How to Spend $1,000: Loan to Kiva

The impact investing platform Kiva ( was designed to do just that. Kiva is a US nonprofit organization that has lent over $1.7 billion to small businesses and individuals. Kiva invests through crowdfunding loans to entrepreneurs who often don’t have access to bank services. Loans typically cover the cost of buying a machine to increase food or textile production, expanding a small general store, or seed for farmers.

Kiva was originally developed to help people in low-income countries, but expanded to the US in 2011. That means you could invest in an indigenous women’s weaving mill in Guatemala or a mother of five in Atlanta hoping to grow her beauty products business.

The main question is whether Kiva delivers positive impact and quality credit. The organization is certainly committed to best practices for their industry. Kiva has received the highest rating (four stars out of four) from Charity Navigator. Kiva works with grassroots organizations that often provide financial education and other services and help borrowers avoid over-indebtedness. And Kiva carefully reviews these partners. Many loans are also supplemented by foundations or banks.

However, determining the actual benefit of impact loans is difficult; Most impact investment firms cite their default rates and the quality of their partners. Determining how many borrowers have improved their income, health, or education is a tough and expensive task, and Kiva does not provide this detailed reporting. However, Kiva tries to provide lenders with opportunities to invest in projects that are most likely to make an impact.

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

Kiva can also help make philanthropy fun by cleverly using social media and networking to build engagement. Investors can join faith-based lending teams, college alumnae groups, or esoteric teams like “Nerdfighters” that lend to “fight for greatness.”

With $1,000, you could take out a lot of loans, or just a few. And with a payback rate that high, you could loan on much of that original investment for years to come.

In the latest Kiplinger’s Personal Finance Magazine, our editors offer advice on how to spend, save, and invest on $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
  • Borrow money for a good cause

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