Kiva Overview for MFIs
Raising low cost debt capital from
social investors via the Internet
July 2007
"Revolutionising how donors and lenders in the US are
connecting with small entrepreneurs in developing
countries”
“Making microfinance easier...Kiva’s website is easy to use,
even for local Cambodian staff who haven’t used computers
that long”
Table of Contents
• What Kiva is and how it Works
3
• Benefit to MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
2
What is Kiva?
Kiva is an online platform that connects MFIs to social investors
Social Investor
Kiva.org
Online Marketplace
Microfinance Institution
Microfinance Client
Profile
3
How Kiva Works (1 of 6)
Approve &
Disburse Loan
Post
client
data
on
Kiva
Social
Invest
or
"fund"
client
profile
s
MFI
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
Client
$
MFI approves client and disburses loan with no change to MFI’s processes
MFI charges same interest rate as usual.
4
How Kiva Works (2 of 6)
Approve &
Disburse Loan
Loan Application
Data
Post
client
data
on
Kiva
Social
Invest
or
"fund"
client
profile
s
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
Digital Photo
• Kiva translation & editing team allows postings to be done in the client’s local language
• Kiva provides MFIs with digital cameras and laptops upon request
5
How Kiva Works (3 of 6)
Approve &
Disburse Loan
Post
client
data
on
Kiva
Social
Invest
or
"fund"
client
profile
s
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
$
$
$
Average time to
100% funding
= 1.5 days
6
How Kiva Works (4 of 6)
Post
client
data
on
Kiva
Approve &
Disburse Loan
Social
Invest
or
"fund"
client
profile
s
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
$
$
$
$
Kiva aggregates 0% interest USD loan capital and wires it monthly to MFI
7
How Kiva Works (5 of 6)
Approve &
Disburse Loan
Post
client
data
on
Kiva
Social
Invest
or
"fund"
client
profile
s
1. During the loan term MFI reports only
Repor
ting:
Receiv
Note
e 0%
the
interes
delinq
t bulk
uencie
loan
s+
from
final
Kiva
impac
delinquenciest
Repay
ment:
Deduc
ted
from
new
loans
On time collection auto-reported to lenders
On time collection auto-reported to lenders
Delinquent – manual report required
2. At the end of loan term MFI must provide a loan impact summary
8
How Kiva Works (6 of 6)
Post
client
data
on
Kiva
Approve &
Disburse Loan
Social
Invest
or
"fund"
client
profile
s
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
$
$
$
$
$
Kiva automatically deducts repayments owed from new loans each month
9
Table of Contents
• What Kiva is and how it Works
3
• Benefits for MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
10
MFI Benefit Summary: Overview
Increase profitability

No cost funds: 0% interest monthly bulk loans wired to your bank account

No liability: Client loan losses borne by Kiva (like a securitization)


Flexible currency risk policy: MFI responsible for managing F/X risk; however
Kiva Social Investors will likely forgive default if massive devaluation occurs
Low reporting costs: Kiva reduces you staff and IT costs by providing:

