The Kiva Concept

The set up of Kiva reminds me of child sponsorship in that a donor is matched up with someone who is in need. Organizations such as Compassion International and World Vision have set up child sponsorship programs so that you can communicate through letters and see progress on how the child is doing. Similar, Kiva offers that relationship between the donor and the entrepreneur to see how their business is coming along. It is also interesting to note that this is simply a loan the donor is providing to the entrepreneur, they get their money back in return, which is unlike child sponsorship. I think the Kiva concept is a great breakthrough for helping to alleviate world poverty. Overhead costs are lower with Kiva because they use e-mail as a form of communication between the donor and the entrepreneur. With child sponsorship there is always the cost of sending hand written letters, the time it takes to get there, even the initial package of information you receive in the mail costs money to send as well. Kiva conducts most of its business on-line to reduce these overhead costs. The cost to the donor is very low as well because they can expect to receive the loan back in 6-12 months. Kiva is also smart in that they partner with other micro-financing organizations to find entrepreneurs in need of a loan. These organizations are already set up and are just waiting for a company such as Kiva to come alongside and help them to achieve their goal to secure loan money for these small business owners in need.