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Matt Flannery, Kiva CEO and Co-Founder, Replies
October 12, 2009
By Matt Flannery Tags: Kiva[I am honored to host Matt Flannery as my first guest blogger. My October 2 post about Kiva generated copious commentary and tweeting. Accepting a guest strays somewhat from the construct of this blog, but seems highly appropriate in this case.--David Roodman]
Hello Everyone,
This is Matt Flannery, Co-Founder and CEO of Kiva.
I recently read and enjoyed David’s article “Kiva Is Not Quite What It Seems”. The article is well-written and thoughtful, and has generated a lot of passionate responses. I’m writing here because I thought it would be helpful to hear from Kiva, as part of this dialogue, to increase understanding about what Kiva does and where it is going.
I see Kiva as a public property, “owned”, in a sense, by its three main constituents—the entrepreneurs, the lenders and the MFI partners, all of whom we serve. It is a delicate balance to serve all three at once. Sometimes it may seem that, for a particular decision, one has to benefit at the expense of the others. However, this is a short-sighted way of looking at things.
I firmly believe that, in the long run, each of Kiva’s constituencies want the others to be well-served, as they are all inter-connected, and rely on each other in their shared efforts towards poverty alleviation. What is needed to create this environment of mutual support is rich communication, promoting greater understanding around the challenges and needs of each constituent.
The Kiva website serves as the hub for that communication to take place. However, large gaps in communication still remain. We at Kiva have a long way to go to increase the level of understanding between the three parties and this article sheds some light on certain areas where we can improve.
Most prominently noted in David’s article is the challenge of communicating to our user base regarding the mechanics of how Kiva functions. Most of Kiva’s users have very casual knowledge of microfinance. In fact a large percentage of them had never heard of microfinance before Kiva and had never donated or lent to an international cause. This presents a major challenge in terms of simultaneously educating them and empowering them to make an impact in our field.
Our approach to this challenge has been to provide a very easy way to engage users, and provide a wealth of information to them as they become more curious. The oversimplified nature of our home-page reflects this broad strategy. Certainly the Kiva homepage does not describe the nuances of microfinance or Kiva’s approach. In fact, it largely ignores the details. However, it is our intention to provide every last detail of the mechanics of Kiva to those curious users. My hope is that, for those that care to delve deeper, users can learn all they need to know—and more—by looking at our website alone.
A main focus of the article has to do with the fact that most of Kiva’s loans are disbursed before they are funded on the Kiva site, which is true. The article points out, rather accurately, that most lenders on the site do not understand this. It goes on to imply that Kiva is taking an active role in perpetuating this misperception.
My response to this critique is two-fold. First, I believe that allowing pre-disbursal is necessary for the success of this model. Second, I think we can do better at educating our users about how and why this is the case.
When Kiva started in 2005, we were working with a pastor in Uganda who had no other source of funding for loans. As he relied on Kiva funding only, it was easy and necessary to wait for the Kiva funds before handing out loans, thus all of the first loans on Kiva were disbursed after they were funded on the Kiva website. In addition, our early Field Partners in 2006 and 2007 also needed to wait for the money because they had no other sources of funding. Post-disbursal was the norm at Kiva in the early days. A lot of the writing, and graphics, on our site, were produced during those early days. For instance, the “How Kiva Works” page was created to describe the Kiva model in the days before pre-disbursals.
As Kiva grew, and millions of dollars poured in through the website, we began to work with larger MFIs who could handle the sums of debt capital that the Kiva Lender community was able to offer. As loans began to fund quickly, MFIs began to expect and depend on Kiva loans being funded. Instead of waiting, MFIs began to disburse these loans in advance, assuming that the funding by Kiva Lenders on the website would take place. Good MFIs are client-driven. To make their clients wait unnecessarily would have been bad customer service. So, for many of our Field Partners, pre-disbursal became the norm.
Rather than outlaw this practice, which allowed MFIs to be more efficient and better serve their clients, Kiva decided to just make the practice transparent on the website, and to let the lenders decide whether to fund a pre-disbursed loan or to withhold. Hence, we created a system whereby MFIs were required to list the disbursal date on each and every “Make a loan” page, beside the rest of the information we considered important for lenders before making the decision to lend. This was our way of communicating this important detail to our users. We also listed detailed descriptions of the mechanics of Kiva in the Help Center, for those curious about loans that have already been disbursed. Kiva Our Fellows also blogged about this practice and created videos explaining how the process really worked. These, we believe, were great efforts at increased transparency.
