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[P]
Kiva: The Power of Small

By xC0000005 in Op-Ed
Sun Oct 14, 2007 at 10:38:37 AM EST
Tags: Kiva, microlending (all tags)

Mamadou Faye is a goat herder in Senegal. We've never met, probably never will. For the last year I've watched each month for an update on his business. Each month I waited for news on how his venture progressed. This business partnership wasn't forged in the humid lowlands of Senegal, I did it from my laptop, in my own home. We met through Kiva. With $25, a paypal account, and a desire to do some good Kiva connected me to this man in Senegal and in doing so revealed the power of small.


Small Loans
Kiva itself is a front, a sort of backing bank for agencies that offer microloans. A microloan is a loan in an amount that normal banks don't traffic in. A loan with a term so short normal banks don't deem it worth their time. A micro-loan can also be the key to change. Micro-lenders deal with a populace who are often extremely poor by first world standards. The mechanics of profit are no different for these people than for any other with one critical exception - they have much less of it. Taking out a $20,000 loan would be unthinkable for many Kiva clients - they might not make that much in two decades. The truth is that to improve their lives they often need far less. They compensate by having more reasonable goals.

My brother once took out a loan for $250,000 to start a business. His goal was clear - to get the business running, pay off his debt, and then live on the income generated by it. The borrowers on the other end of the Kiva connection have similar goals but on a smaller scale. A common goal is, for instance, to eat better. One business I loaned to noted that they could now afford meat once a week. Other times the goal of a loan will be to fund education for the year. The family can probably afford tiny monthly payments but the up front school costs are prohibitive, and in many countries school does not start for you until your parents pay up in full. Mamadou wanted a loan to buy goats. He would buy the young goats, raise them on the land, and sell them for meat when they were older. When I choose my loans I'm looking for someone who wants to do what they know. If you want to lend $1000 to the bushman to learn to play concert violin, be my guest. I believe a goat herder knows how to raise goats and thus has a reasonable chance of success.

Small goals
The businesses you see on Kiva might look markedly different than one would expect. For instance, a $200 loan request to buy a cow. Once mated that cow will give milk every day. A common business is to sell the milk by the glass. The same cow can be bred, continuing the chain of wealth. Manure from the cow will be used as fertilizer for a family plot. Another common business might be to purchase cell phones and calling cards. The cell time is then sold by the minute to people who do not have a phone. Such "phone rooms" are common in some countries. Food preparation is another common business. Buy the ingredients, make the food, sell it at a road side stand. You have nothing to sell if you have no ingredients, you have no money with nothing to sell. A bank won't glance at one of these people, so poor the only collateral they hold is their own good word. A micro-loan agency caters to this market.

A common objection to microloans is that they take business away from a country's banking system. Many of the people receiving microloans are actually in a financial state that leaves them below the realm of normal banks. Micro-lenders aren't cannibalizing the banking market in these countries, they are catering to a different group of people. The only security for many of these loans is a person's good word, and that is a powerful motivator in many cultures. You'll also see women's solidarity groups, where a group of women pool their money to finance one member each month. The other women in the group will pick up the debt if one cannot pay. It is honor and sisterhood that secure those loans.

Twenty five dollars. Half of what any next-gen game costs. Less than many of us spend on a meal. Through the power of currency exchange that $25 goes a long way. Some projects require more than $25, and for that lenders band together. I give $25, you and a dozen friends do as well. Together we finance a butcher shop in Mexico.

Small changes
So you lend $25 and it goes to a person in need of a loan. They invest the money. They work through and pay the loan. The loan officers send infrequent reports on how the business is doing, sometimes even with pictures. As the borrower pays back, the money accrues until finally the loan is paid off and the money is transferred back to you. At that point you can choose to re-invest or withdraw your funds. And what if disease strikes a family, or the livestock die, or the crop fails? You are out $25. There'll be no driving to Africa to reclaim it, no fire sale of collateral to recover pennies.

Your loan is not a donation: you expect that the money will be repaid. You'll rest easier if you pretend it's gone. I lent money to one project that experienced some serious problems. It helps to remember that often you are loaning money to places with corruption problems that make the International Olympic Committee look like bastions of virtue. And while it's a loan, you aren't recovering interest. The micro-lending agency is. This is a common point of concern - if I'm providing the capital interest free, shouldn't the loan agency? No. The loan officer needs to eat. The loan agency needs to make a profit to set aside and build its own lending reserve. The partners will charge interest (interest that seems high by normal loan standards). Doing so creates a sustainable business where every successful loan builds into the cycle, allowing others to be helped. Kiva claims they monitor the interest charged by their partners and only allow "reasonable" rates but with a term of six months and loan amounts like $125, interest will always be high. Your "interest" is connection to other human beings.

Mamadou paid off his loan this month in full, one month early. I plugged the money back into new loans. I won't be gaining money on these loans. Just a sense of connection. Just a hope that somewhere in the world I can make a difference. If somewhere tonight a child eats better; if this year they sit down to school, if this time they can afford the medicine, that is enough. I accept these things as proof of the power of small.

