Not all bad things in this article, but there may be better ways to microfinance those who need these types of loans (microplace.com)?

http://www.nytimes.com/2009/11/09/business/global/09kiva.html

Confusion on Where Money Lent via Kiva Goes

Kiva may attract 'new' money, as it's fun and interactive - you get to choose exactly whom you benefit. While fun, I didn't like the experience of having to actively 'reject' so many others in the process, so that emotional interactivity backfired me.
I wonder if there's an American organisation which works in the same way as Traidcraft Exchange.
http://www.traidcraft.co.uk/about_traidcraft/how_traidcraft_works/traidcraft_charity
They don't loan money, they use gifts in different ways to help people in business in developing countries. They don't ask for their money back (though you as a donor can get your original capital back at any time), but I've often read how people who have benefitted go on to either employ or train others.
Donations are handled through an umbrella organisation which only charges a 5% fee. It's a UK charity, so taxpayers opt for Gift Aid (so the Govt adds tax to your donation).
"We process donations and reclaim Gift Aid for our member charities, and charge a small fee for our service. It works like this:
       1. When you donate �10 on our site, we send 100% to the charity by the end of the week.
       2. We reclaim Gift Aid from the government, which takes about a month, adding �2.82 to your donation.
       3. It�s only when we receive the Gift Aid that we charge our 5% fee, along with credit/debit card/PayPal charges, and send the rest to the charity. If you are not a UK taxpayer and we can�t reclaim Gift Aid, our fee comes out of your donation. Since over 85% of donations through JustGiving are eligible for Gift Aid, our charities always end up raising more with us.
    So, for every �10 you give as a UK taxpayer, the charity receives almost �12, and they get it much faster than they would otherwise."
http://www.justgiving.com/how-justgiving-works/
As a UK company, I wouldn't think they are geared up for international donations, and Gift Aid wouldn't apply to those, but there may be a US similar company?

There were discussions about this at Kiva Forum itself.

Here in Brazil interest rates in banks are very high, and to get one you have to fulfill many requirements.  If you don't have a formal job or run a formal business, they won't lend you a cent.  So this type of people only have access to informal loans, which charge absurd interest rates - and not rarely threat you if you can not pay for some reason.

What the NGOs associated with Kiva do is to get bank loans (if not getting from Kiva) at "normal" rates - which, as I said, can still be very high - but lower than the "sharks" charge, and lend this money to the needy people.  Of course they have to charge interest rates higher than the bank asks them, so they can cover their costs.  NGOs are not voluntary work.  These intermediates may even make a living out of it, and I see nothing wrong.  They are still better to the poor people than the sharks.

It seems Kiva does regular checks on these NGOs.

Remember that "microloans" is an initiative that began in Bangladesh and even received a Nobel Prize (http://en.wikipedia.org/wiki/Grameen_Bank). I think very few initiatives are so successful, because it is not charity, it is a way to help people achieve a better condition through their own work.

There are microloans in Brazil, but from funds with donated money.  I have already emailed a couple of these institutions telling about Kiva, but maybe they already get the support they need.

Of course, we all can run microloands ourselves, and my family has done it a lot, lending money to maids, janitor, taxi driver, etc - people we know and trust.  But it is good to count on a company liek Kiva, from which I never heard anything suspicious.

Today I checked my Kiva account and discovered that I have reached 100 paid-back loans. It feels so good to have helped so many people in just 2 years.

I have not seen Burundi in Kiva before, and decided to pick them for a loan today, cpunting towards our MSG Kiva group.

http://www.kiva.org/lend/208536

I hope others here will help finance this loan.

My second choise was this group in Uganda, through a field partner that has a longer record in Kiva, but I had already finished my credit balance:

http://www.kiva.org/lend/207592

I really dont know what is going about there. About 50 peoples in photo needs 5000$ ... Blahhhhhhhhhhhhhh

I'd better keep my mouth shut but you are right. After Maria's post last March, I checked out some "projects" in Northern Mindanao, where I happen to live a large part of the year. I particularly checked out a couple of projects in places I have very good contacts. Those projects smelled... (deleted) ... Don't want to spend money on a Kiva-lawyer, although I can prove my points.

I particularly checked out a couple of projects in places I have very good contacts. Those projects smelled... (deleted) ... Don't want to spend money on a Kiva-lawyer, although I can prove my points.

I'm disappointed to hear this. Is it possible you can give some general indication of what issues concern you? I doubt that Kiva are minded to instruct expensive lawyers anyway as they are themselves a non-profit organisation. It's not as if they have serious vested interests of their own at stake.

