Alex Rodriguez finds out just where a $25 Kiva loan goes, how it’s spent and whether it really helps someone.[Alex Rodriguez Photography]
Before donating (or in this case, lending) money to any charitable organization, do your homework.
It’s obvious from the video that it takes money [tens of thousands of dollars? thousands? hundreds? more than $25 just to drive there?] to get $25 to a farmer in Cambodia, to get repaid, to process and update each borrower’s account, etc. So do some homework and find out how much is spent in the administration of any charitable organization to make sure that a major part of your contribution is really going to do good. Though Kiva does not charge any interest to Field Partners, it hires lots of people, maintain offices, and need money to run its organization, money which, I am guessing, comes from the interest collected from the millions of loan money on hand.
According to Kiva, on average, a borrower who borrows your $25 may have to pay back as much as $34. That’s an incredibly high interest of 36%!!!. Some Field Partners may be in this for the money, charging exorbitant interest to the borrower, using your freely loaned money to do so. Before making a loan, check the Field Partner carefully, its reputation [e.g., you don’t want to make your money available to a loan shark], how much interest it charges, the delinquency rate, etc.
Kiva is just one of many charitable organizations in the microfinance lending field and comes with a sterling reputation.