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Kiva: The Power of Small | 91 comments (71 topical, 20 editorial, 0 hidden)
i'm going to start a website just like this (2.78 / 23) (#1)
by circletimessquare on Fri Oct 12, 2007 at 08:05:27 PM EST

and call it "shiva"

as in the destroyer

instead of making small loans, it provides ak-47s for people in oppressed countries


The tigers of wrath are wiser than the horses of instruction.

I endorse this idea (3.00 / 3) (#12)
by nostalgiphile on Sat Oct 13, 2007 at 12:19:12 PM EST

and would welcome the opportunity to directly sponsor a Chinese worker's AK47...W/stipulation that he not use it against any Taiwanese, of course. Engraved on side, in my own elegant ideograms, would be: "only to be used for purposes of making the Man go meet Marx."

"Depending on your perspective you are an optimist or a pessimist[,] and a hopeless one too." --trhurler
[ Parent ]
s/Marx/Mao/ (3.00 / 3) (#13)
by BJH on Sat Oct 13, 2007 at 01:31:30 PM EST

只被使用為做政府官員 的目的是集會毛澤東
--
Roses are red, violets are blue.
I'm schizophrenic, and so am I.
-- Oscar Levant

[ Parent ]
or how better we say (none / 1) (#14)
by nostalgiphile on Sat Oct 13, 2007 at 03:08:08 PM EST

...政府官員或'業餘洋鬼'<--i.e., "Amateur foreign devils" (to borrow Lu Xun's term).

"Depending on your perspective you are an optimist or a pessimist[,] and a hopeless one too." --trhurler
[ Parent ]
Impotent rage. (none / 1) (#54)
by V on Mon Oct 15, 2007 at 04:14:31 PM EST

Beautiful.

V.
---
What my fans are saying:
"That, and the fact that V is a total, utter scumbag." VZAMaZ.
"well look up little troll" cts.
"I think you're a worthless little cuntmonkey but you made me lol, so I sigged you." re
"goodness gracious you're an idiot" mariahkillschickens
[ Parent ]

what's impotent about it? nt (none / 1) (#65)
by circletimessquare on Tue Oct 16, 2007 at 11:47:06 AM EST



The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
There's nothing he can do (none / 0) (#66)
by V on Tue Oct 16, 2007 at 04:58:02 PM EST

to change the fact that the PRC is the ruler of all China.

V.
---
What my fans are saying:
"That, and the fact that V is a total, utter scumbag." VZAMaZ.
"well look up little troll" cts.
"I think you're a worthless little cuntmonkey but you made me lol, so I sigged you." re
"goodness gracious you're an idiot" mariahkillschickens
[ Parent ]

there's nothing osama bin laden can do (none / 1) (#67)
by circletimessquare on Tue Oct 16, 2007 at 05:23:39 PM EST

to end the united states

but i wouldn't call him impotent

i think you lack imagination, and a love of stasis

The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

That's because you are scared of every (none / 1) (#70)
by V on Tue Oct 16, 2007 at 06:48:01 PM EST

raghead you see.

Osama is impotent but compared to you he is a monster.
---
What my fans are saying:
"That, and the fact that V is a total, utter scumbag." VZAMaZ.
"well look up little troll" cts.
"I think you're a worthless little cuntmonkey but you made me lol, so I sigged you." re
"goodness gracious you're an idiot" mariahkillschickens
[ Parent ]

that's a racial slur you ignorant turd (none / 1) (#71)
by circletimessquare on Tue Oct 16, 2007 at 07:01:41 PM EST

and yes, i am afraid of committed militant fundamentalists with a proven track record of mass murder

why aren't you?

osama is impotent?

how many murders of innocents, most of them in the muslim world, btw, can be traced to him?

that's impotence in your mind?

how exactly does someone as ignorant as you figure out how to use a computer?


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

ZOMG!!!111 Someone call the PC police!!!!ones (none / 0) (#72)
by V on Tue Oct 16, 2007 at 08:13:26 PM EST

Good question. How many murders can be traced to Osama? (Hint: The answer is much less than you think.)

Even if  your delusions where true Osama would still be impotent.

Unlike you, I'm not afraid to die and I don't give any power to bogeymen and witches.

V.
---
What my fans are saying:
"That, and the fact that V is a total, utter scumbag." VZAMaZ.
"well look up little troll" cts.
"I think you're a worthless little cuntmonkey but you made me lol, so I sigged you." re
"goodness gracious you're an idiot" mariahkillschickens
[ Parent ]

hey, internet tough guy (none / 1) (#75)
by circletimessquare on Tue Oct 16, 2007 at 11:03:54 PM EST

osama is real, he's not a bogeyman

and i'm glad you are not afraid to die. i don't think you have much to live for anyway

me, i am afraid to die, and i worry about those who work hard to kill me


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

"internet tough guy" (3.00 / 2) (#76)
by V on Wed Oct 17, 2007 at 02:29:19 AM EST

Coming from a guy with fantasies of fighting evil over TCP/IP with myspace deathsquads. LOL.

