Risk and Due Diligence
Kiva screens, rates and monitors each Field Partner
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454 Current number of staff and volunteers working to make Kiva a data-rich, transparent online lending platform for the poor |
Kiva's staff and volunteers work to create a highly transparent,
data rich lending platform for the poor. Kiva's main role besides operating a website
is to screen, rate and monitor each Field Partner —
who in turn are responsible for screening each entrepreneur
listed on the site and administering your loan.
Each Field Partner has a different risk profile — some are highly established with a proven track record and others are young and unproven — but with the potential to reach entrepreneurs not reached by more established Field Partners. Like eBay and other online marketplaces, Kiva hopes that an online lending platform will let unproven, riskier, Field Partners build a great reputation through long term performance. In the process, they should be able to raise capital from other sources beyond Kiva to serve more of the poor in their area. |
Kiva Role #1: Initially screen each Field Partner
New Field Partners must meet Kiva's Minimum Requirements in order to fundraise for local entrepreneurs on Kiva's platform:
- Have a mission of lending to the poor for a social purpose with interest rates that are significantly discounted versus alternatives for the local poor.
- Be able to accept US dollar denominated debt capital from US lenders and manage a reasonable degree of currency risk.
- Be cleared of the US Department of Justice Terrorist Exclusion List and the Treasury Department's list of "Specially Designated Nationals and Blocked Persons."
- Provide Kiva with legal incorporation registration documents recognized by the local government.
Kiva Role #2: Assign each Field Partner a Risk Rating
Once the Minimum Requirements are met, each Field Partner is given a Risk Rating. A Kiva Risk Rating is a 1-5 star rating assigned to each Field Partner by the Kiva Staff. This rating reflects the estimated repayment risk associated with each partner according to the evidence described below. A 1 star rating indicates very limited evidence supporting a Field Partner's repayment reliability, and a 5 star rating indicates very significant evidence supporting a Field Partner's repayment reliability.
Evidence – not driven by Kiva – supporting a Field Partner's repayment reliability
Evidence supporting Field
Partner's Repayment ReliabilityCorresponding
Risk RatingVery Significant (Lowest Risk)
Significant (Low Risk)
Moderate (Moderate Risk)
Limited (High Risk)
Very Limited (Highest Risk)
- Recent Financial Audits, Credit Ratings and Independent Evaluations
- Most Reputable Outside Funder and Network Affiliations
- Organizational Age and Sustainability
- Existing Loan Portfolio Size and Risk
Kiva works with leading Microfinance Industry experts to constantly improve its Risk Rating Model and with Field Partners to improve data quality / integrity.
Evidence – driven by Kiva – supporting a Field Partner's repayment reliability
- Kiva Repayment Performance over time: Like other online marketplaces (e.g. eBay), Kiva incorporates the long term repayment performance of each Field Partner into their Risk Rating — allowing less established Field Partners to build their reputation online.
- Bank Statement Reviews: For select Field Partners with lower Risk Ratings, Kiva monitors the bank statements in order to verify the flow of funds and note any major discrepancies.
Role #3: Monitor Field Partners and set monthly fundraising limits
The amount of money a Field Partner can raise each month for local entrepreneurs on Kiva depends on their Kiva Risk Rating. A well established 5 star Field Partner can post over $100,000 of loan requests to Kiva's website each month while a less established 1 star Field Partner can post less than $10,000 each month. However, as a 1 star Field Partner proves itself over time, its Risk Rating will increase — which in turns increases its monthly fundraising limit.
Kiva routinely audits and monitors each Field Partner. If a Kiva audit uncovers funds mismanagement, Kiva will make this transparent on the website and take appropriate actions to resolve the issue, including possible partnership termination and legal action in the case of gross funds mismanagement.
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