Kiva Overview for MFIsRaising low cost debt capital from social investors via the InternetJuly 2007 “Making microfinance easier...Kiva’s website is easy to use, even for local Cambodian staff who haven’t used computers that long” "Revolutionising how donors and lenders in the US are connecting with small entrepreneurs in developing countries”

Table of Contents • What Kiva is and how it Works 3 • Benefit to MFIs 11 • Progress to Date 15 • Case Studies 17 • Corporate and Press Support for Kiva 23 • Management and Leadership 26 • Partnership Requirements and Contact Information 28

Social Investor Kiva.org Online Marketplace Microfinance Institution Microfinance Client Profile What is Kiva?Kiva is an online platform that connects MFIs to social investors

Approve & Disburse Loan Post client data on Kiva Social Investor "fund" client profiles Receive 0% interest bulk loan from Kiva Reporting: Note the delinquencies + final impact Repayment: Deducted from new loans How Kiva Works (1 of 6) MFI Client $ MFI approves client and disburses loan with no change to MFI’s processes MFI charges same interest rate as usual.

Approve & Disburse Loan Post client data on Kiva Social Investor "fund" client profiles Receive 0% interest bulk loan from Kiva Reporting: Note the delinquencies + final impact Repayment: Deducted from new loans Loan Application Data Digital Photo How Kiva Works (2 of 6) • Kiva translation & editing team allows postings to be done in the client’s local language • Kiva provides MFIs with digital cameras and laptops upon request

Approve & Disburse Loan Post client data on Kiva Social Investor "fund" client profiles Receive 0% interest bulk loan from Kiva Reporting: Note the delinquencies + final impact Repayment: Deducted from new loans How Kiva Works (3 of 6) $ $ $ Average time to 100% funding = 1.5 days

Approve & Disburse Loan Post client data on Kiva Social Investor "fund" client profiles Receive 0% interest bulk loan from Kiva Reporting: Note the delinquencies + final impact Repayment: Deducted from new loans Kiva aggregates 0% interest USD loan capital and wires it monthly to MFI How Kiva Works (4 of 6) $ $ $ $

Approve & Disburse Loan Post client data on Kiva Social Investor "fund" client profiles Receive 0% interest bulk loan from Kiva Reporting: Note the delinquencies + final impact Repayment: Deducted from new loans How Kiva Works (5 of 6) 1. During the loan term MFI reports only delinquencies On time collection auto-reported to lenders On time collection auto-reported to lenders Delinquent – manual report required 2. At the end of loan term MFI must provide a loan impact summary

How Kiva Works (6 of 6) Approve & Disburse Loan Post client data on Kiva Social Investor "fund" client profiles Receive 0% interest bulk loan from Kiva Reporting: Note the delinquencies + final impact Repayment: Deducted from new loans $ $ $ $ $ Kiva automatically deducts repayments owed from new loans each month

Table of Contents • What Kiva is and how it Works 3 • Benefits for MFIs 11 • Progress to Date 15 • Case Studies 17 • Corporate and Press Support for Kiva 23 • Management and Leadership 26 • Partnership Requirements and Contact Information 28

MFI Benefit Summary: Overview Increase profitability • No cost funds: 0% interest monthly bulk loans wired to your bank account • No liability: Client loan losses borne by Kiva (like a securitization) • Flexible currency risk policy: MFI responsible for managing F/X risk; however Kiva Social Investors will likely forgive default if massive devaluation occurs • Low reporting costs: Kiva reduces you staff and IT costs by providing: • Exception based reporting system and automatic monthly net billing • Free full time on-site interns to help train staff and post client data • Free digital cameras and laptops • Free translation, text editing Improve transparency / global reputation • Exposure: Kiva.org is the world’s most trafficked microfinance website • Transparency: Show client level impact/operational excellence to other funders • Be a part of the fastest growing MFI network: Over 65 MFIs in 36 countries raise money via Kiva – growing at 5 MFIs a month…