Osama is the idea that someone with a rag in his head is out to kill you because he hates your freedom. Might as well be afraid of the tooth fairy.

V.
---
What my fans are saying:
"That, and the fact that V is a total, utter scumbag." VZAMaZ.
"well look up little troll" cts.
"I think you're a worthless little cuntmonkey but you made me lol, so I sigged you." re
"goodness gracious you're an idiot" mariahkillschickens
[ Parent ]

so your beliefs (none / 1) (#78)
by circletimessquare on Wed Oct 17, 2007 at 02:42:24 PM EST

depend upon the fact that osama bin laden and al qaeda and their track record is fictional?

(snicker)


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Wowowa UR so Coolz! Not afraid to diez! NT (none / 1) (#88)
by mrcsparker on Thu Nov 01, 2007 at 12:32:11 PM EST



[ Parent ]
Heh. I KNEW it. (3.00 / 2) (#53)
by livus on Mon Oct 15, 2007 at 04:00:01 PM EST

"what you seem to be describing is Kiva." - my comment to your story.

---
HIREZ substitute.
be concrete asshole, or shut up. - CTS
I guess I skipped school or something to drink on the internet? - lonelyhobo
I'd like to hope that any impression you got about us from internet forums was incorrect. - debillitatus
I consider myself trolled more or less just by visiting the site. HollyHopDrive

[ Parent ]
Shiva:Loans that End Lives$ (3.00 / 3) (#56)
by xC0000005 on Mon Oct 15, 2007 at 04:26:47 PM EST



Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]
shiva:killing da evil aholes da whiny aholes wont$ (none / 1) (#58)
by circletimessquare on Mon Oct 15, 2007 at 04:30:08 PM EST



The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
how's the revolutionary fund raising going? $ (none / 0) (#83)
by LilDebbie on Sat Oct 20, 2007 at 01:18:56 PM EST



My name is LilDebbie and I have a garden.
- hugin -

[ Parent ]
too complicated (none / 1) (#84)
by circletimessquare on Sat Oct 20, 2007 at 02:38:59 PM EST

so i outsourced it to india

...and now that i said it, that actually makes more sense than the stupid jokes sounds


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

lol tell me when ur halfway there (none / 1) (#85)
by LilDebbie on Sat Oct 20, 2007 at 05:37:46 PM EST

and i'll start working the contacts.

My name is LilDebbie and I have a garden.
- hugin -

[ Parent ]
i did this once (2.44 / 18) (#3)
by Tex two point oh on Fri Oct 12, 2007 at 10:13:59 PM EST

i was going to write a k5 story about it but you beat me to it. i lent $5 to some family in slovenia so they could achieve their life dream and open a laundrymat. six months goes by and what do you know, they're late on payments talking about how i'll get my money when they invent detergent or something like that. needless to say i flew into collect. it wasn't really about the money but i had to break the old guy's kneecaps and surprise sex his daughters for the principle of the thing.

you really are (1.57 / 7) (#4)
by nononoitaintmebabe on Fri Oct 12, 2007 at 10:18:49 PM EST

just the coolest guy. first bees and now this.  
and i want to know how you turned into you.

My guess is he didn't (none / 0) (#52)
by rusty on Mon Oct 15, 2007 at 11:36:54 AM EST

He was him all along. We all are. Right from the beginning.

____
Not the real rusty
[ Parent ]
well that's (none / 0) (#61)
by nononoitaintmebabe on Mon Oct 15, 2007 at 10:05:53 PM EST

just downright depressing. i always like to think all the crummy people can be better some day.  

[ Parent ]
I normally just vote your shit up (3.00 / 2) (#19)
by Josh Smith II on Sat Oct 13, 2007 at 05:33:41 PM EST

because you're the Beeguy. Without really reading much of it that is, I just assume quality and interest.

This however, I read in full. It's well written, interesting, and even powerful. I've looked at Prosper.com and the like for a long time but I never could get into it cause it was usually stupid shit like: "I want to buy an XBox360".

This however sounds a lot better. Do you get a cut of the interest? How much do you get back on average per $25 invested? What's the average loan time? Beats the hell out of "adopting a child in Africa" type shit.

I've said for years that the only way these countries will come ahead is through developing business and pulling themselves up by their bootstraps.

Anyway, +1 FP.

-- Josh Smith recommends you take a hulver hike.

Thanks. :) (none / 1) (#20)
by xC0000005 on Sat Oct 13, 2007 at 07:45:43 PM EST

I get nothing but, as TDS put it in his excellent comment, "conscience prostitution". As for pulling themselves up by their own bootstraps, in just about any country where the dole isn't a basic expectation people are really good at this.

