Spirit: Changing Lives

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From the comfort of your personal space here in Northern California, you can donate to Joyce Owusu, who is in Ghana trying to raise $800 to improve her clothing store. Or funds can be raised for Sieni Toa in Somoa, who needs $800 to buy a refrigerator to store fish.

So far Kiva has helped.

Microlending helps entrepreneurs in developing countries who may have a few cows, a few rickshaws, but little in the way of collateral or credit to present to banks, Shah says. “Access to capital is such a massive problem and that continues the poverty trap,” Shah says.

The concept is particularly appealing to individuals who like the transparency Kiva offers through its updates. How it works is that lenders make their loans using credit cards through PayPal. Entrepreneurs have a fixed time-frame, usually a year to 18 months, within which to repay the loan. Once the money is repaid, lenders can take back their money or choose to invest it with another entrepreneur.

“I’m sure 1,000 people have had this idea,” Shah says about Kiva. But it was the convergence of a lot of fortuitous things that led to its emergence, he adds.

Kiva is the creation of husband and wife Matt and Jessica Flannery. The couple spent time in East Africa in 2004 filming businesses that had benefited from microloans while Matt Flannery was a student at Stanford. Matt, Kiva’s CEO, left his job as a computer programmer at TiVo Inc. in 2005 to devote his time to Kiva.

But it took more than just one couple’s belief in microloans for the concept to catch on. “I don’t know if Kiva would be around if it wasn’t for the blogsphere,” Shah notes.

Shah, also a Stanford graduate, received a grant to study microfinance in India while in college. He left PayPal where he was a principal product manager to come to work for Kiva because he says it was the right thing to do. Because of the positive vibe the site engenders, web heavyweights such as PayPal and Google provide free service to Kiva. And YouTube provides free advertising.

The company has even rolled out a Kiva Fellows program, giving unpaid volunteers a chance to further the cause by chronicling the lives of the entrepreneurs being helped by the site.

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