Costing out Kiva’s debt capital Comments: Interest Rate Kiva Charges Kiva passes 100% of the funds lent via social investors online. Kiva supports its low cost internet operations by charging social investors optional fees. Kiva has been a financially self sufficient 501c3 U.S. non-profit organization since November 2006. 0% Based on time study data of MFIs using Kiva, the cost of staff time to post and maintain each client profile on Kiva.org ranges from < $1 USD to $10 USD. The average Kiva loan raised per client profile is $500USD – putting the average cost as a factor of the debt capital raised on Kiva to around 0.2% - 2%. Cost of staff time to post client data 0.2% - 2% Write Off Rate According to the MIcroBanking Bulletin, the average write off ratio for all MFIs listed on the MIX is 1.3% in 2005. This number is subtracted from the cost equation since Kiva social investors bear default risk / all MFI write offs. 1.3% Kiva’s loans are in U.S. dollars and Kiva’s policy is for MFIs to manage the currency risk. The cost of hedging short term loans varies by context and many MFIs simply do not hedge given the large savings spread by using Kiva. F/X Hedging Cost Varies Total Cost of Kiva Capital ~0 - 1% Excluding F/X risk For most MFIs, Kiva represents the cheapest U.S. dollar debt capital source available.

MFI Benefit Summary: Medium/Large MFIsIn addition the benefits already listed, Kiva can provide significant benefit to medium and large MFIs. Benefits • Reduce overall cost of capital • Potentially reduce interest rates • Maintain interest rates and increase profitability • Increased access to capital • Increase reach to borrowers

MFI Benefit Summary: Small/Growing MFIsSmall MFIs list a lack of capital as the largest constraint to growth: a problem Kiva can help solve. Lack of capital1 • A survey of 191 MFIs ranked “Lack of funding” as the biggest constraint to growth • The biggest barrier to funding being “not enough contact with social investors / donors” • The main sources of capital are grants and commercial capital • Young institutions have difficulty accessing commercial capital • Those that can secure commercial capital do so at relatively high interest rates, which are then passed onto the borrower • Institutions can build equity to borrow against by accepting customer deposits, but this takes a significant amount of time, and subjects them to complex laws • Many are unaware of additional sources of funds, or have difficulty securing grants 1, CGAP and Microfinance Information Exchange survey

Growing Microfinance Institutions The microfinance landscape is dominated by a long, fragmented tail of small and growing MFIs. MFIs by # of Borrowers Reached1 # of MFIs worldwide = 10,000 • 73% of global microfinance is disbursed by small, growing MFIs • Facilitating the growth of small MFIs will make a significant contribution to the microfinance market 1. BlueOrchard website; Microcredit Summit Campaign data, 2006

Barriers to growth: Lack of capitalUntil MFIs achieve a certain scale, capital is a major constraint to growth. Impact of access to capital on growth Illustrative # of MFI clients Infusion of Conservative Institutional Capital Threshold scale needed to access commercial institutional capital Infusion of catalytic low cost capital With Kiva Without Kiva Time • Individuals can provide risk capital where commercial institutions won’t • Emotional return reduces need for risk adjusted financial return • No overhead cost structure to support (vs. bank) further reduces need for return

Kiva Loan Portfolio GrowthOver $8.3 million from +80,000 Social Investors has already been raised • 5 year projections • $130M – 280M USD • On track to become one of the world’s largest MF funds Total Capital Raised from Kiva Social Investors ($m) Average month-over-month growth rate > 30%

Kiva Partner Geographic Distribution60 MFIs from 35 countries have already partnered with Kiva Ukraine Moldova Bulgaria Azerbaijan Tajikistan Iraq Afghanistan Nepal Gaza Mexico Haiti Dominican Republic Guatemala Chad Vietnam Senegal Honduras Nigeria Togo Nicaragua Sierra Leone Cambodia Cameroon Uganda Cote’ D’Ivoire Ghana Kenya Ecuador Indonesia Congo Tanzania Mozambique Bolivia Samoa Paraguay