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]
Kinda ghey that (2.50 / 4) (#26)
by Josh Smith II on Sat Oct 13, 2007 at 08:59:09 PM EST

they don't give you a cut of the take. If I could get even 2 - 3% off of my loans it'd make me even more likely to loan out continually. Still gives the microloan people room for making a profit but at the same time it lets me make up for my own losses to debtors over time.

Prosper.com is interesting in that you get a cut of the interest and can in essence become a bank yourself. I think it'll be a really wild way of investing in the near future. Some of these loans go for as much as 15% and all payout within 3 years. Just like with Kiva you can just loan a percent of the total loan and only once a full amount is gathered together will it be given.

-- Josh Smith recommends you take a hulver hike.
[ Parent ]

Sounds good, but I prefer Heifer International at (3.00 / 2) (#24)
by insomnyuk on Sat Oct 13, 2007 at 08:28:32 PM EST

the moment, as they donate livestock to families in need all over the world. It is a loan in the sense that the 'interest' they are required to pay is in the form of them helping others in their community, by giving some of the offspring from their livestock to others in the community. Their operative slogan is 'Heifer turns recipients into donors.'

I'm a big fan of Kiva, and the micro-loans proposals made by that fellow who won a Nobel Prize for it.

---
"There is only one honest impulse at the bottom of Puritanism, and that is the impulse to punish the man with a superior capacity for happiness." - H.L. Mencken

I like Heifer as well. (3.00 / 2) (#27)
by xC0000005 on Sat Oct 13, 2007 at 09:52:15 PM EST

I've used them for a number of donations (bees!). I like their respect for the recipients. I have trouble with their "your gift is a symbolic gift to be redirected as we see fit." I'm an adult. You tell me there's really a need for x, I'll probably understand. Don't say "Give $30 to give ducks" and then redirect it to something else. It seems, well, not dishonest, but maybe, I don't know. Just not the transparency I demand from my charities.

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]
Maybe you should look into getting a new broker. (3.00 / 4) (#25)
by jxg on Sat Oct 13, 2007 at 08:43:29 PM EST



Heard about this on Oprah with.... (none / 1) (#31)
by Calalily on Sun Oct 14, 2007 at 01:32:04 AM EST

Bill Clinton and his new book "Giving". Love the principle behind the idea.

We are maggots tunneling through a rotting corpse. QuantumFoam
Do not delude yourself (2.75 / 4) (#33)
by BottleRocket on Sun Oct 14, 2007 at 02:31:52 AM EST

You are now a banker in a developed nation lending money to the poverty-stricken. I don't claim to have a miracle solution for narrowing the gap between the rich and the poor, but this is not it.

$ . . . . . $ . . . . . $ . . . . . $
. ₩ . . . . . . . . . . . . . . . . . . . .
. . . . * . . . . . * . . . . . * . . . . . * . . . . . *
$ . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . $
Yes I do download [child pornography], but I don't keep it any longer than I need to, so it can yield insight as to how to find more. --MDC
$ . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . * . . . . . * . . . . . * . . . . . * . . . . . *
. ₩ . . . . . . . . . . . . . . . . . . . .
$ . . . . . $ . . . . . $ . . . . . $
$B R Σ III$

Gap? (none / 1) (#39)
by rhdntd on Sun Oct 14, 2007 at 03:01:40 PM EST

Who said anything about narrowing the gap?  Even if an investor did make money this way -- and what the poster is saying is you don't, it's all risk and only feel-good reward -- he'd make $1 and a poor family gets meat.  So what if the gap isn't closed if both sides are happy.

The gap, if it's important at all, will start to take care of itself once people in the poorest countries on the planet start living past 40.

-- 
"book chicks really seem to like anal"
  — Lady 3Jane
[ Parent ]

I like to give meat to 3rd world prossies (none / 0) (#62)
by newb4b0 on Tue Oct 16, 2007 at 12:19:38 AM EST


http://www.netmoneychat.com| NetMoneyChat Forums. No Registration necessary. Ya'll.
[ Parent ]

I went (2.50 / 2) (#34)
by starsky on Sun Oct 14, 2007 at 04:07:51 AM EST

to this site all inspired and ready to loan 25 bucks to some person to whom that money would mean everything.

I get there to find the site has been on "Oprah", and is full of people wanting several THOUSAND bucks.  That's the kind of loan I would get.  

I also am of the opinion that when this thing has been on Oprah and is dishing out thousand there is a high probability it's now going to be organised scam city.

Bah, world proved to suck again :(

FUCKING OPRAH.

I avoid high dollar loans. And I tend to (none / 1) (#37)
by xC0000005 on Sun Oct 14, 2007 at 11:46:13 AM EST

stick with agriculture loans. The high dollar loans don't leverage the currency exchange as much as I'd like, and agriculture is the base of so many other economic transactions.

The oprah-ization of this will pass, such is the nature of all things In a few months, when it's no longer the rage there will still be good to do.

