Kiva savings account Help the world whathing your money grow!

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[matteol]

Hi Everyone, (if this topic already exist please tell me about it, I couldent find it and I think its very important)

i just got here so I am hopping this is a fresh idea that can help Kiva. I just joined two days ago and I am overwelmed by the materpiece of this idea and full of hope that I can do something to make it even better. First I will tell my idea, then do the bla bla as many might not want to read for that long

the idea: I live in Spain, madrid. here, if you want to put your money aside with no risk there is an interest call TAE, which now is around 4% depending on the bank. Its really low, but quite normal here, not sure how much it is in the US.

SO I though, what if instead of loaning your money to the bank to get this low 4% rate, what if you could loan it to Kiva, with a special savings account. You get less then 4%, but most people wont care because nobody can feel the diference in their pockects from 4% to almoust 3% (counting the defoult rate/delinquency rate).

I think as more ideas get practicall and easy for everybody, and that they dont think they are loosing much money, more they can work. so having said that, there are a couple of issue that have to be solved.

If you put your money into a savings account, you want to be able to take it back when you needed. There for there could be created a part of the investment that doesent go to kiva, lets say 10%. so if you want to take your money out you do, and this safety net can absorve the money you take out. Also people want to know its safe, even if I dont care to loose a bit, some people might care. In this way a good arangment with an institution that buys the risk for a small margin could work, so you can offer a 2,8% sure return instead of a 3% not sure.

there is also another thing. we wouldent like to loose our proximity with the people we are helping, transparency and tracebility is a bit plus with kiva. therefore I think people should be asked to choose, in a easy way the projects they want to invest inn.

well, all this have to be though thru a bit better, and kiva would need to find a lot more people in need. but I have some people I know in some banks and it could be interesting. for the bank its publicity that they help, and for lender around the world could meen a great help. For example, if I had a lot of money (which I dont), lending 25 dollars at a time its quite operationally complicated. So, if I had 10.000 euros on my account, wouldent it be easyer to transfer it to a Kiva savings account?

guys, Im going out now, but I would like to continue this discussin with you, maybe we can find a way to help more and more people!!

again, it sounds strange. but thank you Kiva, thank you because I am happier now that I found this way of helping people, that is dignifying, its fun, it helps a lot, and most of all, its sustainable and has all it needs to grow exponentialy!!!!!!

good night

Matteo

[matteol]

It has just occured to me that if I want to sell this ideas to friends, that by giving they are making a savings account, couse they can get their money back when they decide to one thing that can make a problem is that you can only give dollars in kiva

I understand that most donners are still in the US. But think about it, if you would like to help/invest large sums of money, even if you dont mind some loss you would like to do it in your own currency. I dont know how does this work from the lenders point of you but for us it would be better to have other currencies.

I know paypal accepts 5 diferent currencies, and I also know that in the last years currencies in the world are much more linked to the euro then the dollars for instants. in brazil for example, the value of the dollars has been declining steadily but the value of the euro has remained the same for the past two years.

my mentality, is that what I am giving is not the 25 dollars, I am giving only 1 or 2% of that amount, which is what I would earn by investing this amount. Now, if I think like that, and I want to invest in more and more projects, if I have the risk of loosing a big part of my investment because of currency fluctuations I have a big problem. Not only that, but I belive that probably, currency in poor countries now days is much more linked to the value of the euro then the dollar, so it would be easyer and more stable for microfinance institutions to have their borrowing linked to the euro.

I posted also the other coment on trying to make agreements with banks to have kiva´s savings account, and now that I think of it it would be only possible if investments wore made in euros.

well guys, hope to share this with you and get some coments, I really want to understand what can I do to help this business model skyroket

much thanks to all

Matteo

[Peter S]

Hi Matteo

First of all, welcome to Kiva Friends. You're exactly right when you said about Kiva being dignifying, fun, and sustainable - and a masterpiece of an idea.

Two very big ideas there in those two posts of yours.

First off, the Kiva savings account idea.  The idea of paying lenders interest has been discussed here several times before, with a few people in favour, but it's probably true to say that most people (on Kiva Friends anyway) don't want interest, and some have said they would actually stop lending if that happened. "Payment" for the use of the money comes from the feeling of connection to the borrowers, through the photos, the loan write-ups, and occasionally from journals - and generally from the sense that we're helping working people to lift themselves out of poverty.

Kiva would face some legal hurdles as well if it wanted to offer interest.  Because it is acting only as a facilitator of interest-free loans, the regulatory burden is minimal.

People who want to have a return on their money, but still want to feel that they are assisting change in the developing world, can get fairly small (2% to 3%) interest returns in eBay's new microfinance venture, microplace.com - only available to US residents at present. There was mention a while ago of a major French bank having a somewhat similar operation directing French retail savers funds to microfinance projects in West Africa, except that the funds are deposited over the counter rather than online.

The currency risk ideas in your second post... The risk cuts both ways of course.  Buy your dollars & fund your loans now while they are cheap, and in 5 years when perhaps the US dollar has reverted to historical levels, you'd maybe be sitting on a tidy currency gain.

