Let it ride -automating re-loaning

[Guest]

.

[andresv]

I've only been a lender for a few months but I'm already quite the evangelist (mailouts to friends, articles for local publications) but I wanted to make a suggestion which might help further.

Round at a friend's house we were talking about donation vs lending. Now I believe people should use their money as they wish, but on the back of an envelope (and then on a handy laptop) I sketched out the power of recirculating the loans.

My friend was talking about giving 30 pounds a year in donations, for ten years, paid upfront. Roughly 600 dollars.

I sketched out the equation and showed that lending in $25 increments, in 6 month loans, with the return 'decaying' at rate of default equal (at the time) to 0.16%, I could make a total of 1,300 $25 loans worth a total of 32,500 dollars...and it would take over a century for the money to run out. An excel sheet illustrating the idea is attached to this email.

An initial investment of just 200 dollars would last over 70 years, making almost 400 loans worth just under $10,000 dollars in loans.

Now you're probably well aware of this, but it had a powerful impact. So my suggestion is that you present your lenders with an automated option. As soon as a loan is repaid Kiva automatically selects another $25 loan from those still fundraising (the closer to reaching their target the better).

In this way a lender can recirculate their money as soon as possible, and get it out into the field as soon as possible. Therefore if someone was of a mind to, they could make an initial set of loans, automate the recirculation and simply receive email updates telling them what their money's doing.

As well as getting money back out into the field more quickly, it removes any indecisive gaps between loans. People are busy, and this method means that those who are too busy to return to Kiva as soon as they're informed that their loans are repaid can still make a contribution. Immediately.
People can switch the option off whenever they like.

It wouldn't take a lot of coding. In fact, it might turn out that Paypal prefers a system where some of the repaid loans aren't processed back to the lender but are simply boomeranged back into the system. Fewer transactions -not that they don't have the capacity!

In another type of automation, lenders may prefer to 'tithe' by setting up an automatic credit card debit to automatically make one or more $25 loans every payday...if I did that for a year, I could get 300 dollars into the system, and that could then recirculate for decades...

Just a thought...anyone out there agree that Paypal/Kiva should take a look at this beyond the amazing day job they're already doing?

[Kay]

I'm not against your idea(s), but if you choose to re-loan, your money does not go back to PayPal but to the borrower(s) you select. 

[Peter S]

Hi Andres -

First of all, welcome to KivaFriends!  I think you might have just broken the record for longest first-time post!

It's a neat idea, but I'm not sure that it would appeal to a great many lenders, mainly because people tend to value their sense of personal connection to the borrower, and want to exercise choice.  If the choice was random, it would become impersonal, just a portfolio recirculating and decaying (I like that word..) at so many percent a year.   And there'd be some practical (but not insuperable) difficulties like catering for vegetarians who don't want to fund butchers and cattle farmers and burger joints.   And if such a portfolio were to kick off with a smallish amount like $200, it would be vulnerable to a rather more rapid rate of decay if it was unlucky enough to suffer a $25 default or two early on.

With PayPal, I think you might possibly be misinterpreting their role: they don't get involved when loans are repaid and the lender re-loans that Kiva credit.  Or perhaps I haven't properly understood what you were getting at there.  They handle the initial money input from the lender of course, and the return of the money to the lender in the roughly 20% (I think) of cases where the lender decides to take the repaid loan out of the Kiva system.  A continuously recirculating automated fund would never involve PayPal in the return direction, that's true.

Well that's my take on it.   By the way, I didn't see that Excel attachment you mentioned.

Finally, everyone should check out the wonderful picture on your lender page...

I see that someone else has already posted a reply, but for some reason the system isn't letting me read it before posting this.

cheers
Peter

[Kay]

And there'd be some practical (but not insuperable) difficulties like catering for vegetarians who don't want to fund butchers and cattle farmers and burger joints.   

That's one reason I wouldn't choose this for myself!   Besides, I just like to choose my own borrowers--as I'm sure most Kiva lenders do!

[Jundee]

Paypal only get's involved if you decide to remove the money from your credit account.

[RichardF]

Another option would be to just Drop change into the Kiva Friends Tip Jar and let Joe take care of business!   

[AccountAbility]

As well as getting money back out into the field more quickly, it removes any indecisive gaps between loans. People are busy, and this method means that those who are too busy to return to Kiva as soon as they're informed that their loans are repaid can still make a contribution.

Anybody got Kiva credits just sitting around?  I don't know about the rest of the lenders, but every time we get our credits back, holding onto them for even hours takes more willpower than I sometimes have. 

Welcome aboard, Andres.

Dan

[Spartan]

Welcome to the community! 

Personally speaking as a matter of principle, I'm always in support of more options for users.

However this particular option is not one that I would employ. This is so because to me the fun in being part of Kiva is in reviewing the loan applications. Moreover given the longterm nature of the loans I cant think of a situation short of major hospitalization where I would not be online for a prolonged period. And even then, short of a coma, I would get someone to give me laptop to use.   

[wind5001]

Hello Andres,

and welcome to this forum!

Any ideas are welcome here and your idea sounds like something for the busy do-gooder who doesn't necessarily have the time to check on his Kiva credit etc. It could be a welcome feature to some! And if one could constrain the loans to particular regions or business types etc., that might be even better.

Personally, I would not employ this method, because it takes away the personal link. The best thing about Kiva is choosing one particular borrower that I WANT to support, I NEED to see and read whom I am supporting for the next months/years.

But thanks for posting!
Oli

[Julia]

I think this is a wonderful idea, I would use it. I get Kiva credits piling up sometimes, and I can see it getting worse if I do some traveling and can't get to my kiva account for weeks.  I really don't like the idea of my money sitting around waiting for me to find time. 

I would love to have something where if the amount of my kiva credit is over, lets say $100, then it starts making loans for me in $25 amounts.  I would be happy with basic criteria - look for a julia, or central america, or mexico, etc...  go down the list till you find a loan. Or wait till a loan is posted with my criteria.   

I would like to have this as an option to easily turn on and off. 

So great idea, did you suggest it to Kiva? 
And welcome to kivafriends.