrepreneurs could use Kiva as a public credit bureau…

Short Term: MFIs could use Kiva to build credit worthiness to other funders…

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Reach “The Long Tail’

“The Long Tail”

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Kiva can uniquely reach the microfinance ‘long tail’The Internet is a promising way to reduce costs and distribute risk in investing in smaller (Tier II - Tier IV) Microfinance Institutions.

Tier I (e.g. Grameen Bank) ----- Tier IV (e.g. church congregation)

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Could Kiva help discover and scale the next Grameen Bank?

Kiva’s platform can aggregate and deliver risk capital unlike any commercial source• Kiva lenders value social return / tolerate risk more than institutions• $25 investments size ensures risk distribution across thousands of investors• Less established MFIs can build a reputation slowly over time (like on eBay)

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Kiva utilizes five “Web 2.0” principles1. Create an “Addictive” User Experience

2. Be “Radically Transparent”

3. “Crowdsource” against constraints

4. Build in “increasing returns on data”

5. Reach the “Long Tail”