However, we can still do better. And this brings me to my second point, where I agree with Mr. Roodman. The “How Kiva Works” page, at the time of this piece, was rather inaccurate because it implied a sequence where entrepreneurs get funding only after a loan is funded on the site. Although the “Make a Loan” pages contained the disbursal date, the “How Kiva Works” page was over-simplified to a fault. To address this, in the short term, we updated the page last week. It now contains more detail with regard to pre-disbursals. You might want to check it out. [See how item 2 has changed since this 2008 version--DR.]
This was just a short-term patch on a problem we had let linger on the site since the early days. In the future, we will update that page and others to bring more clarity to the new user on how things currently work. So, this is one situation where constructive criticism has contributed to a strengthening of Kiva as an organization. I’d like to thank Mr. Roodman and the readers of the article for their help here.
There are a couple other areas that I would like to clarify.
The article also claimed that “Kiva charges 2%” on loans made through the platform, to our MFI partners. This is not true. In fact, Kiva does not charge any interest to its MFI partners, and passes along 100% of the loan funds raised on the site to its MFI partners. That was just an innocent mistake on the part of the author.
Further, I want to assert that Kiva doesn’t fear that complete honesty would undermine growth! In my humble experience, I’ve learned that honesty creates stronger bonds between the organization and its constituencies. Time after time, this lesson has been reinforced, and it is a lesson which affects many operational decisions within the organization to this day.
Kiva doesn’t believe that lending is a silver-bullet, poverty alleviating mechanism. We do believe, though, that lending is one meaningful tool in a larger set of tools that the development community can use to alleviate poverty. Currently, the lending experience is highlighted on our website, while “plus services” such as savings and education are not. This doesn’t mean that we don’t believe they are beneficial or that they wouldn’t be successful on the web. Last year, I spent a few weeks in Cambodia and witnessed dozens of women who were given a savings account for the first time, thanks to our MFI partners there. Rather than save under the mattress, they were creating accounts with an MFI. In a dangerous place like Cambodia, this is an incredible service.
I can imagine that one day Kiva will highlight savings and education on our site. At this early stage, we haven’t been able to create the functionality to enable that. Getting lending right has been quite challenging, as you can imagine. Once we feel like we have nailed that experience, you can imagine that other services will be offered through Kiva.org. Many of our partners already offer such services to their clients and we are open to help fund those services at some point in the future. However, it may be a while before this expansion takes place as our current product has a great deal of potential still to achieve.
One of the contributions that Kiva has made is to demonstrate that empathy increases generosity. The pictures and stories on the Kiva site increase understanding between various parties that would otherwise operate in completely different universes. When understanding increases, so does empathy. When empathy increases, so does generosity. People are inherently more generous towards people and causes they understand.
Kiva has played a small role in increasing understanding between the constituencies on the site. However, we have a long way to go. As technology spreads throughout both the developed and the developing world, I hope to see the strength of the connections increase as well. You can imagine that, as wire transfer costs decrease, we could see a loan funded on Kiva the day that it is disbursed. You can also imagine that deep lender to borrower communication can be widespread on the Kiva site. Kiva has entered the game early and there is so much further to go.
I will conclude with a compliment to Mr. Roodman. I really enjoyed his article and, in particular, I learned about the history of child sponsorship in greater detail. We have much to learn from that history. We can learn what worked well with child sponsorship and also what we should avoid.
In particular, we need to avoid playing the role of “playwrights”, as the article describes. In my experience, there is no greater play than reality. Any attempt to fictionalize falls short, and never does reality the service that it deserves. With the help of technology, I don’t think Kiva needs to repeat the failures of child sponsorship. We don’t need to be playwrights on the Internet. We are going to do our best to avoid that trap, but certainly value the ongoing help of a critical and engaged user base along the way.
Thank you.
Matt
Kiva.org CEO and Co-Founder
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48 Comments on “Matt Flannery, Kiva CEO and Co-Founder, Replies”
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October 13th, 2009 at 10:57 am
Great initial piece, David. Great response Matt. This is the kind of thoughtful dialogue I wish there were more of.