Exception based reporting system and automatic monthly net billing

Free full time on-site interns to help train staff and post client data

Free digital cameras and laptops

Free translation, text editing
Improve transparency / global reputation

Exposure: Kiva.org is the world’s most trafficked microfinance website

Transparency: Show client level impact/operational excellence to other funders

Be a part of the fastest growing MFI network: Over 65 MFIs in 36 countries
raise money via Kiva – growing at 5 MFIs a month…
11
Costing out Kiva’s debt capital
Comments:
Interest
Rate Kiva
Charges
Cost of staff
time to post
client data
Write Off
Rate
0%
0.2% - 2%
1.3%
F/X Hedging
Cost
Varies
Total Cost
of Kiva
Capital
~0 - 1%
Kiva passes 100% of the funds lent via social investors online.
Kiva supports its low cost internet operations by charging social
investors optional fees. Kiva has been a financially self sufficient
501c3 U.S. non-profit organization since November 2006.
Based on time study data of MFIs using Kiva, the cost of staff time
to post and maintain each client profile on Kiva.org ranges from <
$1 USD to $10 USD. The average Kiva loan raised per client
profile is $500USD – putting the average cost as a factor of the
debt capital raised on Kiva to around 0.2% - 2%.
According to the MIcroBanking Bulletin, the average write off ratio
for all MFIs listed on the MIX is 1.3% in 2005. This number is
subtracted from the cost equation since Kiva social investors bear
default risk / all MFI write offs.
Kiva’s loans are in U.S. dollars and Kiva’s policy is for MFIs to
manage the currency risk. The cost of hedging short term loans
varies by context and many MFIs simply do not hedge given the
large savings spread by using Kiva.
For most MFIs, Kiva represents the cheapest U.S. dollar debt
capital source available.
Excluding F/X risk
12
MFI Benefit Summary: Medium/Large MFIs
In addition the benefits already listed, Kiva can provide significant benefit to medium
and large MFIs.
Benefits
• Reduce overall cost of capital
• Potentially reduce interest rates
• Maintain interest rates and increase profitability
• Increased access to capital
• Increase reach to borrowers
13
MFI Benefit Summary: Small/Growing MFIs
Small MFIs list a lack of capital as the largest constraint to growth: a problem Kiva can help
solve.
Lack of capital1
• A survey of 191 MFIs ranked “Lack of funding” as the biggest constraint to growth
– The biggest barrier to funding being “not enough contact with social
investors / donors”
• The main sources of capital are grants and commercial capital
• Young institutions have difficulty accessing commercial capital
– Those that can secure commercial capital do so at relatively high
interest rates, which are then passed onto the borrower
– Institutions can build equity to borrow against by accepting customer
deposits, but this takes a significant amount of time, and subjects them
to complex laws
• Many are unaware of additional sources of funds, or have difficulty securing
grants
1, CGAP and Microfinance Information Exchange survey
14
Growing Microfinance Institutions
The microfinance landscape is dominated by a long, fragmented tail of small and growing MFIs.
MFIs by # of Borrowers Reached1
# of MFIs worldwide = 10,000
>100K
borrowers
2%
<2.5K
borrowers
73%
10K - 100K
borrowers
9%
2.5K - 10K
borrowers
16%
 73% of global microfinance is disbursed by small, growing MFIs
 Facilitating the growth of small MFIs will make a significant contribution to the microfinance market
1. BlueOrchard website; Microcredit Summit Campaign data, 2006
15
Barriers to growth: Lack of capital
Until MFIs achieve a certain scale, capital is a major constraint to growth.
Impact of access to capital on growth
# of MFI clients
Illustrative
Threshold scale
needed to access
commercial
institutional capital
Infusion of
Conservative
Institutional
Capital
Infusion of
catalytic low
cost capital
Time
 Individuals can provide risk capital where commercial institutions won’t
– Emotional return reduces need for risk adjusted financial return
– No overhead cost structure to support (vs. bank) further reduces need for return
16
Table of Contents
• What Kiva is and how it Works
3
• Benefits for MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
17
Kiva Loan Portfolio Growth
Over $8.3 million from +80,000 Social Investors has already been raised
5 year projections
•$130M – 280M USD
• On track to become
one of the world’s
largest MF funds
Total Capital Raised from Kiva Social Investors ($m)
$9m
$8m
$7m
$6m
$5m
$4m
$3m
$2m
$1m
$0m
Oct
Nov Dec
Jan
Feb
Mar
Apr May
Jun
Jul
Aug Sep Oct
Nov Dec
Jan
Feb Mar
Apr May Jun
Average month-over-month growth rate > 30%
18
Kiva Partner Geographic Distribution