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]

Ok (none / 0) (#40)
by starsky on Sun Oct 14, 2007 at 04:28:15 PM EST

Sorry if this is a dumb question... but do some people actually require 25 bucks or are you contributing 25 bucks of a larger loan?

[ Parent ]
The lowest loan I've seen was $75 (none / 1) (#41)
by xC0000005 on Sun Oct 14, 2007 at 05:00:50 PM EST

for a hundred chickens and feed. It's $25 to a larger loan. When the oprah-ization fades they'll re-instate the ability to fund in $25 increments, so one person could theoretically fund an entire loan. Right now there's a fad to donate this way. More important will be sustained support than a flash flood of it.

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]
from the incorrigible lefty, A. Cockburn (2.00 / 2) (#35)
by postDigital on Sun Oct 14, 2007 at 07:56:02 AM EST

and since I am one who identifies with reprobates:

The Nation - October 19, 2006 (November 6, 2006 issue)
The Myth of Microloans
Alexander Cockburn

For those of you who may not be aware of Alexander Cockburn, he is old school, is one of Counterpunch's foundersand there are many indigenous differences between his world view and mine, but A. Cockburn possesses qualities that make him owrthy of both reading and respecting: temerity, and a will to speak the truth as he perceives it, wherever the chips may fall.

I have enjoyed reading his articles about reknown former lefty flip-floppers David Horowitz and Christopher Hitchens:

Also of note is his brother, Patrick Cockburn, who is one of a handful of Western Iraqi war journalists who venture out not embedded up the ass of a coalition military unit.



(1) The only thing worse than link-whoring (none / 1) (#82)
by LilDebbie on Sat Oct 20, 2007 at 01:16:01 PM EST

is doing it for someone else.

My name is LilDebbie and I have a garden.
- hugin -

[ Parent ]
Nice, but (3.00 / 3) (#38)
by trhurler on Sun Oct 14, 2007 at 02:04:53 PM EST

Honestly, who is still stupid enough to do business with PayPal? I'd as soon gnaw off my own leg.

In case you aren't aware:

1) They abuse their hugely complicated and vague terms of service to randomly freeze accounts and take peoples' money - and unlike the government, there is no real appeal process and they just keep it.

2) They have been broken into more times than have made it into the media, and each time money is taken from users. A guy I know lost $5000 that way. They do not use any reasonable industry wide standards for data protection (which DO exist,) and they simply point to their terms of service when problems do occur - the terms say it is your problem.

3) They have managed to worm their way around federal regulations so that basically none apply to them. They put on airs like they're a financial institution with all the safety that implies, but this is a complete and utter fiction. I'm all for deregulation, but not for deceiving your customers. (Note: they do not actually outright CLAIM to be a bank or whatever.)

Add to this that they are owned by eBay which is known to have all the customer service acumen of Charter Communications or AT&T and you might as well be doing business with Satan.

--
'God dammit, your posts make me hard.' --LilDebbie

OMFG Paypal lost my $25 WAAAAAH (none / 1) (#42)
by localroger on Sun Oct 14, 2007 at 06:05:10 PM EST

Seriously, PayPal is the most economical way to move money around on this scale. Anybody who keeps $5K in their PayPal account is an idiot, of course. And doing business with them is just as risky as doing business with any other random business online, which I do all the time. Is there a chance one of them will skip with my $50 and not ship the product? Sure, though it doesn't seem to happen very often. PayPal is a very large business because it is the only practical example of a convenience that is necessary for this kind of commerce to occur at all.

Use the right tool for the job. Don't use PayPal to buy real estate. Using it for transactions under $100, and keeping a balance under $500 in your account, can open up a lot of possibilities for minimal risk.

alexboko: I think, how do animals view our behavior?
Sgt York: Opening
[ Parent ]

No, you don't get it (none / 0) (#47)
by trhurler on Sun Oct 14, 2007 at 10:25:28 PM EST

First of all, if you're an online merchant who uses PayPal, you WILL have $5000 in there at some point or other unless you're a complete failure. And this guy lost that.

Second, do a bit of research. They ACTUALLY WORK to find excuses to freeze accounts with any significant cash in them so they can take the money. Like the RIAA with their "we have the legal right to break into your computer even if we have no evidence against you" nonsense, they're basically a criminal enterprise.

Third, they're hardly the only way of doing online transactions. They're just the only one most people have heard of because eBay is tied in.

--
'God dammit, your posts make me hard.' --LilDebbie

[ Parent ]
Sure I get it (none / 1) (#49)
by localroger on Mon Oct 15, 2007 at 08:05:57 AM EST

If you have $5K to stick in your PayPal account you have the means to actually accept credit cards, especially now as opposed to 2005 when there weren't as many services for that.