Thanks
October 13th, 2009 at 1:35 pm
Echoing Zamboangadon’s sentiment ~ thank you, David and Matt.
October 13th, 2009 at 4:30 pm
Here Here! Journalism does not have to be combative.
October 13th, 2009 at 8:58 pm
perhaps Kiva needs something like CommonCraft’s Plain English series to describe what it does.
http://www.commoncraft.com/
October 14th, 2009 at 12:01 pm
Indeed a great conversation. I was especially triggered by this argument that Matt made:
“One of the contributions that Kiva has made is to demonstrate that empathy increases generosity. The pictures and stories on the Kiva site increase understanding between various parties that would otherwise operate in completely different universes.”
I am involved with http://NABUUR.com, a site where similarly entrepreneurial people in developing communities can reach out to the world, to be heard and as a result to be connected, to individuals willing to volunteer their skills and time.
In both cases, recent technology has enabled a direct connection between people, enabling “empathy” to counter “exclusion” as a mechanism behind poverty.
Kiva helps establish financial services by making more money available to MFI partners, and is looking for ways to make more direct connections possible. NABUUR has the direct connections, and is looking for ways to let more partners help channel the available knowledge and skills as services.
As Matt says, it’s still early in the game and a long way to go, and so it’s great to see the gap between dreams and reality narrowing!
October 14th, 2009 at 2:20 pm
Good leadership is vital to donors. Matt’s thoughtful response just gave KIVA a boost in my already positive admiration.
October 14th, 2009 at 7:56 pm
Perhaps Kiva can partner with the World Council of Credit Unions to offer matched savings accounts.
October 15th, 2009 at 5:56 am
If Kiva was truly committed to ‘transparency’ like they say they are, they would change their homepage, not their about page… the root of the majority of the confusion… where it still implies to potential and current users that you lend directly to a specific entrepreneur, which according to David’s article is simply not the truth (which is admitted by Matt, but not resolved).
I was an advocate, albeit an uneducated one, of kiva’s before reading David’s article, and it’s sad, but in my mind, they have taken a big hit. I actually feel pretty deceived. Sure, I should have read the fine print.. but in my opinion there should never be a discrepancy between the big print and the fine.
October 15th, 2009 at 8:08 am
This is a great, thoughtful response to the original article. I hope Kiva goes on to fully disprove the notion that lender empathy/generosity and charitable efficiency are at odds with each other, first by more fully disclosing their methodology as they have begun and pledged to continue doing, and second by expanding into some of the other areas mentioned, such as savings.
While the issue of the cost of the photos and stories seems to damn the enterprise to at least some degree of inefficiency for the sake of provoking generosity, I do not think this is inherently true. Seeing photos and reading descriptions not only increases lender empathy/generosity, but also lender _confidence_, as they now have direct (and testable, as proven in the New York Times video of the Baker from Kabul referenced in the first article) evidence that their money is being used for something productive, rather than vanishing into a bureaucracy. Of course, for this to be a legitimate point in Kiva’s favor, the photos and stories must in fact be an accurate reflection of how the money is being used, and it seems like there is still some work to do in this area. But as technology gets cheaper and cheaper, true accountability and status tracking for individual projects will become feasible.
Yes, more detailed reporting means more overhead for the MFIs, but the long term benefits more than outweigh the overhead (if it’s done right). Not only will more detailed analysis vastly increase lender confidence and spread the word in the western world that microfinance works, _it will simultaneously provide an incentive for MFIs to publish much -needed data that can be studied to determine whether it actually does._
October 15th, 2009 at 1:36 pm
Nice work Matt. You made Dave’s original article into something useful.
October 15th, 2009 at 6:28 pm
Like other commenters, I appreciate the thought that went into (particularly) Matt’s reply. I don’t think Laura Levenson’s response is fair to Kiva. In a real world, rapidly growing enterprise it’s hard to keep across every detail to the degree that she seems to require. In the end there are inherent tensions in what Kiva seeks to achieve that cannot be perfectly resolved. More power to those (like Kiva) who try anyway. I think I know who’s going to heaven!
