I’ve written a bit about the benefits of donating to charity before, both in terms of tax benefits and in terms of how it makes you feel. Of course, there are many sorts of charity that don’t have a tax benefit, such as handing a few dollars to the homeless person you pass every day or dropping your change into a bell ringer’s pail during the holidays.
Something else that falls into that category is making a loan through Kiva. Kiva is a micro-lending site, allowing lenders to lend directly to entrepreneurs in developing countries. Lenders browse the site to find a person they want to lend to and how much of the loan they want to fund (usually $25-$50). Most of the loans have terms of six to twelve months, during which time the borrower pays back the money in small increments and makes short journal entries to discuss their progress.
At the end of the loan term, Kiva deposits the loan amount back into the lender’s account. The majority of borrowers repay their entire loans, but there is a risk that they will not be able to repay the full amount. The lender can then choose to re-loan the money or withdraw it back into their bank account.
There is no interest earned on these loans. Additionally, because it is a loan and not a donation, it is not tax deductible. But should that matter?
I made my first Kiva loan earlier this month and am eagerly awaiting reports on the progress that the woman makes on her business. It really brings home the idea of how much we can do for someone else with something so small. What was I going to do with the money? Given my budget lately, probably spend it on groceries. What is she going to do with the money? Build her animal sales business. And then she will repay it (hopefully!) and I can lend it to someone else to help them achieve their goals.
From everything I’ve read, people are delighted with their experiences as lenders with Kiva, and I’m excited to be a part of that group.