Microfinance - A Tool For Corporate Social Responsibility

Kiva is a leading facilitator in the world of micro-lending. Micro-lending is the process in which an individual can lend relatively small amounts of money to the underprivileged around the world. The benefit of this type of lending is dual. First, it helps individual Internet users become socially responsible and it stimulates the economy and supports families in underprivileged communities by providing the capital necessary to maintain or start a business.

Social Responsibility

Social responsibility is the idea that businesses should account for performance socially and ecologically. Generally, discussions on social responsibility apply to corporations, known as corporate social responsibility or CSR. If you are an entrepreneur and are interested in building a business model around social responsibility, Kiva is a useful tool for investing. By partnering with microfinance institutions around the world, Kiva connects lenders with those who need a financial boost.

The Lending Process

When considering an investment strategy, always spend time researching your venue and assessing your risks. There are important factors to review when considering lending internationally including devaluation and politics.

Kiva enlists microfinance institutions around the world called Field Partners. Field Partners locate members of their community who need assistance. Once an individual is identified, the Field Partner snaps a picture and records their story. They then populate Kiva's website with profiles of selected entrepreneurs who need assistance.

Kiva's website is designed so lenders have total control over the loan selection process. Simply browse the site for an individual you would like to lend to by selecting "fundraising" from the Find Loans drop down menu. Once you find a fundraiser of interest, select their profile for a detailed overview. The site will provide information on how much money is requested, how much has been raised and the number of days remaining to fund the loan.

Once you have selected someone you would like to lend to, you can fund the loan via PayPal or your credit card in increments of $25.00 USD. Loans are repaid monthly to your account over a period of six to twelve months. You have the option of lending to another Kiva fundraiser or receiving the funds to your PayPal account.

Assessing the Risk

With all investments, risk assessment is an important part of the process. Kiva's website provides some tools for assessing the risk of lending through their Field Partners. Kiva utilizes a 5 star rating system based on a number of financial indicators and time. Additionally, you can gain some understanding of Kiva's customer base by sorting by "Ended with Loss" from the Find Loans drop down menu. At this time, there are substantially more loans categorized as "Paid Back" than there are having ended in loss.

In summary, socially responsible investments provide relief to members of underprivileged communities. Making investments with Kiva is a simple process that allows everyone an opportunity to impact someone else's life. Make sure you research your investment venues before you lend.