This type of lending is not tax deductible in Australia - it's a loan.
Here's how I approached my Kiva lending. I figured I'm not going to miss $10 a handful of times a year. So, I made my initial loan of $25 (US) to a borrower and when $15 had been paid back I topped it up with another $10 and made my next loan. I then had two loans chipping away at repayments. When another $15 (total) had been repayed I topped it up again, but this time I added a small donation of about $3 to Kiva to help them with their work. Each time about $15 is paid back I top it up and relend it. As far as I'm concerned this money is a donation - I have no intention of withdrawing it and it will keep going around in the microlending culture and continue to assist those who need it. I'll keep reassessing my lending structure from time to time, and tweak it as I can manage.
Just a couple of things to keep in mind if you decide to help through Kiva:
- Check the repayment terms. Some loans are paid back bit by bit each month; others are paid back in full at the end of the loan term. The cash flow of my structure works when loans are paid back bit by bit each month. Having said that, the more loans I have going means I can help to fund end of term repayment loans too. Just worth keeping in mind if you're relying on the return of the money to fund your next loan.
- When you make a loan and go to the checkout, check the options for donating to Kiva. For a while it was defaulting to a $3.75 loan and you had to uncheck the option. It may have changed, and I had trouble donating another time.
- Yes, interest rates can appear excessively high, but details of how this works is explained well here. It's nowhere near as bad as it is made out to be, and in fact, works successfully.