In an effort to do its part to help alleviate poverty, the Mills College Economics Club voted this month to donate $250 to women entrepreneurs through Kiva, a micro-lending organization.
Kiva, launched by Matt and Jessica Flannery in 2005, is the first online micro-lending organization. The couple came up with the idea for the project after interviewing entrepreneurs in East Africa about the issues they faced in applying for loans and to cover start-up costs. According to its Web site, the San Fransisco-based organization seeks to connect individual lenders to borrowers across the globe through private loans of $25 or more.
“Micro-lending is a way to keep money in the community [that we donate to],” said senior Melissa Bruley, Economics Club Public Relations Chair.
She said giving money directly to entrepreneurs cuts out the use of corporate banks, which allows for more of the money to be used for the local sector.
“If a small business owner has to pay high interest on loans, that money is being taken out of a local community and becomes profit to a bank… Often times a large corporation will not spend their profits within the community of their operation,” Bruley said.
Sophomore Jaia Orient, President of the Economics Club, said Kiva deals with entrepenuers who need smaller loans, which most large banks are not equipped to deal with. Orient added that many of the business owners live in remote areas where access to banks is very limited.
“We chose Kiva because it’s a really amazing platform that lets people connect with other people throughout the world,” Orient said. “It really puts a human face on poverty. I think it’s important for people to have those connections because they can see who they’re giving money to. It makes it more obvious that their donations, no matter the size, are making a difference in people’s lives.”
Kiva.com provides a forum for microfinance institutions to post profiles of qualified entrepreneurs from developing countries who are seeking loans for small businesses. Lenders can then choose which businesses to invest in and how much money they’d like to give.
According to Kiva’s Web site, approximately 82 percent of all loans have been made to women entrepreneurs. Studies conducted by independent research center Consultative Group to Assist the Poor (CGAP) have shown that micro-lending helps empower women to play larger roles in decision-making. CGAP claims violence against women has declined in areas where these programs have been in place for several years.
“Our intention was to lend to a woman or women or a women’s group,” Orient said.
During their March 2 meeting, club members gathered around a computer in the Faculty Lounge to view Kiva’s Web site. After sifting through several entrepreneur profiles, they divided the club’s funds amongst seven different women and women’s businesses from Africa, Asia and Latin America.
The businesses that received partial loans from the Economics Club’s funds were mostly involved in the agricultural and food sectors, but one business was a women’s bank in Costa Rica.
“We decided we wanted to be the final push and chose loans that were close to completion,” Orient said. “Being a woman was the only criteria.”
Although this was the first time the Economics Club has given loans through Kiva.org, the club hopes to continue lending to more businesses.
Bruley explained the lending plan to the group.
“Start with a $250 donation. As they [the borrower] pays that money back, we donate it [again],” Bruley said. “It’s one of the better ways to alleviate poverty in the community.”