NSLC 2010Premal ShahPresidentKivawww.kiva.org

Parth ShahNational DirectorKiva High Schoolwww.kivahighschool.org

"Revolutionising how donors and lenders in the US are connecting with small entrepreneurs in developing countries”

What is Microfinance?

• Microfinance = small capital• The poor are typically excluded by financial service providers:

• No collateral• No credit history• Illiteracy

• The poor need financial services, and already use them informally:• Borrowing money from loan sharks with interest rates so highthat it may be impossible to ever pay back• Savings accounts kept in the home, vulnerable to theft• Investing in livestock which is vulnerable to disease

• Microfinance works to provide the poor with these financial services, in a• Safe and controlled environment, through a microfinance institution

Give a man a fish, feed him for a day.Teach a man to fish, feed him for a lifetime.

What if he knows how to fish,but just can’t afford a fishing net?

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Microfinance Institutions

• Some focus on women in places where women don’t have the same rights as men and so have no economic

empowerment

• Some focus on the rural population in areas where people are isolated and cannot travel to cities to access

services

• Some focus on a comprehensive program which includes business training with financial products

• Some focus on women in places where women don’t have the same rights as men and so have no economic

empowerment

• Some focus on the rural population in areas where people are isolated and cannot travel to cities to access

services

• Some focus on a comprehensive program which includes business training with financial products

There are thousands of microfinance institutions around the world, and they all vary a little depending on the

region they are in and people they are targeting to help

What ties them all together, however, is a desire to help the poor by providing them with financial services

Microfinance Institutions

Entrepreneurs

Banks and NGOs

• Microfinance institutions typically get the money that they lend, from banks or non-governmental organizations, or both

• This can be expensive, as it is often borrowed with interest

• There may also be difficult application procedures to access debt capital from non-governmental organizations

• Some organizations can even find themselves shut out due to the region they operate in, particularly post-conflict regions

• Restrictions that microfinance institutions face ultimately affect the entrepreneurs, who rely on microfinance institutions to serve them

Traditional Microfinance Lending Process

Why loans rather than charity?

• Dignified Business Transaction• Spreading opportunity, rather than charity• Sustainable

– A Hand-up not a hand-out!– Spreading opportunity rather than spreading

wealth

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"Don't ask what the world needs, do what makes you come alive; because what the world needs most are people who have come alive." -- Howard Thurman

Guiding personal principle

Sophomore slump

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“Ali

ve-n

ess”

Key milestones and how ‘alive’ I felt

SEWA Research

Project

Management Consultant in New

York

Joined small start up: PayPal

Personal discovery of Microfinance

Leave for Kiva.org

PayPal acquired by

eBay

Big company – “do I matter?”

angst

“I got this idea”

OMG it’s working!

33Age

InternetLender

Online marketplace

Local Partner(MFI)

Entrepreneur

Money

Information

Kiva 101

550K people lent $120M to 200K entrepreneurs in 4 years

Other Key Stats• Growth: $1M loans every week• Repayment Rate: 97%• Recycle Rate: 65%• MFI Portfolio: 115 MFIs in 50 countries. Growing 3 a month.• Traffic: 40,000 visitors / daily• Organization: 35 employees / 500 volunteers • Leverage: $10 in loans for every $1 donated.

5 yr goal = $1 Billion

Kiva utilizes 4 “Web 2.0” principles

1. Create an “Addictive” User Experience

2. Be “Radically Transparent”

3. “Crowdsource” against constraints

4. Build in “increasing returns on data”

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Create an “Addictive” User Experience

“Addictive” = Easy + Fun

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How Kiva tries to make it “Easy” Designed for everyday people, not affluent experts

“I can see the person I’m lending

to…”

Low cost to entry

Business relationship based on mutual dignity,

not pity

Quick and easy

checkout

How Kiva tries to make it “Fun” Badging, Teams, fast changing UGC, stats...

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Loans are fully funded in hours

Transactions happen every 18

seconds…

Real time un-edited

updates…

Randomized “1 minute of

fame “ + Lending Teams…

For some, Kiva is becoming very addictive!

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Be ‘Radically Transparent’

Transparency Authenticity Trust

Kiva and Radical Transparency

Paying for Kiva’s overhead is an explicit choice

Kiva and Radical Transparency

Data inaccuracy and defaults are made explicit

“Crowdsource” against constraints

Big constraint? + No resources? =

Crowdsource

Kiva and “Crowdsourcing”

Kiva Fellows Program

How do we train MFIs, gather progress updates and verify data accuracy hyper-fast?

Kiva and “Crowdsourcing”

Kiva Translator Program

How do we immediately translate entrepreneur profiles from native language to English?

Build in “Increasing Returns on Data”

Leading public platform + Data integrity

“Increasing Returns on Data”

Public reputation system for MFI Risk and Social Performance

Social Rating

Risk Rating

Kiva Social Rating

Kiva Risk Rating

Result: 30,245,763 loans found

Kiva and “Increasing Returns on Data”

World’s largest DB of microfinance investments

Long Term: Entrepreneurs could use Kiva as a public credit bureau…

Short Term: MFIs could use Kiva to build credit worthiness to other funders…

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Kiva High School

Mission - to bring together and organize high school students interested in fighting poverty on both a local and national scale.

How does Kiva High School Work?

1.Starter-Kit • What is Kiva/Microfinance/Kiva High School? • How to setup a chapter• Chapter fundraising ideas• Chapter finances

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Kiva High School

What does Kiva High School bring to your school?

•Awareness of global issues such as poverty

•Give high school students a platform to make a powerful impact

•Show the capacity of microfinance and the ripple effects of your loan

•A network of like-minded students that are unified through a central organization

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Kiva Fellow Video

http://fellowsblog.kiva.org/2010/03/11/12745/

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Thank you and questions