Boothbay Region High School Interact Club members are investing $500 from fundraising efforts into microloans across the globe, and the Rotary Club of Boothbay Harbor is matching those funds. Rotarians are also working with the students through this project to foster finance and investing skills. Director of Youth and New Generations Jeff Long has been working on financial literacy with BRHS students and microloans provide good examples of some basic questions to ask, like will they be able to generate income directly or why are they going to repay the loan?
Club Coach Ingrid Merrill splits the club into teams of three and allots money for each group to invest. The Club maintains an account with Kiva Microloans. Once the groups have researched who they want to loan money to, they submit their case to Merrill, who submits the loan. Most of the people taking out the loans are asking for modest investments around $1,000, but Kiva essentially creates a crowdfunding process, Merrill explained.
Kiva sends the money to a local partner who identifies prudent borrowers. Then the money goes to the borrower who works out a repayment plan and schedule. Repayment goes to the local partner who returns it to Kiva which returns it to the loaner.
“There are two risks associated with making these loans,” said Long. “Is the borrower going to be able to generate the money to pay back the loan? The second is that we are exposed to this local partner because we are relying on them to get out there and get the money back and get the money back to us. If they fail, or if they don't perform or if there's any fraud or anything like that, then we can have a problem.”
Merrill and Long recommend the students diversify their loans and be open to lending through multiple partners across several regions rather than the same partner. It is good for learning people's various needs, and is good investment practice.
Interact Club President Hali Goodwin, a junior, said microloans surfaced as an idea when she was a freshman, so the fact they are now following through with the program speaks volumes to student commitment.
“It's really cool to be able to see the people and see their stories online and slightly interact with them while we're helping invest money in something we know is for a good cause,” said Goodwin.
While the club members can watch their investments, Goodwin said returns are almost always 100 percent, but even the rare risk of seeing little to no return is worth it to know they are helping somebody somewhere.
“Once it comes back, we invest it again back into the program and kind of just keep going.”
Merrill said the club members will be coming back in every month to see the progress of their loans and reinvest any returns made in the meantime. With help from Rotarians, who also have their own team account on Kiva, Merrill said students are already getting the hang of the process.
One of the cool things about this program besides learning geography and financial literacy is learning the statistics and ratios involved between business types, loan types, and the differences and likenesses between loan seekers.
“You can go by partner, by country or by sector,” said Merrill. “That's the idea, trying to get (loans) diversified … but at the same time maybe there are some things that we're only looking at to get our money back versus, are some of these donations?”
Loan types vary wildly from agriculture to arts, business to education, and building and housing to personal medical expenses. One group of students decided to invest in a motorcycle repair shop in El Salvador. Another invested in a Burkina Faso farmer’s livestock.
“One of the students doing one of the arts loans found an artist's page and you can buy their artwork,” said Merrill. “It's interesting to see how they all have different ideas of what's important. It's a real life thing.”
Check out the Interact Club’s Kiva team page at: https://www.kiva.org/team/boothbay_region_high_school_interact_club_