Where are the funds that have been repaid, but not credited to my account ?

[Guest]

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[David M]

I was really surprised to receive my first notice that payments had been made on all of my loans but that the funds would not be credited to my account until the loan was fully repaid or the term is complete. I have a couple of questions / comments:

1. Where is the money ?
2. Who is making use of that money and for what purpose ?
3. If that money was back in my account, I could re-loan it.
4. Kiva shows that it has made loans of nearly $22 million. I don't know how much is typically outstanding at any one time but this could still conceivably be a huge amount of cash.
5. This is most unconventional. ( I realize that Kiva is also unconventional.)
6. I assume that part of the funds are with the various partners as the links between lender and borrower are a little longer than our domestic banking system.

I'd really like to understand why the system works this way.

[Henry]

1. Where is the money ? 
Money repaid goes to the MFI, then to KIVA, where it will earn income for KIVA.org until the loan is paid in full.

2. Who is making use of that money and for what purpose ? 
KIVA.org - operating expenses

3. If that money was back in my account, I could re-loan it. 
there has been a little discussion of this happening, but nothing of recent.

4. Kiva shows that it has made loans of nearly $22 million. I don't know how much is typically outstanding at any one time but this could still conceivably be a huge amount of cash.
If you click on an MFI (field partners) page, you can open up a lot of the stats, you'd be surprised, I think this answer sits there.

5. This is most unconventional. ( I realize that Kiva is also unconventional.)
good point!

6. I assume that part of the funds are with the various partners as the links between lender and borrower are a little longer than our domestic banking system.
I believe, roughly 'monthly', to keep cost down, wire transfers happen each month - I think they use some 'net' calculation for which way the money flows.

Wow, that was fun....  and Great questions for a school group to have fun with!
disclaimer...  I'm probably wrong on all these answers, but close!!!!

 

And, a big big welcome to KIVAFriends!!!!

[Peter S]

yes, what Henry said, and here's a link to the official explanation, second item down the list

http://www.kiva.org/about/help/questions?subtopic=Tracking%20Repayments

[Agent001]

Seems right on to me...

While it would be nice to have access to funds faster to re-loan them, I don't begrudge Kiva the use of our group's money in the meantime as an income generator for operating expenses. Its a big leap for an organization like Kiva to effectively pass on 100% of money to the end user with no cut taken or interest charged. They can't/don't make use of advertising and have few options for sustaining themselves beyond the support of followers and foundations. As the beauty of microcredit is its self-sustaining nature in a well functioning program (hence the interest charged), its a bit ironic if Kiva can't find a way to become self-sustaining outside of ongoing grant and donor support...this is at least a contribution in that direction

Peace,

Shawn

[David M]

You're right Shawn, but even the best organizations must have solid foundations of full disclosure and good governance.

[Agent001]

Agreed!