When I see online merchants that accept PayPal as well as MC/Visa, I marvel at the stupidity. As a purchaser, if I can get a PayPal account it means I have a CC. The usefulness of PayPal is for one small entity to sell to another small entity without having to mail a physical cheque. A good example is me accepting it for donations and signed copies; that account has never had more than a few hundred dollars in it, and neither has the bank account to which it is electronically connected. I know all about that.

I see a large entity like Kiva using PayPal because credit cards only work one way (the process for CC credits being very awkward and not at all standard, especially online).

As for "actually working" to take your money just because you have a lot in the account, that is somewhat controversial. But even if it's true there's a simple solution, which I've already mentioned. You wouldn't use a pocket screwdriver to change a tyre. Use the right tool for the damn job.

alexboko: I think, how do animals view our behavior?
Sgt York: Opening
[ Parent ]

Not necessarily stupid (none / 0) (#59)
by ctgPi on Mon Oct 15, 2007 at 06:02:48 PM EST


When I see online merchants that accept PayPal as well as MC/Visa, I marvel at the stupidity. As a purchaser, if I can get a PayPal account it means I have a CC.

Sure, but that may not mean I want to use a CC. I'm a Brazilian that both has an international credit card and competes on TopCoder; the processing fees and taxes mean the only reasonable way of receiving my cash prizes is through PayPal.

Since it's hell to cash a foreign check here in Brazil (and the processing fees would kill me), I use PayPal whenever I have the option. This is an example of Gresham's law in action (though it only applies for the buyer, not the seller)

[ Parent ]

Um (none / 0) (#79)
by trhurler on Wed Oct 17, 2007 at 09:34:08 PM EST

You realize lots of online merchants deal in individual transactions which are quite small, right?

--
'God dammit, your posts make me hard.' --LilDebbie

[ Parent ]
What's that again? (none / 1) (#45)
by localman on Sun Oct 14, 2007 at 09:06:38 PM EST

I'm all for deregulation, but not for deceiving your customers.

I think a lot of people forget why regulation exists in the first place.  I'm not a fan of wanton regulation either.  But unfortunately there are just enough jerks around that a little is required.

Too bad PayPal escaped.

[ Parent ]

"A guy I know lost $5000 that way." (3.00 / 4) (#50)
by tweet on Mon Oct 15, 2007 at 09:24:35 AM EST

Well, with such convincing evidence of wrongdoing, I will cease using Paypal immediately.

Btw, a guy I know gained $5000 that way.

_______________________________________________
Not everything in black and white makes sense.

[ Parent ]

So I get all of the risk, but none of the profit? (2.88 / 9) (#43)
by localroger on Sun Oct 14, 2007 at 06:20:23 PM EST

I could see half the profit, but none? Sorry dude, that IS charity. I recognize that Kiva has to support itself, but so do its venture capitalists. That would be you. It's a casino where whenever you win your "host" takes your profits, but when you lose you stand there with your dick in your hand. That's not an investment or even a wager at all. There is no possibility at all for your expected value to be positive.

And that's not even counting the PayPal transaction fees, which compare to the interest on a loan of this type. This isn't a business model, except in the sense that Kiva's business model is to use the poor as bait to lure in your dollars, which you will never get back in quite the quantity you put them in, with the main return being a warm feeling. That will only go so far. I would be willing to invest in a scheme like this if it wasn't trying to rip me off like that; give the recipient an honest interest rate, which will be high but not ruinous because of the circumstances, so that Kiva's overhead, your PayPal overhead, and profit for both of you can be covered when the loan is paid. Then, assuming a sufficient rate of repayment, it's a positive EV bet and only an idiot would reject it. As it is, it's just a more complicated (and perhaps more effective, but still no more "business" like) form of charity.

alexboko: I think, how do animals view our behavior?
Sgt York: Opening

Hmmm. (none / 0) (#44)
by xC0000005 on Sun Oct 14, 2007 at 07:14:50 PM EST

Paypal doesn't charge Kiva to transfer money to them. Paypal doesn't charge them to return it to you. Kiva operates as a non profit, so I'm not certain about your overhead claims. The goal is not to make a profit. Consider it like a charity where you get your money back. There are sites like prosper where you do get a cut.

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]
OK, to elaborate (3.00 / 2) (#46)
by localroger on Sun Oct 14, 2007 at 09:09:54 PM EST

So PayPal is basically donating their services. I guess they read Google's corporate slogan a few times too many. As for Kiva, I'd point out that Blue Cross / Blue Shield also claims to be a non-profit, but like the for-profits they won't bother themselves to write you an individual policy if you're a diabetic and they'll happily charge you $12,000 a year for insurance if you have a pre-existing condition they will deign to cover. Something about maintaining "reserves" which they invest in other industries to maintain liquidity and other business nonsense. It's not "profit" because it's in some different column but it works the same way when you're asking for coverage or filing a claim.

What I see with Kiva is I plonk down my $25, and have 0.x% chance of getting my $25 back and 1-0.x% chance of getting $0 back, and 0% chance of getting more than my $25 back. And the poor person getting the loan is paying interest, so if it works out there actually is more than $25 in play. Somebody is getting paid for assuming the risk -- which is what interest is about -- but it isn't the person assuming the risk, which would be me.

