Borrowing money

How to Spend $1,000: Loan to Kiva

The impact investing platform, Kiva (, was designed to do just that. A US-based nonprofit that has lent more than $1.7 billion to small businesses and individuals, Kiva investors fund equity loans to entrepreneurs who often don’t have access to banking services. Loans typically cover the cost of buying a machine to increase food or textile production, supplies to expand a small general store, or seeds for farmers.

Kiva was originally designed to benefit people in low-income countries, but expanded to the United States in 2011. This means you can invest in a weaving indigenous women’s cooperative in Guatemala, or a mother of five in Atlanta hoping to expand her beauty products business.

The most important question is whether Kiva offers positive results impact and high quality loans. The organization certainly commits to best practices for its industry. Kiva received the highest rating (four out of four stars) from Charity Navigator. Kiva partners with grassroots organizations that often provide financial literacy and other services, helping borrowers avoid over-indebtedness. And Kiva carefully veterinarians these partners. Many loans are also matched by foundations or banks.

Determining the true benefit of impact lending is tricky, however; most impact investing firms highlight their default rates and the quality of their partners. Determining how many borrowers have improved their income, health, or education is a difficult and expensive task, and Kiva does not provide these detailed reports. Kiva is however trying to present to lenders options invest in the projects most likely to have an impact.

Kiva investors can lend between $25 and $500 per project, although Kiva encourages an optional donation of around 15% to cover their administrative costs. The loan is not tax deductible, but any amount donated to Kiva is. The repayment rate on all loans is 96.4%. Investors can liquidate their accounts at any time.

Kiva can also make philanthropy fun, cleverly using social media and networking to build engagement. Investors can join faith-based loan teams, alumni groups, or esoteric teams like “nerdfighters“, which gives to” fight for the awesome “.

With $1,000, you could make several loans, or just a few. And with such a high repayment rate, you could re-lend much of that initial investment for years to come.

In the last Kiplinger Personal Finance Magazine, our editors offer tips on how to spend, save and invest $1,000. Get more smart tips:

  • Add small caps to your portfolio
  • Use fractional shares to buy small amounts of expensive shares
  • Find an affordable way to learn new job skills
  • Lend money for a good cause