I suppose the main thing I'd want to say is that the Kiva model as it exists is amazingly simple, and that's one of its many attractions. Introducing interest, and ways of managing currency risk for international lenders, are possibly things that will be considered in the future. But for now Kiva's problem is not a shortage of lenders, but a shortage of borrowers, and they are working hard to build up their network of Field Partners to redress the balance.

Don't mean anything here to come across too negative, Matteo.  It's great that you've been inspired to think about ways of helping Kiva to skyrocket.

Peter

[matteol]

Peter,

thank you for your answer. actually something funny is that I got it wrong, I though there was a 3% return on investment, not sure where I could have seen it. Your argumentation was really good, and by what I´ve seen around here, and coments of people that are into this system is that really they prefer not to think it as an investment with some financial return. could you tell me where I could find this topics you said people already discussed about?

maybe what I got from your argumentation is that I should see if its possible to apply the idea somewhere else. The reson why I think is important to transoform (or create) a purely charity business in to a business that helps people, like mohamed Yonu (the guy that founded microfinance) said, is that if you make a business sustainable and more atractive to more people then you can help much more people. I really like the way kiva gives you direct contact with borrower, but more then making my concience feel better (because that is the biggest part of what it does to have journals) I think the most important is to try and help the most people you can. As the model is right now, I will continue buying projects but thinking as what percentage of my salary and can give a way every month, but if I could find a site where I get a 3% yearly return (which is almoust nothing, specially compared to the 50% that is charged in some countries) I could deposito all my spare money and leave it there for a long time. ofcoure, as you said, I could deposit it now and in 5 years when the tendency of currency changes I could make money, but what if I dont want risk. Lets say I have 10 thousent dollars and I know I will need them in 1 year. I could put them in the bank for 4%, or I could lend it for a bit less. but if I think I might loose from now to when I need the money maybe 15% of this money, then instead of giving 10 thousend I would give 500.

also, I dont think currency protection would be hard. I am sure most countries currency fluctuate less against the euro, and paypal has euro accounts, that way you wouldent loose the 2% exchange comission that paypal charges and wouldent have to think if there is a risk on the cost of dollar or not.

well, I dont know. I am glad that the kiva initiative opened my eyes to this effective form of helping, but in my opinion I will continue searching, or maybe creat a model that its even more sustainable, so more and more people can be helped by more and more funds. there are 6 billion people in poverty, and we need to find the fastest way to help them

if you read this and you know where I can find something like this please let me know

Matteo

[Wood Fairy Glenda]

Hi, Matteo and welcome! 
    Here's the link to the thread called "Paying interest to lenders - Pros and Cons." The link is to the first page of this long discussion - 16 pages so far: http://www.kivafriends.org/index.php/topic,215.0.html

[matteol]

hi, thank you for refering me to the other topic

matteo

[Dagfinn]

Hi Matteo - I think you are on to something so I want to share with you what I think.

I guess I am pretty normal to most people here, that is finances shift.  What I would like to see is that savings aspect.  I would be quite happy to have Kiva use my excess funds at no interest instead of getting the low interest a bank would offer.  And if the situation calls for it I could withdraw funds as needed (provided I had a positive balance;)

I see it pretty much the same way as you - I lend out 25usd a time and may expcect minus 3 percentage return - which is indeed ok with me.  Putting funds into microloans is a lot better than a deposit account where I easily can get my hands on them.

If it is of interest to Kiva I have no idea though.  A connected question to me is when I have a substantial (to me) amount outstanding is the security Kiva offers me.  Risking 3 percent is fine - the lot is definitely not.

Anyway - thanks for sharing your thoughts

[matteol]

Hi Dagfinn,

just wanted to say thanks, but someone here redirected me to another topic where people wore already discussin this. many people on kiva seam to be agains charging interest rates so the idea is not very good for kiva. I am continuying reading in other places and so far I came across Grameen Bank. if you dont know it is nice to look at

check out this links kiva advices http://www.kiva.org/about/microfinance/#WEBSITES_AND_ORGANIZATIONS

so this guy is the pioneer of all this he created a bank in bangladesh 30 years ago and now this bank is totally autosuficient! its really amazing, it is own by the people because they can deposit their money at 8 to 12% and it borrows at 11%. its an amazing concept especially because its autosuficient. It had help to get where it is now, but now it does not acept donations anymore. so I would think this idea of the savings account would function better with this kind of concept.

well, I will have to check up some things but my idea is maybe to try and do something similar in brazil.

well, thanks for your though and happy lending

matteo

[ineedaname]

I was reading this posting and I noticed that most people were saying how getting interest back is a bad idea. 

On the other hand I too think a savings account is a good idea because a lot more people would be more willing to put larger sums of money into this.

To remedy the "interest" is very simple, just have no interest at all. 
I think a lot of people would agree that they wouldn't mind giving up their measly bank interest rate to a better cause while having the security of not losing their money. 

*edit*
Actually I got another Idea that's a lot more plausible.  It would be cool if Kiva teamed up with a bank like ING Direct that offers savings accounts that give 4% interest.  But instead of getting the 4% interest you can choose to give 1-4% of that to kiva towards micro financing.  That way it doesn't really make more work towards said bank and helps it get clients while still having a great underlying cause.  Not to mention will definitely help getting kiva known.