I have been giving this post a lot of thought over the past two years. There are a few charities that I personally support and I have written about before, such as Oceana and Reader-To-Reader. But I wanted to find a charity partner that I could put Trading Heroes behind that would represent what I believe in and the change I want this blog to make in the world.
So after a lot of thought and research, I have decided to make Kiva the official partner charity of Trading Heroes. There are several reasons for this decision.
Why I Chose Kiva
Here they are in no particular order:
- They have an excellent rating on Charity Navigator, an independent charity evaluator
- Kiva makes loans to micro businesses in developing countries. That means we are supporting people who are creating products, services and jobs. I feel that this will go much further in ending world poverty than just donating money.
- They have a 98.88% repayment rate at the time of this writing
- Each loan is only $25, not a huge risk
I think this video says it all…
How It Works
- Choose a borrower from the list
- Loan as little as $25 to their project
- When the total amount that the person wishes to borrow is fulfilled, the loan is given out
- They repay you according to the terms of the loan
- Do it again! You can relend the money, or donated it directly to Kiva to fund their operating costs.
- These are unsecured loans, so you could lose all of your investment. Luckily it is a small amount.
- There is no return on the loan, you do not receive any interest
How To Reduce Your Risk
If your loans default, then you won’t be able to reuse your money to help others. So it is only prudent to do everything in your power to make sure that you get your money repaid. Here is what I look for when choosing business owners to lend to.
When you look at their risk rating, that will give you a good idea of how risky it is to lend to borrowers that apply through them. XacBank has a 5/5 rating at the time of this writing. This won’t completely eliminate your risk, but it will greatly reduce it.
From there, I look for people who have an existing business or extensive experience in the area that they are going to start a business in. I generally look for businesses that have non-perishable inventory to further lower the risk.
Then I like to look for people who are parents or supporting others because I feel that this makes them more inclined to be responsible and focused on their business. I stay away from personal loans (like loans for cars and home repair) because they are just putting themselves in the hole, without creating the potential for additional income.
UPDATE (03/15/2014): So far, this has worked well and I have had only had two defaults out of 21 loans. But in both cases, they had already paid back 90%+ of the principal.
Join The Team
To make things more fun, I’ve started a group to lend together. Being on the team doesn’t cost anything and there is no obligation. It is just a way for traders to get together to support a cause we believe in. Click here to see how the team is doing.
How I Will Support Them
I will donate 5% of all proceeds from the sale of Trading Heroes products and affiliate sales to Kiva and I will blog about the loans. Trading is all about learning to create an income by educating yourself to trade in order to live The Trading Lifestyle. By supporting people in developing countries that want to help themselves, I believe that we can make a difference and help them to live a better lifestyle too.
Are there any charities that you support that you want to us to know about? Leave a comment below and tell about it any why you support that charity.