I've lent on a few projects and it has all seemed above board to me. All my loans so far have been repaid in full and usually early. Other than the voluntary donations to Kiva for administration purposes at the start of the loan it has cost me nothing.

There is always a cost to raising money for charity and naturally that cost tends to be much higher when the charity is based in the Western world. Kiva seems to be a relatively efficient means of loaning much needed money to hard-working people to improve their lives. It is always entrepreneurial people who are prepared to take risks who improve the lives of those in their communities.

I'm disappointed to hear this. Is it possible you can give some general indication of what issues concern you? I doubt that Kiva are minded to instruct expensive lawyers anyway as they are themselves a non-profit organisation. It's not as if they have serious vested interests of their own at stake. ... It is always entrepreneurial people who are prepared to take risks who improve the lives of those in their communities.

Sorry for my late reply. At that time I was on travel, then back in Europe. I can't judge projects in other countries than the Philippines, just the two I saw in Northern Mindanao. It was about two local convenience stores or sari-sari shops. I could write a book about the economy of those but to be short: it's the kind of little enterprises that lose money and that magically stay afloat, since a cousin in Dubai or the US (better) shoulders the losses. Sari-sari stores are just to keep mom and grandmom busy.

They buy their stuff not even with a wholesaler but in another shop in town, and they carry it all back home by public transport (jeepneys) where they sell it 10% higher. Considering some goods will expire, eaten by mice and rats, stolen, robbed, - 10% is not profitable. But those people never count their working hours. Gross income for a Filipino = profit. The whole country lives on that assumption. Must be microstockers. 

When a sari-sari store at a location is successful (= breaks even without working hours and investment in the store, or has a minor loss), people in the neighborhood get jealous or curious, and one of them will build a crap sari-sari store nextdoors, then another one at the other side of the road. Those 3 will compete each other to death lowering their prices till none makes even a profitable cash-flow. Luckily, there are the cousins in Dubai and the US sending them money from time to time to survive. The whole scheme is not business, but keeping people busy to fight boredom.

I had a look at the local partner of KIVA, and I read the blog of a girl that was a KIVA field officer for a while in my area. It was a tourist that probably never went to the remote villages where the NPA (Maoist guerrillas) rules. The stories on her blog sounded quite naive. The collectors drove by motorcycle in that area and never got robbed, carrying fortunes (in local terms). Come on. In an area with 70-80% unemployment, desperados have all the time to follow you and rob you for 10$. Yet, on the site, they claimed to have 100% recovery. Come on...

Then, the "entrepreneurs" have to come to the office in the big city to collect the loan. The fare from the faraway village represents 20% of the loan. Come on... if you subtract the fuel and the time of the collectors, it all doesn't make sense. Nothing in the Philippines involving money does make sense. Most of all, any profits are killed by the rampant corruption: bribes to politicians and police take up a lot. I really can't give details or I get evicted.

I subsequently applied to be a KIVA officer online, but it turns out they prefer tourists, and that I had to follow a seminar first in San Francisco. Yeah right. It's certainly not fraud, just ignorance about how money really works and flows in an under-developed poor country. People will sell their soul, their wife, daughters and kids to have some. Apart of foreign money (the cousins and aunties) a part of the cash economy (people don't use banks) thrives on shabu (a drug).

What can you do? Certainly not whine. Misery is so rampant at some places that I spent a lot out of my own pocket, I'm ashamed to say. Sure I have been fooled (and robbed) too, but not as much as the NGO's. At the moment, I'm in contact with a local (Belgian) charity that focuses on the poorest kids and claims to have zero overhead costs. I will insist on my own QC with the recipients myself (or better locals I trust). If anybody is interested, I'll post a follow-up later. It has to do with the only investment that matters in the long run: education. There are grade-schoolers around that had to skip 2 years and idle around in their slums, just because the family can't pay the school uniform (5$) and the school fees.

You have to be very careful though. I heard (from locals) about charity recipients that walk around with iPods (5 months wage of a grade school teachter). How they got it? I have some ideas. Poverty makes some people ingenious and shrewd, and borderline criminal. I heard the same stories from a friend in Chennai (India). Nevertheless, there are many cases of extreme poverty that fall totally under the radar because they don't have a clever "friend" or "cousin" that can write up a proposal for Kiva for a fee of 50%. You need to look for those actively, making your boots dirty.

By long experience, I can only testify that of the large NGO's the Red Cross does the best work in the field. The reason is that the Red Cross works with local volunteers, that know the culture and how money works. By the scale and the experience, the Red Cross also has very good auditing and accountability schemes. The only problem for a donor is that a gift to the Red Cross will apparently disappear in a large pocket, and you can't "feel" your gift did any good. But in my humble opinion, it does much more than a gift to you-know-who.