Loans That Change Lives

May 18, 2009

I’m a big fan of Kiva. Kiva is a web site that allows you to make small loans to entrepreneurs in parts of the world that really need your help. For example, I just gave $25 to a man selling food in Palestine. It’s a small amount of money to me, but it goes further there. And when multiple people give, it really adds up.

It’s important to note that this is not a donation in the traditional sense – it’s a loan. So the money will be paid back eventually. And this is the power of Kiva.

You’re familiar with the idea of compounded interest, right? You deposit money into a savings account that earns interest, and as you do so, you gain interest on the interest you’ve already earned. So you can save an amount of money, and that amount will keep working for you. Well, Kiva works similarly in that you can give a small amount of money, and keep that money working.

Let’s take the example of my Palestinian grocer. I loaned $25 to him, and eventually he’ll pay that $25 back. I could ask Kiva to send me a check for that amount, or I could choose to “re-loan” that money. Clearly, re-loaning the money would ensure that it goes much further than it would if I just asked for it back. So I re-loan it to another business in a poverty-stricken part of the world. Now my $25 has helped two businesses. See how it “compounds?” I’m not earning interest exactly, but my small loan is continuing to work.

I’m just beginning to realize the power of this concept. I’ve only given a couple hundred dollars, but it’s turned into more than $700 because I keep re-loaning. Again, this is a small amount of money, but I think it goes a long way to help small businesses that may not have many funding sources. And can you think of a better return on investment?

God calls us to serve the poor, and Kiva is one of many ways you can do that. If you’d like to learn more about Kiva, you can do that here. And if you’d like to see who I’ve loaned to, you can see a list here.