Over the past year, we have handed out loans to 23 third and developing world entrepreneurs, one of which has since been fully repaid, three of which have been almost fully repaid, and 15 of which are in some sort of early stage of repayment.
In my eyes, it's an outstanding success, but the reason I decided to write a dairy about it is not to boast, and it's not to brag. It's to point out that, with a little time, and a little effort, you too could be in charge of a third world business development fund. Here's how we did it:
So a few years back, I read something here about a new non-profit outfit called Kiva. You might have heard something about them yourself. If not, here's the skinny:
Kiva is like Napster for people who have a little coin they'd like to send to people in the developing world, to help them start businesses and get out of poverty. That is, the third world entrepreneur puts forth a request for a business loan, which is administered by a third party microcredit organization (IE: someone who will ensure the money is properly spent), and Kiva is the peer-to-peer method for people like you and me to actually send some cash to help out.
Simply go to their website, look at the businesses in need, and if you spot one you think you'd like to invest in, you can do so via credit card or Paypal. Simple.
It's not a donation - you're not throwing money down the memoryhole - it's a loan. And it also happens to be a loan that is repaid somewhere around 97% of the time, which is a far better rate than local banks manage.
The entrepreneur pays interest on the loan, and that interest goes to covering admin costs (feet on the ground isn't cheap, especially in places like Sudan and Palestine), and the principal, when it is paid back, comes back to you. When it's paid off, you then decide whether you want to take the money back, or reloan it.
Once you've given out your loan, you receive monthly updates from the borrower, telling you how the money has been spent, and how the business is progressing.
This has led to some interesting conversations back and forth between borrowers - one in particular that springs to mind where a guy in Palestine, letting his lenders know he is behind in payments because Israel has shut his town down, and no business is permitted to stay open, was told by several lenders, "Don't worry about it, just stay safe. Consider my loan to be an apology for the policies of my government."
Personally, I love the Kiva system to an incredible degree, and that's why I decided to syphon off a few dollars from my company every few weeks and make one loan every time I do so. I mean, what the hell - I'm not losing the money, I'm just letting someone else make use of it for a while. And over time, those loans have built up to the point where I'm now sittong on a bona fide 'world development fund'.
Which brings me to you - if you can afford to loan the minimum $25 (remember, it's not a donation, it's a loan, so you're only losing bank interest) every month, by the end of the year, you'll be sitting on a $300 charitable fund, and receving email updates from a dozen people in the third world telling you how they've put your loan to good use.
If you can do $25 per week, that charitable fund will be $1250 strong by the end of the year, and you'll have over **FIFTY** different loans in play.
My company has loans to the following entrepreneurs:
Tanzania: General store, cattle breeder
Palestine: Construction company
Senegal: Jewelry makers, fishing collective, farmers supplies
Cambodia: Food seller, tuk tuk driver, soil transporter
Uganda: Food shop, peanut butter maker, maize seller, water tap, cattle breeder
Honduras: Shoe store, restaurant, hot dog vendor, barber
Ecuador: Clothing shop
Kenya: Electrical repair store, groundnut miller, furniture manufacturer
Now, that's a LOT of good being done by really not a lot of effort on my company's part. It cost the same amount to buy a Cambodian guy a Tuk-Tuk as it would have cost to fly me to Seattle for a business meeting, so instead of flying to the meeting, I took the train and put the money saved towards the tuk-tuk.
The recipe to set up your own charitable loan organization is simple: Just go to Kiva right now and pick someone to loan $25 to. Then, in a few weeks, go do it again. Don't even think about it, just go do it.
The future I envision is one that I'd love to see - where hundreds, or even thousands of Kossacks sit in control of funds that helps people in Kenya and Uganda and Tanzania send their kids to school, or help people in Cambodia or Palestine or Senegal employ their friends and neighbors... and it wouldn't cost us ONE SINGLE CENT over the long term.
We talk a lot about how we want to make change in the world, but how much do we really make? We, as first world consumers, exploit the ever-loving heck out of the developing (and undeveloping) world, and we think that by not going to Starbucks or driving a Prius we're really doing our part?
I can't imagine what it would be like to have to not send your kids to school because school fees take up half your income. I can't imagine what it would be like to not have two cents to my name, and have a family starving to death before me. But I know that other people in this world suffer that indignity every single day, and I also know that I'm doing my part to change that.
Build your non-profit organization today. It'll only cost you $25 to start, but if you've got a few grand sitting in the bank earning pennies on the dollar in interest, think about using it for something better.
It's the least we can do, to those we've exploited for so long. I mean, geez, can you imagine if all of us with companies started making small loans here and there? If we can get political candidates elected, we could transform much of the third world in a few years. Imagine if just one of us with the right contacts managed to get an AT&T or Microsoft to devote 0.0001% of profits to something like this.
All too often we look to government to do this kind of stuff, but this is the online age - nowadays, we can go do it ourselves.
Your turn.
KIVA - LOANS THAT CHANGE LIVES
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