Big things are happening at Kiva.org. Not only does the organization’s day-to-day impact continue to grow virally, but it just won $300,000 from American Express for placing third in the company’s annual Members Project competition. The contest invites individuals and organizations to submit their ideas for a project that will help change the world. The idea is to get AmEx card members to vote on what they think are the most worthy projects and then AmEx doles out $2.5 million in total to fund the top five vote-getters. (The grand prize was $1.5 million).

Kiva’s project was all about what they are already doing -- changing the lives of entrepreneurs in developing countries through microloans -- and building on the impact of their online lending model to reach an even greater number of deserving entrepreneurs around the world. According to Kiva, the $300,000 grant will allow for $6 million in loans to be given out to 12,000 additional entrepreneurs over the next ten years.

So, besides the potential that this brings for a still-relatively-small non-profit, why is this such a big deal? Well for one, Kiva placed third out of almost 1,200 projects submitted, meaning that in just a short amount of time, they influenced enough people to take action and vote for their cause. With the help of Involver, one of Inc.com’s 30 Under 30 companies this year, Kiva created an online video campaign that ran on Facebook, MySpace, and their own Website, which made it extremely easy for supporters to spread the word about Kiva through their social networks and professional circles.

Involver, which was founded in 2007 by 26-year-old Rahim Fazal and 27-year-old Noah Horton, helps companies create lucrative online marketing campaigns by providing them with a platform to build, manage, and distribute videos across large community platforms like Facebook. Involver’s technology is results-oriented, so companies that use the technology are not just putting out a self-promotion video, but they are offering their customers a way to engage. With the Kiva campaign, anyone who watched the video on Kiva’s Facebook page was prompted at the end to vote for them in the American Express competition. A simple click registered a vote for Kiva’s campaign without redirecting the viewer to navigate their way around the American Express site. (Watch Kiva's campaign video here.) Besides voting, viewers also had the option of joining the campaign through Facebook or sharing the video with their friends. Friends can watch the video and vote without having to add an application to their profile. By the end of the competition, the Kiva video had been viewed 140,000 times, and those that passed it along shared the video an average of 12.75 times.

Kiva is certainly an Involver success story. In the American Express competition, they were up against much larger corporations with greater marketing budgets in a race for votes and supporters. And they got those votes without spending a lot of money or effort to publicize their project. Too often companies waste marketing money for online campaigns that turn out to have little to no impact. But Kiva and Involver have proved that when customers are given a direct way to engage with your brand, they almost always become proactive. Do you think Involver’s model for online marketing could work at your company? Why or why not?

Major leaders of the global microfinance movement gathered this week at the Microcredit Summit Campaign in Bali, Indonesia to discuss some of the pressing issues that have affected the microfinance sector over the past year. A major issue of debate among Summit participants, which included Nobel Peace Prize winner and father of microcredit, Muhammad Yunus, was what to do about the growing commercialization of microfinance.

If you have been following any of the news on microfinance lately, you know that there has been a lot of attention paid -- both good and bad -- to the movement in the past couple of years. Microlending has become extremely popular, and as a result, an increasing number of commercial banks and for-profit institutions are now marketing loans to the poor. Many of these institutions have taken advantage of uneducated borrowers in the developing world and charge very high interest rates that are often unclearly stated in the terms of the loan. Leaders of the microfinance world believe that these kind of profit-seeking ventures are at odds with the underlying mission of microfinance, and the issue has sparked much controversy in the industry over the past year.

As part of the Microcredit Summit earlier this week, I listened in on a global conference call that addressed the need for greater transparency among global lenders in the microfinance market. The purpose of the call was to announce the launch of Microfinance Transparency, a non-governmental organization designed to publicly report the interest rates of lending institutions worldwide. The US-based initiative is headed by industry expert Chuck Waterfield, and is backed by Muhammad Yunus, founder of Bangladesh-based lending institution Grameen Bank, and by Summit Campaign director, Sam Daley-Harris. The organization already has a substantial list of endorsers, including co-founder and executive director of Kiva, Matt Flannery.

During the call, Waterfield described Microfinance Transparency as an "information clearing house," with the goal of establishing truth-in-lending standards to parties in both the developed and developing world. Several lending institutions -- that together represent more than 20 million borrowers -- have already agreed to report their interest rates to Microfinance Transparency. According to Waterfield, the first batch of data collected will be published on the organization's Website at the end of October. Ultimately, the site will become a searchable database for anyone seeking information on microfinance lenders.

