Shanti’s Dispatches

According to this article, the founders of Kiva (Matt and Jessica Flannery) actually did want to create a for-profit entity at first, but didn’t due to regulatory hurdles:

First of all, Kiva is a non-profit. As Matt and Jessica Flannery have explained, it’s very difficult to become a SEC-registered broker/dealer - even more difficult when you’re running Kiva from your living room on the nights and weekends. (See pages 37-38 of the Innovations article for Matt’s take on this decision.) MicroPlace, on the other hand, had the institutional and financial backing of EBay, allowing it to go through the complex regulatory application process and to put up the necessary money for the SEC to sign off. Upshot: Kiva wanted to be for-profit, but had to stay a NGO because it was a regulatory nightmare to register with the SEC. As a result, lenders on Kiva only receive their loans back - without interest. MicroPlace, as a broker/dealer, can pay interest to lenders - thanks to its ability to navigate the aforementioned regulatory maze.

This makes sense. Several people whom I’ve told Kiva about said they would consider loaning if there was a small percentage rate available to lenders.

I view the loans more as donations, only with the hopeful expectation that they will be paid back, and can then be re-circulated to other entrepreneurs.

You can bookmark this, digg this or check the cosmos