Gifts

[Guest]

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[sunshine]

Just curious friends,   does a gift go directly to the participant or does the field worker take a portion? 

this is a real eye-opener to how some people survive.  i cannot complain again.

Sunshine

[Diane R]

Sunshine, what do you mean by "a gift"?

--Diane.

[michael]

Sunshine, please understand that this is not a charity.  These are LOANS that we make, collectively, to a specific borrower.  WE charge no interest.  There are two middle men, as it were.  The first is Kiva, based in California.  They are nonprofit and take no cut.  The second is an MFI, or lending intermediary from the country where the borrower is.  The MFI is a business, and they actually make the loan using our funds and charge nominal interest.  The interest is charged to the borrower and is kept by the MFI to run their business.  The principle, when repaid, is returned to you, the fund provider.

Does this help?

[KivanSteven]

I wish we could contribute a little extra in the form of a gift, so they can use it to pay off a month or use it to cover the interest...

[krizzz]

Actually, I'm still a bit curios whether banks slice off a piece of the cake or not. I noticed banks in developing countries tend to charge insane transaction-fees, and wonder how the money raised through Kiva reaches the MFI. Probly, Western Union or PayPal work more efficient, but if funds are wired through, I suppose, a part of it simply vaporizes and disappears in the pockets of large multinationals 

[Soriak]

We don't know for certain how Kiva handles it, but it's unlikely they physically transfer any money. My guess is the MFI just has an account with Kiva that is credited when loans are raised and debited for the payments. That way the loan is covered and no transaction fees come up. I can't imagine that the MFIs don't have cash on hand to pay out the loan... although it'd also depend if having funds in an account abroad would be permitted for the coverage of the mandatory reserves.

[krizzz]

That might do the trick, indeed... that way, the funds can be considered barter/LETS-points or Linden Dollars...

[Peter S]

Money does actually get wired to the Kiva Field Partners.  This from the Help Center at:
http://www.kiva.org/about/help/questions?subtopic=How%20Kiva.org%20Works

How does the money get to the entrepreneur?
Loan funds received by Kiva.org are forwarded, by check or international wire, to the respective Field Partner on a monthly basis. The Field Partner then distributes the funds to the entrepreneur. Some of our Field Partners have working capital, which they forward to an entrepreneur when they see the business has been fully funded online, before the payment arrives from Kiva.org. This allows the business to start operating sooner.

What we know happens is that Kiva forwards funds on a net basis.   Say for example a Field Partner is due a wire for $50,000 for new loans, but has received $17,000 in repayments due to Kiva from entrepreneurs .  The two amounts are netted off and Kiva wires the $33,000 difference.  I've read that a few times, can't say exactly where just now.

Some smaller Field Partners will not actually have the funds to loan out unless they get the money wired from Kiva, and the "cash-rich" ones will still want that interest-free money to loan out, no question.

As to money transmission costs, that's an overhead expense at both ends of the transaction, for Kiva and for the Field Partner, and no doubt they shop around for the most cost effective way of doing it.  It would be entirely wrong for the Field Partner to deduct bank charges from the loan amounts handed to entrepreneurs, and I'm sure that if that were ever found to be happening, Kiva would step in very firmly to stop it.

P

[sunshine]

HI all,  thanks for the interesting replies and for helping me understand things a bit better.   from what i seem to gather from some of the borrower's site,  there is interest charges of about 14 % to 18% ,  i know this is considerably less than the so-called lender organizations that i saw on tv once where the borrower never gets out from under.  I never thought of this not being charity but i suppose your correct but then again,  there is a place that you can send a gift.  what i want to know is , "does the whole gift go to the participant" ,  i thought that even $25 right to their pocket would make such a change.  perhaps i am talking through my hat.

thanks for letting me know some info

sunshine

[KivanSteven]

Any amount straight to an entrepreneur would be enormous, especially since $25 there would go so much further than that amount here obviously, but Ive never heard about any gift giving options offered through Kiva....maybe directly through an MFI, but nothing established as far as I know...anyone else want to field this one?

[sunshine]

 ;)Guess I better wake up and smell the coffee, the gifts , i understand are what you send your family or friends to give out,  i better spend more time reading these things.  thanks to you all for being so patient and putting up with my silly questions.

Sunshine and lots of snow

[Diane R]

The only "gift" mentions I know about are the Mama Mark Fund for the mother of Mark Agwonah, a Kiva borrower who was killed last summer, and a contribution to Ms Cao, which Khang was arranging but which did not happen.

Were you maybe thinking of Gift CERTIFICATES, which we send to others so they can start their own Kiva.org loan portfolio?

--Diane.

[KivanSteven]

Diane she has to be referring to the Gift Certificates I think, thats the only thing Kivan that comes remotely close to a gift.  If you purchase a GC for someone, which is a very easy to buy and easy to redeem process, the recipient, be it your mother for example, receives the entire amount...its not something youll receive in the mail, but the GC can be printed out for gift purposes, especially if "your mother" has yet to start an account with Kiva.  When they redeem the gift certificate it is the same as when you help fund a loan.  The money goes in, it gets repaid, and you collect the amount you loaned once the loan is fully repaid.  At that point, as you probably know, you can withdraw the funds, or re-loan the amount, or just sit on it and wait if you arent interested in doing either.  Hope that helps.

BTW no question is a silly question...we all had lots of the same questions when we first started out, you were just brave enough to ask.