The main message that came through during the call -- and that was repeatedly emphasized by Muhammad Yunus -- was that if microfinance is going to achieve its founding mission of helping the world's poor get out of poverty, then it must operate within a fair market environment. What do you think? While it remains to be seen how effective Microfinance Transparency will be in leveling the playing field, do you think the industry needs a self-regulating organization to bring it back to its roots? Or do you think that in order for microfinance to truly reach all the world's poor, a competitive and commercial environment must exist?

Thanks to a microloan from half a world away, a Cambodian rice winemaker named Phal An is ready to expand her growing business.

On the day that Phal An is interviewed about her business, her modest home in the village of Damnak Sankae, Cambodia, is crowded with excited family members. Phal An is a rice winemaker in her late 50s -- and one of thousands of entrepreneurs listed on Kiva.org, a website that facilitates microloans to entrepreneurs in developing nations all over the world.

This past December, Inc.com embarked on an editorial project to cover the rapidly growing phenomenon of microfinance. As a staff, we contributed a modest sum and became lenders on Kiva.org, sponsoring a diverse group of entrepreneurs that includes Phal An, as well as business owners located in Peru, Ecuador, Uganda, Tanzania, and Tajikistan. Updates on these entrepreneurs and their businesses and how they are using their loans are being posted frequently on a new Inc.com blog called "The Kiva Connection."

The following Q&A with Phal An (pronounced Paul Anne) was conducted with the help of Jessica Young, a Kiva fellow in Cambodia, and with Ponnak Kiry Pa, who is Phal An's loan officer in Cambodia. Young has been working on the ground in Cambodia for several months to help bridge the gap between Maxima, the microfinance institution that disbursed the loan to Phal An, and Kiva borrowers in the region.

Continue reading "Small Loans, Big Results"

When I set out to blog about the entrepreneurs that Mansueto Ventures sponsored through Kiva.org, I wanted to provide readers with as many details as possible about the day-to-day lives of small business owners in developing countries and how exactly access to microfinance was impacting their operations.

As you can imagine, it is not a simple task to connect directly with entrepreneurs in developing communities, as most do not have access to communication technology. So far, what I have learned about the entrepreneurs we sponsored and what I have reported here on this blog has come from examining the background profiles and photos posted on Kiva's website of each borrower. However, this snapshot is only part of their story, and as a journalist, I felt it my duty to uncover as much of the individual's story as possible.

This is where Kiva comes in. The organization's staff has been amazingly instrumental in getting me access to the information I desired. I have connected with several Kiva fellows, volunteers who are stationed in countries all over the world where Kiva has microfinance partners. These fellows are working on the ground to facilitate the smooth transaction between the local lending institutions and their clients. As such, many of these fellows have the chance to visit with entrepreneurs in their homes and places of business.

Continue reading "The Kiva Connection: Exclusive Interview from Cambodia"

Last week, Advanta, a major provider of small business credit cards, announced that it has partnered with Kiva.org to launch KivaB4B, an initiative that gives small business owners and entrepreneurs the opportunity to increase their contribution to the social cause of microlending. The KivaB4B program encourages entrepreneurs in the U.S. to support their counterparts in developing countries by making microloans through Kiva. Advanta small business customers who make a loan using their Advanta credit card will get their grant matched by Advanta for up to $200 per month.

With KivaB4B, Advanta and Kiva have tapped into a very powerful cause in the entrepreneurial community: business-to-business giving. In my experience meeting and writing about small business owners, I have always been struck by how quick entrepreneurs are to lend a hand to a fellow business owner just starting out, or advise an entrepreneur who may be stumbling through the growth process.

Continue reading "The Kiva Connection: Business to Business Lending"

In continuing to introduce the entrepreneurs Mansueto Ventures has loaned to through Kiva, I thought I'd write about one of the more unique loans in the bunch. We contributed to a group of five women (pictured below), who live in Uganda and each have their own business. However, instead of each of the woman applying for an individual loan, they are receiving a group loan, meaning the money that they request (in this case the total loan amount was $1,650) goes to fund all five of the businesses they are involved with.