The smell test thing isn't passing here, sorry.

alexboko: I think, how do animals view our behavior?
Sgt York: Opening
[ Parent ]

Banking Regulations (none / 1) (#48)
by cronian on Sun Oct 14, 2007 at 10:50:02 PM EST

I recall reading somewhere, that by not paying they get around having to follow all the regulations. I think one of the founders of the site said he would be interested in paying interest, but he hadn't figured out how to get through the regulatory hurdles. Operating it as a quasi-charity, makes it a lot simpler.

We perfect it; Congress kills it; They make it; We Import it; It must be anti-Americanism
[ Parent ]
But hang on (3.00 / 3) (#51)
by rusty on Mon Oct 15, 2007 at 11:12:47 AM EST

Compare that to straight-up charity. You donate $25, you have a 100% chance of getting $0.00 back. Furthermore, part of your $25 will be diverted to pay the people working for the charity. So overall, you've just tranferred a little of your wealth to some people who are poor, and some other people who are less poor (and possibly less poor than you, even).

With this micro-loan thing, you donate $25, and, if all goes well, you get your $25 back. Meanwhile, that $25 has been out in the world doing work, and like magic, it has had babies which are paying for the people who run the fund and providing a living for the person you loaned that money to.

That is, you donated $25 and created more than $25 worth of value, rather than less than $25.

Sure, compared to standard capitalist loans it's a loss. But compared to charity, it's a big win. I suspect the only reason you're seeing it as a loss is because you're thinking of losing your $25 as a "risk" that you're assuming, rather than (as with charity) the only possible outcome.

____
Not the real rusty
[ Parent ]

It's eight years of casino habit (none / 0) (#68)
by localroger on Tue Oct 16, 2007 at 06:20:36 PM EST

After all that pounding at people to not do stupid shit like placing negative EV bets, or to at least find high variance negative EV bets and only place a few so you have a chance of winning, and seeing the structure of this Kiva thing, it's like my worst nightmare of the game where you just write the casino a check.

That's the problem; to me it is charity. The chance of getting my $25 back is more of a nuisance pretending to be a benefit. But then, most people let the real casinos take them to the cleaners too.

alexboko: I think, how do animals view our behavior?
Sgt York: Opening
[ Parent ]

I doubt (none / 1) (#73)
by rusty on Tue Oct 16, 2007 at 10:25:41 PM EST

anyone much takes their money back and walks away. It would be interesting to know what percentage of people immediately turn over their money back into another loan. I'd guess it's north of 95%.

____
Not the real rusty
[ Parent ]
I certainly did. (none / 0) (#74)
by xC0000005 on Tue Oct 16, 2007 at 10:53:28 PM EST

I liked the premise when I first loaned. I liked it when the loan was paid back, so I put it back in.

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]
Of course it's charity (none / 1) (#91)
by QuickFox on Sun Nov 11, 2007 at 03:51:45 AM EST

The way I see it there's nothing wrong with this being charity. As I understand it that's the whole point.

You compare with casinos, but there's no trickery here like there is in the casinos. They're quite clear and up-front about the fact that you can't win anything, and that you can lose your money. It's all quite clear from the start, nothing sneaky.

However from the recipient's point of view there's a world of difference between these loans and traditional gift charity. With gift charity the recipient is placed into a role of inferiority and passivity. He becomes the receiver of a hand-out. He is made even more of a victim than he was before. With a loan you get the exact opposite effect. The recipient is empowered. His role becomes that of a self-reliant provider for his family. He gets to struggle himself, running his business to create some return. All he needs is some temporary help with the material on which to work, stuff like for example shelves and merchandise for a shop. With that as a base, he does the work, he earns the money, he is self-reliant.

Gift charity can devastate the local economy around the recipients, by putting local shops out of business, since they can't compete with food and clothes given for free. Micro-loans will instead spur local growth in a very healthy way. You get the opposite effect!

So yeah, it's charity, but there's nothing wrong with that, and in the long run it's far, far more healthy and productive than traditional gift charity.

Those who would give up essential liberty deserve Bush.
[ Parent ]

How is it different from yuo? (3.00 / 2) (#57)
by livus on Mon Oct 15, 2007 at 04:27:12 PM EST

Seriously, how is it different from, say, contributing to your tip jar?

Aren't they both an appreciation of effort and an attempt to reward it?

