Can You Trust Kiva?

kiva-social-lending

Thank goodness for altruists among us. There are many Americans, Brits, Canadians, and others who won’t blink when asked to help people in need all over the world. Every society is blessed by their members who freely and willingly reach out with a helping hand.

Kiva is a social lending site that brokers private loans between well-intentioned individuals in the ‘developed’ world with cash-strapped entrepreneurs in the developing world. This is a crucial crowdsourcing service because it helps much-needed capital flow to areas of the world where capital is tight.

As can be seen in the heart warming and uplifting story of Bangladesh’s Grameen Bank, microlending can truly change many poor peoples’ lives for the better. Grameen enabled many rural women who barely had anything to eat become successful small-scale entrepreneurs who can now provide for their families.

Kiva follows the path blazed by Grameen: by providing microloans to budding entrepreneurs it aims to combat poverty in the Third World. The problem, of course, is the issue of trust. Borrowers need to be vetted to ensure that the money offered by good-hearted lenders aren’t stolen. Given the huge distances involved and the cultural gap, many people, understandably have second thoughts when it comes to lending on Kiva’s platform. Here are some tips to help you gauge whether you should extend credit via Kiva.

Is the borrower connected with a NGO?

If an NGO (non-governmental organization) is vetting for the borrower, the chances of the borrower being legit is better than otherwise. Still, this fact alone is not dispositive because there have been some cases in the past where the NGO itself is a fraudulent organization or used by a militant organization to raise funds.

Do a quick search on the NGO to see if everything is on the up and up. You should be able to turn up the name of the head of the NGO, run a search on that person. You might be surprised by what you turn up. Of course, you have to also do a search on the person doing the lending.

Fund only very very small requests

Not everyone on Kiva asks for sizable loans. Some ask for a very small amount of money. We’re talking about a fund less than $200 in some cases. In these cases, you should still do due diligence but since the funds involved are so small, many lenders can live with the fact if the funds don’t get repaid.

Still, you should look at Kiva’s ranking and feedback system and give out small loans only to people that have good rankings at the site.

About The Author

Edwin is a marketer, social media influencer and head writer here at Daily Finance Options. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.

 

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