The micro-lending fund that the Finance Association of Northwood University is launching, spearheaded by your's truly.

1. FANU Kiva Fund
What is Kiva?
Kiva.orgisa nonprofitgroupthatacts as a conduitforpeople tomake “micro-loans”to
entrepreneurs indepressedregionsof the world. These micro-loansare typicallyquitesmall,of short
duration,andcan be fundedbymultiple creditors. The minimumamountone canlendis$25.
The way Kivamakesthese loansavailable isthroughthe use of partnersinthe locationsinwhich
Kivaoperates. These partnerstake the formof schools,churches,local lendinginstitutionsand
charitable organizations. 80%of these partnersoperate asnonprofitswiththe remaining20% usingthe
kivafundingtosubsidize theirlendingatalowerrate than couldotherwise be obtained.
The partnershave the responsibilitytoseekoutbarrowers,performdue diligence,andthen
pass theircasesonto Kiva.org. Kiva poststhese cases; detailingthe nature of the loan,the barrowers’
delinquencyrate,andfinancial position. Itisthenupto the individual lendersonKiva.orgtodecide
whetherornot the barroweriscreditworthy. Once the loanhasbeenfullyfundedbyKivausers,Kiva
will wire the moneytothe local partnerswhothenlenditto the barrower.
At thispointitis the responsibilityof the partnerstocollectrepaymentandwire the principal
back to Kiva.org,whothenreturnsthe principal tothe original lender. The onlyinterestcollectedisthat
whichthe local partnerscollecttocover theiroverhead. All overheadforKivaiscoveredbyseparate
donationstothe sight. All creditKivaprovidestopartnersisat 0% interest. The individual lendersusing
the sightalsoreceive 0%interest.
It isimportantto note that Kivamaintainsstrictqualitystandardswhenselectingwhomthey
partnerwith. Thisqualitycan be seeninthe 98.79% repaymentrate seenbyKiva.orgusers.
Mission:
It isthe missionof the Finance Associationof Northwood University(FANU) Kivafundtoprovide
lowinterestmicroloanstosmall businessmenindevelopingnationsinordertofostergrowthand the
entrepreneurialspirit. Furthermore,we willstrive toinspireanopennesstofreedomandcapitalismby
demonstrating,throughgenerosity,the wealthanddecencyof afree enterprise society. We hope to
achieve the dual goalsof helpingotherstohelp themselves, whileatthe same time helping ourselves to
fulfillthe moral obligationof sharingthe greatwealthof oursociety. We aimto use thisfundas a
meansof empowermentratherthana handout. In so doingwe hope toavoidthe evilsof dependency
and resentmentthathave plaguedcharitiesadinfinitum.
Charitable Goals:
 Promote free enterprise andentrepreneurshipin developingnationsbyfacilitatinglow interest
lendingtosmall businesses.
 Buildgoodwilltowardscapitalismandthe UnitedStates.
 Setup a philanthropicoutletforthe wealthgeneratedby the currentleadersof afree enterprise
society.
 Helpothersto helpthemselves.
 Avoidthe pitfallsof dependencyandresentmentthatarise fromcharitable handouts.

2. FANUGoals:
 Gain experience incredit andrisk analysis.
 Become familiarwithinternational creditmarkets.
 Gain experience inselling(our fundtopotential donors).
Strategic Goals:
 To preserve capital whilemaximizingloanturnover.
 Because anyinterestcollectedisretainedbythe local lendinginstitutions,we collectno
interest,andthereforehave noothermetricforgaugingour performance.
Rules:
 No loanwill comprise greaterthan 10% of the total fundtreasury.
 No loanswill be issuedinnationshostile tothe UnitedStates.
 The fundwill complywithall sanctionsimposedbythe congressof the UnitedStates.
 All loansmustbe approvedby a majorityvote of the governingbodyof the fund (FANU).
 No moneywill everbe withdrawnfromthe fund.
 Anyamendmenttothe foundingcharterwill be approvedby 2/3of the FANUstudentbody.
 100% of all donationswill be usedtomake loans.
 All loansmustbe commercial innature (nohome loans,car loans,personal loans).
 All loanswill be made to enterprisesof lawful andethical bearing.
 A quarterly auditwill be conducted. Itwill includethe beginningand endingbalance,change in
balance, the runningtotal of dollarslentsince inception,andloanturnoverforthe quarterand
since inception.
 Shouldthe fundbe dissolvedall moneywill be donatedtoKiva.com.
FundraisingPlan:
Fundraisingwillbe conductedonce everysemester ata time tobe determinedbyFANU
members. Donations will be solicited fromindividuals,charitable organizations,businessesand
nonprofitgroups,andNorthwoodUniversity. Itisour goal to raise at least$500 to start our fund.
All moneycollectedwillbe usedfor lending. Nodonationswill be usedforoverhead. A
quarterlystatementof the fund’stotal lending todate will be senttoanydonorwho hasmade a
contributioninexcessof $100 (inthe formof an email).
LendingStrategy:
We will tryto mitigate the above risksusingaconservativeapproach,focusingondiversification
and thoroughdue diligence. Byavoidingoversizedpositionsandconcentratedlendinginanyone area
we hope to stretchour capital as far as possible.
The qualitative meritof debtorswill alsobe examinedwhendeterminingwheretoallocate our
capital. We will lookforbusinesseswithalikelychance of successanda realistictime frame of
repayment. We will trytofocus ourlendingonenterpriseslookingtomake capital investmentsthatwill
generate immediate cashflows.

3. As the fundwill be assumedtooperate inperpetuity,we will measure oursuccessbycalculating
the loanturnoverof our fundin the formof a total amount loanedandrecovered since inception,
dividedbycapital raisedsince inception.
Potential Risks to Capital:
 Individual Defaultrisk
o Due to the small size of mostenterprisesseekingfunding,aswell asthe unsecured
nature of the loans,there isa higherlikelihoodthatthe debtormaybe unable tomeet
theirobligationresultinginapermanentlossof capital.
o Thisriskmay be mitigatedthroughconservativesizingof individualloans.
 Currencyrisk
o The exchange rate of foreigncurrencies maychange resultinginlossof capital.
o There isno abilitytohedge thisrisk throughKiva.com.
 Political risk
o Foreigngovernmentsmaybe corrupt, unstable,orunderexternal threat.
o Diversificationof lendingacrossnationscanminimize the impactsof thisrisk.
 Economicrisk
o General economicconditionsmaydeteriorate resultinginbroaddefaultsdue tothe
tenuousfinancial positionsof manypotentialdebtors.
o There isno way of diversifyingorhedgingthisrisk.