Partial Kiva MFI Partner List (Kiva is growing at 5 MFIs / month!) EUROPE & CENTRAL ASIA • Komak Credit Union – Azerbaijan • Microinvest LLC – Moldova • Mikrofond EAD – Bulgaria • MLF MicroInvest – Tajikistan • Nadiya – Ukraine • Norwegian Microcredit LLC – Azerbaijan • Regional Economic Development Center – Bulgaria AFRICA • Action Now: Kenya – Kenya • Afrique Emergence & Investments – Cote’ D’Ivoire • Ebony Foundation – Kenya • GHAPE – Cameroon • HELP Africa – Togo • Hluvuku-Adsema – Mozambique • HOPE RDC – Democratic Republic of Congo • Kisumu Medical and Education Trust – Kenya • Kraban Support Foundation – Ghana • Life in Africa Foundation – Uganda • Lift Above Poverty Foundation – Nigeria • Microfund – Togo • People’s Microcredit Investment Bureau – Kenya • Salone Microfinance Trust – Sierra Leone • SEED Development Group – Kenya • Senegal Ecovillage Network – Senegal • Share an Opportunity Microfinance Ltd. – Uganda • Urban Ministry – Nigeria • Women’s Economic Empowerment Consort – Kenya • Youth Self Employment Foundation – Tanzania LATIN AMERICA • Admic Nacional – Mexico • AlSol – Mexico • Esperanza International – Dominican Republic and Haiti • Friendship Bridge – Guatemala • Fundación para la Vivienda Progresiva – Mexico • Fundación Paraguaya – Paraguay • IMPRO – Bolivia • Mifex Microfinance Exchange – Ecuador • Prisma Microfinance – Honduras / Nicaragua • Pro Mujer – Bolivia • FADES - Bolivia ASIA • CREDIT MFI – Cambodia • Maxima – Cambodia • MBK Ventura – Indonesia • Mekong Plus – Vietnam • South Pacific Business Development – Samoa MIDDLE EAST • Al Aman Center – Iraq • Ariana Financial Services – Afghanistan • Shurush Initiative – Gaza

Case Study: (Togo) Testimonial from Managing Director • “The partnership of KIVA with MICROFUND is very excellent and today KIVA is our best partner” • “The support of KIVA has been and is very helpful to our survival and allows us to increase considerably our portfolio” • “Due to our partnership with KIVA, MICROFUND responds more easily to the needs in credit of its members at the great satisfaction of its beneficiaries” - Joseph Kossi (MICROFUND Manager) Partner stats (Pre-Kiva) Loan Portfolio: ~$500K USD Date founded: 1998 Sources of funding: 3 Performance on the Kiva Platform Kiva Partner Since: Nov 6, 2006 Total Loans Raised: 705 Total Loan Capital Raised: $670,000 Average Loan Size: $850 Average Time to Fund a Loan 1 day

Case Study: (Mexico) Part of Network Partner stats (Pre-Kiva) Loan Portfolio: ~$3.1M USD Date founded: 1980 Sources of funding: 5 Performance on the Kiva Platform Kiva Partner Since: Aug 31, 2006 Total Loans Raised: 994 Total Loan Capital Raised: $557,000 Average Loan Size: $510 Average Time to Fund a Loan 1.3 days Testimonial from Managing Director • “Kiva has been an incredibly successful partner in providing us low cost funding to expand our operations” • “Highly recommended.”

Kiva Case Study: AFSG (Afghanistan) MFI Mission Statement: To provide high quality and fair priced savings and loan products to our clients, which will increase their incomes, expand their businesses and improve their quality of life. Partner stats (Pre-Kiva) Loan Portfolio: ~$550K USD Date founded: 1003 Sources of funding: 3 Performance on the Kiva Platform Kiva Partner Since: Jan 18, 2007 Total Loans Raised: 305 Total Loan Capital Raised: $117,000 Average Loan Size: $385 Average Time to Fund a Loan: 8 hours Testimonials from MFI • “Kiva's loan fund has brought a significant change over AFSG's growth and productivities and huge change to clients living standard” • “KIVA has been proved to be a powerful instrument for poverty reduction build assets, increase incomes and reduce their vulnerability to economic stress in Afghanistan” • “AFSG and its clients are really thankful of Kiva's fund and we hope that Kiva supports AFSG continuously” - Storai Sadat (Executive Director)

