Cost of Kiva
By Casey Cline, KF 15, Nicaragua
There are 137 local microfinance institution partners around the world on the Kiva platform. Not only does each benefit from the access to a completely new universe of individual lenders, but they also receive loans with no interest charges from Kiva. This does not mean, however, that being a Kiva field partner comes without costs to the local institution. On the contrary, it often requires a significant amount of upfront expenses such as hiring of additional resources, training, and systems implementation, as well as the associated administrative and management expenses on a monthly basis.
One-time set up costs are those expenses required to prepare the local microcredit institution to begin the relationship with Kiva. These outlays may include the purchase of new equipment such as computers, printers, cameras, and even small items like a flash drive. There are also expenditures associated with training; both the time spent by those involved, including any travel time required, and the cost of any materials that may be necessary. Additionally, oftentimes a local partner has to make modifications or enhancements to its portfolio accounting system so that repayment information can be received by Kiva accurately and timely on a monthly basis.
Recurring expenses are those costs that the local partner incurs on a monthly basis to maintain its relationship with Kiva. Most often the largest expense in this category involves the time spent by personnel that work on a number of required tasks. There are various monthly items that the dedicated Kiva Coordinator has to manage, and often loan officers, systems specialists, and finance professionals are involved either directly or indirectly with Kiva clients. The equipment and resources, including internet, printing, electricity and other utilities used by these employees that work on the Kiva relationship can also amount to a significant expenditure each month. Additionally, wire fees to send or receive transfers with Kiva also are a monthly expense that can be substantial.
Lastly, each Kiva field partner has one-off costs associated with the relationship. These can include different projects such as social performance questionnaires required by Kiva, managing a Kiva Fellow’s visit and addressing his/her questions and information requests, and overall management of the Kiva relationship. Kiva does visit its field partners frequently, and this of course, requires time of the local partner’s management and staff.
As mentioned above, the personnel who maintain the relationship are a key component of the costs affiliated with being a part of the Kiva platform. In most instances, there is a primary person in charge of the relationship, called the Kiva Coordinator. In the case of Fundación Leon 2000, this person is Sandra Mendoza. Sandra works on a daily basis to ensure that all of the stories from the field, including profiles, photos, journal updates, and any other relevant information are uploaded to the Kiva website so that lenders can keep current on the dozens of new Kiva borrowers each month. Additionally, she is responsible for reporting to Kiva the repayments of all of the Fundación Leon 2000 borrowers on a monthly basis. Lastly, Sandra acts as the primary point of contact for a visiting Kiva Fellow.
Sandra is not alone, of course, in ensuring that the Kiva relationship runs smoothly. Led by Roger Vargas, all twenty-seven loan officers at Fundación Leon 2000 gather the required borrower information, take photos, and conduct all the direct follow-up with the borrowers. The accounting and information technology teams work together to prepare the monthly repayment reporting information. Additionally, the management team here, including the Director of Credit and the Director of Finance, are very involved in all phases of the relationship.
The advantages of being on the Kiva platform are clearly evident. Having access to the generosity of individual lenders like you is a critical source of lending capital for many of these microcredit institutions. Additionally, zero interest loans allow the local microfinance partners to pass savings along to their clients. The relationship, however, is one that requires meaningful expenditures of time, effort, and ultimately money by the field partner to ensure its success.
Casey Cline is a Kiva Fellow (KF 15) working with Fundación Leon 2000 in Leon, Nicaragua. If you would like to learn more about Fundación Leon 2000, please visit its partner page. You can also show your support by joining the Fundación Leon 2000 lending team.