60 MFIs from 35 countries have already partnered with Kiva
Moldova
Bulgaria
Ukraine
Azerbaijan
Iraq
Gaza
Mexico
Haiti Dominican Republic
Guatemala
Chad
Senegal
Honduras
Nigeria
Togo
Nicaragua
Sierra Leone
Cameroon
Uganda
Cote’ D’Ivoire Ghana
Kenya
Ecuador
Congo
Tanzania
Afghanistan
Nepal
Vietnam
Cambodia
Indonesia
Mozambique
Bolivia
Samoa
Tajikistan
Paraguay
19
Partial Kiva MFI Partner List (Kiva is growing at 5 MFIs / month!)
AFRICA
EUROPE & CENTRAL ASIA
•
•
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Action Now: Kenya – Kenya
Afrique Emergence & Investments – Cote’ D’Ivoire
Ebony Foundation – Kenya
GHAPE – Cameroon
HELP Africa – Togo
Hluvuku-Adsema – Mozambique
HOPE RDC – Democratic Republic of Congo
Kisumu Medical and Education Trust – Kenya
Kraban Support Foundation – Ghana
Life in Africa Foundation – Uganda
Lift Above Poverty Foundation – Nigeria
Microfund – Togo
People’s Microcredit Investment Bureau – Kenya
Salone Microfinance Trust – Sierra Leone
SEED Development Group – Kenya
Senegal Ecovillage Network – Senegal
Share an Opportunity Microfinance Ltd. – Uganda
Urban Ministry – Nigeria
Women’s Economic Empowerment Consort – Kenya
Youth Self Employment Foundation – Tanzania
ASIA
•
•
•
•
•
CREDIT MFI – Cambodia
Maxima – Cambodia
MBK Ventura – Indonesia
Mekong Plus – Vietnam
South Pacific Business Development – Samoa
Komak Credit Union – Azerbaijan
Microinvest LLC – Moldova
Mikrofond EAD – Bulgaria
MLF MicroInvest – Tajikistan
Nadiya – Ukraine
Norwegian Microcredit LLC – Azerbaijan
Regional Economic Development Center – Bulgaria
LATIN AMERICA
•
•
•
•
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Admic Nacional – Mexico
AlSol – Mexico
Esperanza International – Dominican Republic and
Haiti
Friendship Bridge – Guatemala
Fundación para la Vivienda Progresiva – Mexico
Fundación Paraguaya – Paraguay
IMPRO – Bolivia
Mifex Microfinance Exchange – Ecuador
Prisma Microfinance – Honduras / Nicaragua
Pro Mujer – Bolivia
FADES - Bolivia
MIDDLE EAST
•
•
•
Al Aman Center – Iraq
Ariana Financial Services – Afghanistan
Shurush Initiative – Gaza
20
Table of Contents
• What Kiva is and how it Works
3
• Benefits for MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
21
Case Study:
(Togo)
Microfund Togo - Total 0% Interest Capital Raised on Kiva.org
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
1
2
3
4
5
6
7
Number of months
Partner stats (Pre-Kiva)
Loan Portfolio: ~$500K USD
Date founded: 1998
Sources of funding: 3
Testimonial from Managing Director
• “The partnership of KIVA with MICROFUND is very
excellent and today KIVA is our best partner”
Performance on the Kiva Platform
Kiva Partner Since:
Nov 6, 2006
Total Loans Raised:
705
Total Loan Capital Raised:
$670,000
Average Loan Size:
$850
Average Time to Fund a Loan
1 day
• “The support of KIVA has been and is very helpful to
our survival and allows us to increase considerably
our portfolio”
• “Due to our partnership with KIVA, MICROFUND
responds more easily to the needs in credit of its
members at the great satisfaction of its
beneficiaries”
- Joseph Kossi
(MICROFUND Manager)
22
Case Study:
(Mexico)
Part of
Network
Admic (ACCION network) - Total Capital Raised on Kiva.org
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
1
2
3
4
5
6
7
8
9
10
Months on Kiva.org
Partner stats (Pre-Kiva)
Loan Portfolio: ~$3.1M USD
Date founded: 1980
Sources of funding: 5
Performance on the Kiva Platform
Kiva Partner Since:
Aug 31, 2006
Total Loans Raised:
994
Total Loan Capital Raised:
$557,000
Average Loan Size:
$510
Average Time to Fund a Loan
1.3 days
Testimonial from Managing Director
• “Kiva has been an incredibly successful partner in
providing us low cost funding to expand our
operations”
• “Highly recommended.”
23
Kiva Case Study: AFSG (Afghanistan)
MFI Mission Statement: To provide high quality and fair priced savings and loan products to our clients,
which will increase their incomes, expand their businesses and improve their quality of life.
Partner stats (Pre-Kiva)
Loan Portfolio: ~$550K USD
Date founded: 1003
Sources of funding: 3
Testimonials from MFI
Performance on the Kiva Platform
• “KIVA has been proved to be a powerful instrument
for poverty reduction build assets, increase incomes
and reduce their vulnerability to economic stress in
Afghanistan”
• “Kiva's loan fund has brought a significant change
over AFSG's growth and productivities and huge
change to clients living standard”
Kiva Partner Since:
Jan 18, 2007
Total Loans Raised:
305
Total Loan Capital Raised:
$117,000
Average Loan Size:
$385
Average Time to Fund a Loan:
8 hours
• “AFSG and its clients are really thankful of Kiva's
fund and we hope that Kiva supports AFSG
continuously”
- Storai Sadat
