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Natural Awakenings Chicago

Microloans: for a Better World

Mar 26, 2019 09:56PM ● By Michael Marmel

Kiva, which means unity in Swahili, is a nonprofit organization founded in 2005 by Matt Flannery and Jessica Jackley after attending a class on theoretical microfinance at the Stanford School of Business. They were so inspired by what they heard they decided to open a crowdfunding company to loan money to people living in extreme poverty, allowing them to start businesses, pay tuition, invest in their farms, make community improvements and more.

        Extreme poverty is defined by the World Bank as living on less than $1.90 per day. At first, the two were skeptical that people living in extreme poverty could be loaned money instead of being given monetary gifts outright as in the past. During the first year, only $3,500 was loaned. By the end of the year, though, 97.1 percent of the money was repaid. Flannery and Jackley had founded the sustainable microcredit concept through Kiva (

        To date, Kiva, which is funded by individual donors, has loaned more than $1 billion to more than 2 million borrowers around the world. Notable donors include Reid Hoffman, founder and CEO of LinkedIn. Lending to Kiva is especially attractive with the new tax law, which makes charitable donations non-deductible if they are less than $12,000 for singles and $24,000 for married people. This means that lending, which is also not tax-deductible, is on an equal footing as charity donations.

        Setting up an account with Kiva is simple, and their website is extremely user-friendly. After providing a bank account from which the loaned funds will be taken, the user is given the option of choosing which causes they would like to lend to. Patrons can choose for example, women, or refugees, or women refugees. The next step is to choose someone specific for the loan—every recipient’s profile comes with a picture, the amount they need and a short description of their predicament. The default loan amount is $25.

        Kiva can locate, vet and communicate with those in need through its field partners, which are paid using the interest taken on the loans. Interest is 10.4 percent, and the loan is payable after 12 months. The newest concept within Kiva is Direct Loans, which are interest-free, and truly provide the highest level of giving.

        The benefits of the microloan industry cannot be underestimated. For example, if a goat farmer receives a $25 loan to buy a goat, he then passes that $25 to the goat seller, which pays the $25 to his child’s school, which gives the $25 to their bus driver, that uses the $25 to buy groceries in the market, and on and on. Consequently, the actual impact of a $25 loan is massive. The fact that it is paid back after a year means that there is minimal impact to the lender.


Michael Marmel is the owner of Marmel Accounting, located at 4433 W. Touhy Ave., Ste. 525, in Lincolnwood. For more information, visit and