Friday, October 26, 2007  

Kiva.org is a web site that allows you to lend money to specific entrepreneurs in the developing world, empowering them to lift themselves out of poverty. These loans do not earn interest, but are repaid in 6-18 months, depending on the individual loan structure. These loans are organized by local organizations working in various developing nations, and Kiva.org collects the money to fund the loans from thousands of individual lenders who use the site. These loans have a very low default rate, about .3% on average, and risk is spread out by lending small amounts to many different entrepreneurs.

I think this is such a great idea that I'm making it part of EditMe's business model. I will be using a percentage of EditMe's deferred revenue to fund a substantial Kiva.org lending program. EditMe's deferred revenue comes from customers who pay for 6 or 12 months of service in advance. The company recognizes this revenue as if everybody made monthly payments, so a fairly large pool accumulates over time. EditMe has already made 39 Kiva loans, and will be making two additional loans per week over the next two years. Beyond that the loan rate will be adjusted to the growth rate of deferred revenue. As each loan is paid back, it will be lent again to a new entrepreneur.

In addition to the lending program, EditMe will donate 10% of all money lent to help keep Kiva.org running. Kiva is a non-profit company that does not charge the lenders, recipients or coordinators anything for their service, and they rely on upon lender donations to keep the electricity on.

EditMe customers who pay ahead for 6 or 12 months of service can know they are helping folks find their way out of poverty and taste the kind of financial freedom most of us take for granted. I sincerely thank all customers who choose to pre-pay, and I am excited to be able to use this money in a way that helps people help themselves.

You can visit EditMe's Lender Page at Kiva.org to see what businesses the company has lent to and read journal updates on their progress. Watch this blog for updates on the progress of the program and stories of individual EditMe loan recipients.

Cheers,
Matt