CSTN has always been about helping individuals fulfill their solo travel dreams. After twenty years of connecting internationally with the global tourism industry and with other solo travelers, I, as CSTN founder, began thinking of such singular journeys in a less self-centered way.
Doubtless, there are few travelers – solo or otherwise – who have not been dismayed to see sights of extreme poverty and need in many places we visit. Thankful for our blessings, we've wished to do something to help ease such abject circumstances. But what? There are, of course, dozens if not hundreds of charitable organizations whose aim is to do good in developing countries. CSTN has investigated some of these charities and, in the past, raised funds for a few, but only in a sporadic way.
In 2008, I began searching for an organization that would provide a compatible and ongoing way of adding philanthropy to the CSTN mandate. Finding Kiva was my first introduction to the concept of micro-financing.
Kiva is about inspiring and empowering individual dreamers one by one. Through a system of small, person-to-person loans, people who otherwise have no hope of getting credit, have an opportunity to lift themselves out of poverty and fulfill their personal dreams. Individuals helping individuals help themselves – a perfect fit for CSTN.
Since April 2008 CSTN has been lending 50 per cent of every registration fee to individual entrepreneurs via Kiva. A report on funding is regularly updated as follows:
>> Mohammad is 30-year-old married man who lives with his wife and two children in a small house in Jabalia Palestine. Jabalia is located in the Gaza Strip and therefore regularly suffers from power outages, sometimes as much as 12 to 16 hours a day. Palestinians usually have water boilers that use either gas or gasoline to heat water, which can be dangerous as well as inefficient, so Mohammad wants to convert to a more efficient solar system. However, as an employee in the public sector, his income barely covers the family's needs, so he needs to borrow enough money to make the upgrade.
CSTN portion: $100.
>> Mirian Rosivel lives in Osicala El Salvador where she buys and sells clothing and footwear to supplement the family income. Mirian is 28 years old, married and is the mother of two children. Mirian has made a living in the clothing business for four years, having learned the trade from her older sister. Currently, She goes from house to house selling the merchandise. She needs the loan to buy more pants, shirts, tank tops, women's and men's underwear as well as clothing for boys and girls. Mirian's dream is to base the business permanently in her home, and thereby gain the capacity needed to expand the variety of merchandise, hence more income.
CSTN portion: $100.
>> Koubanao Yentine Group is composed of women working and living in Senegal. Representative of the group is Mame Khady who is at the right in the photo with her hand raised. She is married, 39 years old, and the mother of six children of whom three are girls. Mame earns income from selling palm oil, peanut butter, and brooms. With this loan, she will purchase four 20-liter containers of palm oil and two pails of peanut butter. The profits will be used to help cover expenses for the children.
CSTN portion: $100.
>> Members of the Jaya Usaha Baluk Group live and do business together in Melaya Bali Indonesia. The group members requested a loan to purchase necessities for developing their farm businesses. After several loan cycles, members successfully maintain their rice fields and gardens, thus earning income for their families. In fact, some members have become so successful they no longer require group support. Meanwhile, the rest of group continues working together to improve their farming practices. Right now, they need to borrow funds to purchase seed, tools, and fertilizer.
CSTN portion: $100.
Excerpts from field report by Kiva Fellow, Meg Gray, working in Nicaragua with Kiva field partner CEPRODEL
In Nicaragua every road has character, and usually this "character" makes it hard to get to CEPRODEL's clients. Now, besides being an inconvenience, why does this matter? It matters because bad roads are one of the factors that contribute to high operating costs for a micro-finance institution (MFI). Here are several more reasons [why CEPRODEL charges 36% interest].
Populations are often very spread out. Even with centrally located offices, many clients have no way of visiting the branch and thus [loan officers must travel to individual clients].
The administrative cost [time, manpower, and paperwork] of a loan is fixed no matter how small it is.
Frequent repayments (often daily or weekly) are more labor intensive. Many CEPRODEL loan officers spend every afternoon walking or driving from business to business collecting repayments.
Now, how are MFIs supposed to pay for all of this? Yes, they could keep seeking out grant money year after year, but I, for one, would like them to be sustainable. The only way to do that is to charge enough interest to cover operating costs.
While rates may seem ridiculously high, as long as we have loan officers needing to drive 30 kilometers through the mud on a motorcycle to spend an hour (or more), all for a loan of $250, then yes interest rates are going to seem high. But financial services will also be reaching people who have never had these opportunities before.
Diane: At first, I was rather alarmed to find that interest charged to recipients seemed excessively high, but the above explanation puts things in perspective. Interest and fees do vary considerably between field partners, and Kiva lets lenders (like us) check the fundamentals of all field partners. Those checks include interest and fee comparison charts, as well as profit margin declarations. Incidentally, just to be clear, we lenders invest the capital but do not receive interest on return. And Kiva operates solely on voluntary donations.