Strong Accolades About Kiva in the International Press “Innovation of the week: Kiva.org uses smart design to make a little cash go a long way.” "Revolutionizing how donors and lenders in the US are connecting with small entrepreneurs in developing countries” 2006 Year in Ideas Issue: “At Kiva.org, a schoolteacher in Kansas can partner with a seamstress in Kenya to jump-start a tailor shop. “You too can have a big impact with a small amount of money." "If you've got 25 bucks, a PC and a PayPal account, you've now got the wherewithal to be an international financier."

Strong Support for Kiva in the Corporate and Philanthropic Community Free payment processing and employee support 120 Million free banner impressions Free Google AdWords – 25% of traffic Free Yahoo Search Marketing and employee support Free promotion (Community Impact Award) Funding for Field Research and Development Free phones for cell based data upload pilot Free promotion of Kiva widget to bloggers Free computers and early Funder Featured Organization Early Funder Early Funder

Kiva Leadership Key Management and Staff Matt Flannery | Co-founder & CEO Matt is a former TiVo engineer with experience in website design and usability. He graduated with a BS in Symbolic Systems and a Masters in Analytical Philosophy from Stanford University. Premal Shah | PresidentPremal is a 6 year PayPal veteran and spent his last year researching technology and microfinance. He previously worked in microfinance in India, strategy consulting and graduated from Stanford. Isabelle Barres | Vice President, Microfinance Partnerships Isabelle is the former Director of Strategic Partnerships at the MIX, editor of the MicroBanking Bulletin and currently leads the microfinance industry wide Social Impact Indicators task force. John Berry | Director, Microfinance Partnerships John has over 20 years of microfinance experience and managed USAID’s $30M microfinance portfolio. Key Advisors and Directors Geoff Davis | President and CEO, UnitusGeoff helps run Unitus, one of the most respected organizations in microfinance. He was an early employee at the Grameen Foundation USA and has worked in microfinance worldwide since 1795. Mary Ellen Iskenderian | President and CEO, Women's World BankingMary Ellen is President and CEO of Women's World Banking (WWB), a global not-for-profit financial institution whose network includes over 50 microfinance institutions and banks. John Hatch | Founder, FINCAJohn is the founder of FINCA, one of the world's leading microcredit institutions with programs in 23 countries and over one million low-income families assisted since its inception in 1784. Sam Daley-Harris | Director, Microcredit Summit CampaignSam is Director of the Microcredit Summit Campaign, the result of the Microcredit Summit, which brings together microcredit practitioners from all over the world to focus on reaching the poorest. Team Background

Does Kiva make financial sense for my MFI? • Checklist Someone on my staff can: • Digitally photograph clients • Communicate via email / access the Internet regularly • Speak English or Spanish My MFI can: • Legally accept US Dollar debt from a foreign lender • Managing foreign exchange risk

Next Steps for Partnering with KivaKiva provides consistent, active support throughout the 5 step partnership process MFI Partner Next Steps Kiva Role • Complete and submit Kiva partnership application • Receive response from Kiva regarding application status • If approved, work with Kiva's Partnerships team to setup a pilot program • Launch 1-2 month Kiva pilot program • Assess pilot program outcomes and scale program based on needs • Provide guidance and feedback on all application documents and requirements • Review application materials and respond to MFIs within 1-2 weeks • Provide all additional documents and on-going, comprehensive assistance with Kiva pilot setup • Monitor pilot and provide on-going support • Provide comprehensive assistance for pilot scaling and work with MFI to determine monthly Kiva funding limit If your MFI is qualified and you’re interested in starting a Kiva pilot program or want more information contact: partnerships@kiva.org

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