Each entrepreneur can apply for a different amount of money, but each borrower is accountable to the others in the group when it comes to meeting repayment deadlines. Some of the microfinance institutions that Kiva partners with only disburse group loans because the format is often more successful (or desirable) than individual lending on a number of levels.

For the MFIs, group loans take less time and money to manage -- the format not only allows the institutions to disburse several loans at once, but also to collect the repayments all together. Additionally, group lending makes it possible for the MFIs to reach a greater number of entrepreneurs in need. For the borrowers, being part of a group loan creates a kind of community among the participating entrepreneurs. These women not only learn from each other, but they become each other's support network. If one member of the group defaults on a loan, the entire group is liable for paying that money back. Group loans have an extremely low default rate because each individual knows that his or her reputation is on the line.

Pictured here is the group that calls themselves Lugoba A. The five women are: Christine Namwalo, Betty Mirembe, Amina Nanyonga, Gorette Nantume, and Ruth Nankya. Ruth and Gorette have retail businesses, Amina is in charcoal sales, Betty runs a canteen selling snacks, and Christine runs a restaurant in their village of Nansana. I was curious about the pink papers in their hands and I was told that a document is given to each entrepreneur by the microfinance institution as a formal acknowledgment that they have received the loan. The form also represents their pledge to pay back their loan on time.

For more information about the Mansueto Ventures Kiva lending project, click here.

Welcome to the newest installment of the Kiva Connection. In my first blog post last month, I wrote about our company-wide endeavor to make microloans to entrepreneurs in developing countries around the world through Kiva.org.

What's great about getting involved with microfinancing through Kiva is that their online model provides a level of visibility to the lenders -- anyone can go to the Website, see a picture of the entrepreneurs requesting loans, and read their story. And while I could simply post a link to our borrowers' profiles on Kiva.org, what I am trying to accomplish with this blog is to make our sponsored entrepreneurs -- whose day-to-day work lives can feel so distant from our own office-centric jobs -- a little more accessible.

To do this, I have connected with several Kiva-affiliated people, or fellows, who are on the ground working with Microfinance Institutions (MFIs) in countries where Mansueto Ventures has sponsored entrepreneurs. In effect, Kiva fellows are the bridge between the MFIs (that assess the businesses in need and disburse the loans) and the entrepreneurs themselves.

One of the things I have learned in corresponding with Kiva fellows across the globe is that the process of approving and disbursing loans for entrepreneurs is a laborious one. The surging popularity of Kiva has certainly allowed many microfinance institutions to thrive, however, most of these institutions still lack the resources to efficiently process the sheer volume of loans that are requested on a daily basis.

Because many MFIs are stretched thin, their staff does not always have time to write journal updates on every entrepreneur. But, Kiva lenders do receive brief progress e-mails once the loan has been disbursed to the entrepreneur, and any time that the borrower pays back a portion of the loan. Based on the e-mail updates I have received, all 7 of our loans have been disbursed to the entrepreneurs and four of the businesses have already made a repayment.

Continue reading "The Kiva Connection: Meet the Entrepreneurs"

Over the holiday season, Inc.com reached out to our colleagues at Mansueto Ventures -- the company that publishes the print and online editions of Inc. and Fast Company -- with an idea to sponsor an entrepreneur through an organization called Kiva.org. As you may know, Kiva.org is a website that facilitates microloans to entrepreneurs all over the developing world.

Since its launch in 2005, Kiva has partnered with 77 microfinance institutions in 39 countries. These "field partners," as they are called by Kiva, identify entrepreneurs in impoverished communities who are in need of loans to purchase the necessary equipment and supplies to sustain their businesses.

Through its Internet-based model, Kiva.org makes it possible for just about anyone to support an entrepreneur in a developing country. The site displays short profiles of all the entrepreneurs who have qualified for loans, so potential lenders can choose who their money will go to. Once the loan is disbursed, the microfinance institution posts progress updates to the Kiva site until the entrepreneur has repaid the money.

At Inc.com, we saw lending through Kiva as a unique opportunity for us to forge a connection with entrepreneurs in other parts of the world and to shed light on their experiences. While our sponsored entrepreneurs may be in a much different place economically than the U.S.-based entrepreneurs we cover, the trials and tribulations that they face as business owners are no doubt similar -- and we will use this blog to examine their challenges as well as their triumphs.

Continue reading "The Kiva Connection: Our Adventure in Microlending"