(Executive Director)
24
Table of Contents
• What Kiva is and how it Works
3
• Benefits for MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
25
Strong Accolades About Kiva in the International Press
“Innovation of the week: Kiva.org uses smart
design to make a little cash go a long way.”
"Revolutionizing how donors and lenders in the US
are connecting with small entrepreneurs in
developing countries”
2006 Year in Ideas Issue: “At Kiva.org, a
schoolteacher in Kansas can partner with a
seamstress in Kenya to jump-start a tailor shop.
“You too can have a big impact with a small
amount of money."
"If you've got 25 bucks, a PC and a PayPal
account, you've now got the wherewithal to be an
international financier."
26
Strong Support for Kiva in the Corporate and Philanthropic
Community
Free payment processing
and employee support
120 Million free
banner impressions
Free Google
AdWords – 25% of
traffic
Free Yahoo Search
Marketing and
employee support
Free promotion
(Community Impact
Award)
Funding for Field
Research and
Development
Free phones for cell
based data upload
pilot
Free promotion of
Kiva widget to
bloggers
Featured
Organization
Early Funder
Early Funder
Free computers and
early Funder
27
Table of Contents
• What Kiva is and how it Works
3
• Benefits for MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
28
Kiva Leadership
Key Management and Staff
Matt Flannery | Co-founder & CEO
Matt is a former TiVo engineer with experience in website design and usability. He graduated with a
BS in Symbolic Systems and a Masters in Analytical Philosophy from Stanford University.
Premal Shah | President
Premal is a 6 year PayPal veteran and spent his last year researching technology and microfinance.
He previously worked in microfinance in India, strategy consulting and graduated from Stanford.
Isabelle Barres | Vice President, Microfinance Partnerships
Isabelle is the former Director of Strategic Partnerships at the MIX, editor of the MicroBanking Bulletin
and currently leads the microfinance industry wide Social Impact Indicators task force.
John Berry | Director, Microfinance Partnerships
John has over 20 years of microfinance experience and managed USAID’s $30M microfinance
portfolio.
Team Background
Key Advisors and Directors
Geoff Davis | President and CEO, Unitus
Geoff helps run Unitus, one of the most respected organizations in microfinance. He was an early
employee at the Grameen Foundation USA and has worked in microfinance worldwide since 1795.
Mary Ellen Iskenderian | President and CEO, Women's World Banking
Mary Ellen is President and CEO of Women's World Banking (WWB), a global not-for-profit financial
institution whose network includes over 50 microfinance institutions and banks.
John Hatch | Founder, FINCA
John is the founder of FINCA, one of the world's leading microcredit institutions with programs in 23
countries and over one million low-income families assisted since its inception in 1784.
Sam Daley-Harris | Director, Microcredit Summit Campaign
Sam is Director of the Microcredit Summit Campaign, the result of the Microcredit Summit, which
brings together microcredit practitioners from all over the world to focus on reaching the poorest.
29
Table of Contents
• What Kiva is and how it Works
3
• Benefits for MFIs
11
• Progress to Date
15
• Case Studies
17
• Corporate and Press Support for Kiva
23
• Management and Leadership
26
• Partnership Requirements and Contact Information
28
30
Does Kiva make financial sense for my MFI?
Checklist
Someone on my staff can:
 Digitally photograph clients
 Communicate via email / access the Internet regularly
 Speak English or Spanish
My MFI can:
 Legally accept US Dollar debt from a foreign lender
 Managing foreign exchange risk
31
Next Steps for Partnering with Kiva
Kiva provides consistent, active support throughout the 5 step partnership process
MFI Partner Next Steps
Kiva Role
1. Complete and submit Kiva partnership
application
• Provide guidance and feedback on all
application documents and requirements
2. Receive response from Kiva regarding
application status
• Review application materials and respond
to MFIs within 1-2 weeks
3. If approved, work with Kiva's
Partnerships team to setup a pilot
program
• Provide all additional documents and ongoing, comprehensive assistance with
Kiva pilot setup
4. Launch 1-2 month Kiva pilot program
• Monitor pilot and provide on-going support
5. Assess pilot program outcomes and
scale program based on needs
• Provide comprehensive assistance for
pilot scaling and work with MFI to
determine monthly Kiva funding limit
If your MFI is qualified and you’re interested in starting a Kiva pilot program or want more
information contact: partnerships@kiva.org
32