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Kiva is a microfinance website which allows people to see the profiles and stories of particular borrowers, kind their own money, and choose to associate their loan with a particular borrower.
Kiva's mission is to connect people through lending for the sake of alleviating poverty.
How it works
1) Lenders browse profiles of entrepreneurs in need, and choose someone to lend to. When they lend, using PayPal or their credit cards, Kiva collects the funds and then passes them along to one of our microfinance partners worldwide.
2) Kiva's microfinance partners distribute the loan funds to the selected entrepreneur. Often, the partners also provide training and other assistance to maximize the entrepreneur's chances of success.
3) Over time, the entrepreneur repays their loan. Repayment and other updates are posted on Kiva and emailed to lenders who wish to receive them.
4) When lenders get their money back, they can re-lend to someone else in need, donate their funds to Kiva (to cover operational expenses), or withdraw their funds.
For more information see: kiva.org
Partner microfinance institutions generally provide other services including savings accounts, which are also extremely valuable to financial independence for the beneficiaries.
Aid blogger David Roodman pointed out in a blog post that the connection between the individual contribution and the recipient is not as strong as was originally implied on the site. His conclusion was that Kiva's actual operation was the right way to run (and the post was overall positive towards Kiva) but that they felt they had to make a more personal connection as that attracts sponsors to invest in the loans.
Kiva co-founder Matt Flannery acknowledged the concerns, described changes made to the website in response described how pre-disbursal of funds was a change led by partner microfinance institutions, allowing approved borrowers to receive funds without waiting for Kiva investors.
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