Kiva City Milwaukee. Image from the City of Milwaukee website.

Kiva City Milwaukee. Image from the City of Milwaukee.

The concept of crowdfunding, including sites such as Kickstarter and Indigogo, is ubiquitous in Millennial culture. As a generation, we’ve become wary of traditional lending and sourcing streams as predatory practices, and crowd-sourced financing is seen as a safe and sometimes altruistic alternative.

Many of these platforms follow the same premise: someone comes up with an idea (any idea), puts together a nifty promo video, and lays out a series of funding goals. These funding  goals may or may not include incentives, like “donate $25, get a coffee mug.” This system is one of donation towards an idea, whether or not they’re fulfilled.

But in early 2015, an innovative crowdfunding concept expanded to Milwaukee. Kiva Zip, championed locally by Mayor Barrett and Wendy Baumann of the Wisconsin Women’s Business Initiative Corp., focuses on micro-lending rather than donating. It’s not a charity, and it’s not a scam: it’s a local investment engine.

These loans are completely interest- and fee-free. 0%. Nada. Kiva is a non-profit operating off their own donation sources. Total loan goals max out at $10,000, though that can be matched by other organizations. That limit helps keep the projects and paybacks realistic. Since 2005, 98.45% of loans through Kiva have been repaid (to the tune of $776 million). While it started in Africa, Kiva Zip now operates in cities around the US.

These loans aim to help those in our own communities who would like to start or expand their own business, but lack the funds and/or qualifications to utilize traditional sources. But Kiva doesn’t expect the general public to simply give money to anyone a bank would refuse, and instead operates with a two-tier qualification system:

  1. An entrepreneur’s project must first be vouched-for by a local “Trustee.” These 30 local Trustees are respected and influential groups and businesses in our area, with the clout to back up the entrepreneurs they’re supporting and an interest in seeing their success.
  2. Depending on the loan goal being pursued, an entrepreneur must first invite friends and family to contribute before opening it up to the public viewing. This enforces accountability towards people they know, not simply faceless backers.

Once those criteria are met and a profile outlining their business intention is set up, the community is welcome to donate any amount starting at $5. Currently, the Diller-von Furstenberg Family Foundation is matching select loan contributions, following the City of Milwaukee’s lead.

Projects currently available for lending in Milwaukee range from fruit and vegetable juices and dressings to high end clothing designs to tax services. Kiva’s lending concept means your neighbor gets to start or expand their business, and you (98.45% of the time) get your money back from the deal. It’s social and community encouragement at its finest, without handouts or high-horses.

Get lending today.