seadog
07-22-2012, 09:05 PM
I recently started looking more and more into charities, but like most things i try to do my due-diligence. I liked the idea of Kiva from what I heard, sort of the "helping others help themselves", and "free- market" principles I agree with.
For anyone not aware, Kiva markets itself as you provide money for interest free loans to people in the third world so they can start businesses and become financially self sufficient. Sounds great.
Turns out though, that's not exactly how it works. Generally "micro finance partners" (third world banks) have already made the loans, and you are merely guaranteeing them. These loans are subject to interest rates of up to 100% or more. Kind of reminds me of CHMC. These banks can then make as rediculous a loan as they want, if they get paid back great, if not, well then it's guaranteed by me.
My problem with it, is that you aren't actually providing the interest free money to the people who need it. Rather its to some third world bank who turns around and lends it out to these people at (what I assume) are near market rates.
I understand there are costs involved, but I wasn't able to find any assurances that the savings in interest by the banks are being passed onto the end borrower, or are they merely charging market rates and keeping the difference as profit?
I get what they're doing, and to their credit they seem to be more upfront than other charities, but they still try and sell the "interest free loans" bit on the main page. I guess that's a better sell than "Make deposits at third world banks so they can lend it out at super high interest rates, and plus(!) there's a chance you'll lose your money".
Anyone who's lived in the third world knows it's hardly a bastion of efficiency. Corruption is rife, it takes 6 people to do the job of 1, and I'm sure those 100% interest rates aren't just going to administrative fees, but also padding a few pockets, which I have a problem with. While some people may be a bit better off, the cost to me : benefit to end user is probably a few percent at best.
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Additionally I've been pressured in the past just walking along the road to donate the UNICEF or whoever else. I think they're legit, once had MADD knock on the door looking for money. I said no because I'm greedy, but looked into it more. I guess most of those people get something like 50%+ of everything they get. To me it just seems misleading. They're asking for donations to help out a cause. I just sort of assumed they were volunteers. But turns out their plea of "Help the children" is really just a veiled plea for "Help me".
It sort of goes hand in hand with the fact the the some of these charities' CEOs get million dollar salaries. Their ultimate mandate is presumably to increase money coming in, and increase money going to the cause. A million dollars more comes in on their watch, 980k get's spent on hookers and blow, 20k goes to Africa, from their perspective, they're doing their job well.
I think most people assume and sort of expect that the people making these requests for help, are being as altruistic as they're asking of you, which clearly isn't the case.
For anyone not aware, Kiva markets itself as you provide money for interest free loans to people in the third world so they can start businesses and become financially self sufficient. Sounds great.
Turns out though, that's not exactly how it works. Generally "micro finance partners" (third world banks) have already made the loans, and you are merely guaranteeing them. These loans are subject to interest rates of up to 100% or more. Kind of reminds me of CHMC. These banks can then make as rediculous a loan as they want, if they get paid back great, if not, well then it's guaranteed by me.
My problem with it, is that you aren't actually providing the interest free money to the people who need it. Rather its to some third world bank who turns around and lends it out to these people at (what I assume) are near market rates.
I understand there are costs involved, but I wasn't able to find any assurances that the savings in interest by the banks are being passed onto the end borrower, or are they merely charging market rates and keeping the difference as profit?
I get what they're doing, and to their credit they seem to be more upfront than other charities, but they still try and sell the "interest free loans" bit on the main page. I guess that's a better sell than "Make deposits at third world banks so they can lend it out at super high interest rates, and plus(!) there's a chance you'll lose your money".
Anyone who's lived in the third world knows it's hardly a bastion of efficiency. Corruption is rife, it takes 6 people to do the job of 1, and I'm sure those 100% interest rates aren't just going to administrative fees, but also padding a few pockets, which I have a problem with. While some people may be a bit better off, the cost to me : benefit to end user is probably a few percent at best.
-
Additionally I've been pressured in the past just walking along the road to donate the UNICEF or whoever else. I think they're legit, once had MADD knock on the door looking for money. I said no because I'm greedy, but looked into it more. I guess most of those people get something like 50%+ of everything they get. To me it just seems misleading. They're asking for donations to help out a cause. I just sort of assumed they were volunteers. But turns out their plea of "Help the children" is really just a veiled plea for "Help me".
It sort of goes hand in hand with the fact the the some of these charities' CEOs get million dollar salaries. Their ultimate mandate is presumably to increase money coming in, and increase money going to the cause. A million dollars more comes in on their watch, 980k get's spent on hookers and blow, 20k goes to Africa, from their perspective, they're doing their job well.
I think most people assume and sort of expect that the people making these requests for help, are being as altruistic as they're asking of you, which clearly isn't the case.