---
HIREZ substitute.
be concrete asshole, or shut up. - CTS
I guess I skipped school or something to drink on the internet? - lonelyhobo
I'd like to hope that any impression you got about us from internet forums was incorrect. - debillitatus
I consider myself trolled more or less just by visiting the site. HollyHopDrive

[ Parent ]

You're not expecting me to give the money back. (none / 1) (#69)
by localroger on Tue Oct 16, 2007 at 06:22:19 PM EST

At least, I hope you aren't :-) I think the problem is I'd rather just give people the money than go through this elaborate sham to pretend like I'm not just giving them the money, because it's this kind of misperception that has made the casino industry what it is.

alexboko: I think, how do animals view our behavior?
Sgt York: Opening
[ Parent ]
Rusty you have left a void in these people (2.66 / 3) (#55)
by livus on Mon Oct 15, 2007 at 04:22:42 PM EST

that clearly needs filling.

Monocle hamsters and user registrations are only a gateway drug, now we have assassination politics and microlending.

---
HIREZ substitute.
be concrete asshole, or shut up. - CTS
I guess I skipped school or something to drink on the internet? - lonelyhobo
I'd like to hope that any impression you got about us from internet forums was incorrect. - debillitatus
I consider myself trolled more or less just by visiting the site. HollyHopDrive

I ask myself, WWLD? (2.00 / 2) (#60)
by xC0000005 on Mon Oct 15, 2007 at 07:04:12 PM EST

What would livus recommend to fill a void in one's soul?  

(seconds until someone answers "horsecock" - 3.5).

Voice of the Hive - Beekeeping and Bees for those who don't
[ Parent ]

Um... not the "soul" (3.00 / 4) (#64)
by rusty on Tue Oct 16, 2007 at 09:21:50 AM EST

I think you're thinking of a different void.

____
Not the real rusty
[ Parent ]
Now what we need is... (2.75 / 4) (#63)
by rusty on Tue Oct 16, 2007 at 09:20:40 AM EST

...a microlending for collaborative assassination scheme.

That's clearly where all this is going.

____
Not the real rusty
[ Parent ]

haha hilarious (none / 1) (#77)
by zombie Colonel Kurtz on Wed Oct 17, 2007 at 01:29:54 PM EST

now that we've beaten them down into sub human hives killing each other every season we're going to toy with them. oh look honey instead of just sending money to their corrupt governments we can give it to their loan sharks and they'll put info up for us on the intraweb! how adorable!

fucker. just send the money if you want to help.


obviously not familiar with the sense of ownership (3.00 / 5) (#81)
by LilDebbie on Sat Oct 20, 2007 at 01:13:05 PM EST

while eating is certainly up there on maslow's hierarchy, pride is too. take bee guy's goat herder. sure, bee guy could've just bought the goat for him, but that goat would never belong to the goat herder. it will forever remain, "that goat i got from the aid agency from americaland."

a loan gives him something to work towards. he makes payments, and once paid, he can now say, without reservation, "this goat is MINE."

yeah, that may sound idiotic to you, but it can mean everything to a life lived in desperation.

My name is LilDebbie and I have a garden.
- hugin -

[ Parent ]

The Nigerian Version (2.80 / 5) (#80)
by badfish2 on Fri Oct 19, 2007 at 12:19:14 AM EST

I started a business partnership with a man in Nigeria who happens to be the trustee of a very large fortune there. He says if I invest $25k into the business it will help him unlock millions! I'm hooked. Wish me luck!

Thanks for turning us on to Kiva (2.66 / 3) (#86)
by SaintPort on Sat Oct 20, 2007 at 09:52:59 PM EST

if feel my karma improving already.

--
Search the Scriptures
Start with some cheap grace...Got Life?

PayPal blows... (none / 1) (#87)
by bighappyface on Mon Oct 22, 2007 at 12:25:28 PM EST

...I'd do it if they accepted credit cards and I weren't $315 in debt.

Bravo, sir (1.66 / 3) (#89)
by guidoreichstadter on Sun Nov 04, 2007 at 08:20:07 AM EST

Your deeds shall not be forgotten.


you are human:
no masters,
no slaves.
Just weighing in... (3.00 / 2) (#90)
by 123456789 on Tue Nov 06, 2007 at 06:27:25 PM EST

... not that anyone cares...

I gave this quite a bit of thought and I read the comments thoughtfully, and I'm coming down on the side of "this is ego-stoking circle-jerking and not really helpful."

I agree with LilDebbie about the ownership aspect but I really doubt that translates very well. From what I've read of how foreigners react to American goodwill I surmise that they're always going to see it as a handout from "Americaland" and will resent it either way. Pride seems to be a pretty huge issue to third-worlders.

And I also agree with the person above who mentioned that it's really stupid that Kiva doesn't kick back ANY of the interest to the investor. At least then there'd be a reason for investing other than to sleep better at night after spending more on coffee in a given week than you lent to goat herders last year.

There's a great passage in "After Many a Summer" by Aldous Huxley (the Brave New World guy) about how it's easy to feel good about doing something but in the end we're all slaves to our ego. I can't find it, so no quote. Sorry.

---
People demand freedom of speech to make up for the freedom of thought which they avoid.
- Soren Kierkegaard
Kiva: The Power of Small | 91 comments (71 topical, 20 editorial, 0 hidden)
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