I will always think of Cambodia when I make my loans because It was my solo backpacking trip to Cambodia in 2004 that totally opened my eyes to extreme poverty. Yes I had seen homeless people in NYC but nothing compared to seeing the street kids in Siem Reap or seeing the conditions just half an hour away from Angkor Wat. Houses were literally thatched one room huts with no running water or bathroom for that matter. Women carried buckets of water for miles. I felt ashamed for ever complaining about anything in life after seeing those living conditions. Despite this, the Cambodia people seemed ok and happy. They shared their culture and stories of their daily lives. It is the only trip where I still keep in touch my tour guide and friend, Alann. It was that trip that made me want to find a way to help the people in any way possible and that started with that first loan to Mrs. Doung. A quarter of my lending has gone to lenders in Cambodia and I hope to visit again with my daughter one day.
90% of my loans have been to women who typically have an even harder time accessing money in the developing world. Providing women access to microfinancing helps support families and communities. For every dollar a woman earns, she invests 80 cents in her family's education and well being. This can truly help change the world for the better.
3) The stories and entrepreneurs
Seeing the people and reading the stories definitely makes the experience at Kiva more interesting and an important piece to helping them surpass that $1 billion loan mark. I haven't met anyone that I've made a loan to yet but I hope to in the future. When I was planning a trip to Peru, I found myself reading about Peruvian loans and starting making most of my loans there. Hopefully I can make an even deeper personal connection in the near future.
As an investment professional, I spent many hours researching companies with a long track record of success like Disney or Walmart. But they all started in the same place as a small business and then slowly grew bigger and bigger. I hope that some of the loans on Kiva can propel families out of poverty and just maybe into the next multinational company. With technology today, anything is possible…
4) Low risk
I started making loans right at the beginning of the Great Recession. You may think that I lost tons of money making loans when the banks in the US almost went bankrupt. During that period, subprime loans were defaulting at a 20% rate but what about loans on Kiva? Not even close. On my loan portfolio, the default rate is 0.28% and the delinquency rate is just 0.41%.
5) Priceless return
No you don't earn a monetary return on any loans made on Kiva but the true return is priceless. I could have kept my money in a bank and earned close to 0% percent interest over these years. For what? To let the American banks recover from their bad loans? No thanks.
It was a no brainer to cycle that money productively into the global economy which could potentially improve lives over and over again. That is the power of capitalism. It is the ripple effect of people empowering themselves and their families. The more they make, the more they spend and the economy grows.
I hope that you check out Kiva for yourself and join in on the next $1 billion milestone!
feature image: “20110805 Microloans give Maghreb youth economic boost | القروض الصغيرة تدعم الاقتصاد المغاربي | Les microcrédits donnent un nouvel élan à la jeunesse du Maghreb” by Magharebia is licensed under CC BY 2.0