October 16th, 2009 at 2:02 pm
This kind of refreshing honesty and acceptance of constructive criticism is one reason I participate in microfinance via Kiva. Long may it live and continue to serve borrowers around the world, including the US!
October 16th, 2009 at 4:47 pm
I was aware that the disbursal date was generally earlier than the funded date, but this site does a good job of explaining the reasoning. As a Kiva donor, I am not less willing to loan for having learned this.
I would be interested to hear if the repayment distribution is in fact still based on the P2P model. That is, are my monthly repayments based directly on the repayments from my loan portfolio?
October 19th, 2009 at 5:34 pm
I heard David Roodman speak at a Brooking event last week. He presented his blog and led a vibrant discussion about Kiva. The paper (http://www.brookings.edu/papers/2009/10_kiva_global_giving_kharas.aspx), “Do philanthropic citizens behave like governments?” uses Kiva and GlobalGiving data sets and doesn’t mention any of the debate here – but transparency around Kiva seems to come up in many contexts.
On that point, I applaud Matt for leading a discussion, rather than avoiding one. He must read Beth Kanter on how to use social media to maintain friends. As counter-intuitive as the “pre-funding” issue remains, at least it is public on the website. I doubt you’ll see anyone else in the banking industry anywhere near as transparent as Kiva.
I just wish they could explore models where money is loaned at cost, rather than through a for-profit middle man, which is my understanding of how Kiva must necessarily work, in order to reach the poor.
October 27th, 2009 at 11:31 am
At this point I feel quite disillusioned. I have advocated for Kiva for several years and gotten friends and my local religious council to contribute.
At this point I’m not even sure if the entrepreneur that I “fund” is connected to me at all. Do their repayments actually reflect on my funds? Am I only connected to an MFI?
I am seriously considering letting my repayments sit and withdrawing my money and putting it into a local charity where I know what the money is doing.
October 28th, 2009 at 5:45 am
To both writers – Great job! Very honest and positive.
October 28th, 2009 at 12:18 pm
An excellent response and another reason that my daughter’s micro-lending fund will stay with Kiva: http://nimbleit.squarespace.com/the-blog/2007/2/1/maddys-100-kiva-micro-vc-venture-fund-update.html
October 29th, 2009 at 9:48 am
Thanks Matt,
I appreciate everything Kiva does and welcome the fact that human story helps us connect and retain the purpose of why we lend.
October 30th, 2009 at 1:28 am
To be honest, I must admit that I feel deceived and somewhat naive and foolish. I have been making loans on Kiva for a little over two years and I will have to rethink whether I will continue.
I would love to say that I will just move my giving to another organization, but the truth is that this has caused me to lose a lot of faith; not only in Kiva but in every charitable organization.
Maybe I am in a minority in not having realized that Kiva loans were predisbursed, but that is a mute point to me.
I’m very disappointed, Matt.
October 30th, 2009 at 6:30 pm
I honestly think that the Kiva model is fantastic! It’s a great platform to find funding for microloans.
So what if the MFIs put up capital first for these loans? I think it’s totally justifiable. The microloans you choose to fund are still funded by YOU as the lender. The MFI just acts as an intermediary solving the funding/lending timing mismatch. As a consequence, they take on the risk that the funding amount does not match the lending amount. So basically, if YOU as the lender decide not to fund Loan X, then the MFI will put in the capital for it.
The good news is that all microloans are funded! You just pick the ones that YOU want to support. With more support, this frees up the amount of capital an MFI has available (as you are essentially buying up that loan made with the MFI’s capital), which allows the MFI to give out more microloans.
I think Kiva’s platform is fantastic and everyone should get on board and lend. Really… does it matter that loans are funded first? Shouldn’t you be happy to know that while people are umm-ing and ahh-ing about a loan, the school is being built?
I think it’s good that the funding/lending timing mismatch is being solved
The core values are still there, you are still funding that loan that you ‘clicked’ on. This is a better model.
October 31st, 2009 at 9:50 am
Thank you for this very thoughtful clarification. I once spent hours on the website to get answers to questions and concerns I had regarding loan disbursion — I was confused by the loan disbursion date as I was of the understanding that the loan was waiting to be sponsored.
I embrace the practice of disbursing loans before receiving KIVA funding – however I firmly believe transparency is a must. When I promote Kiva to my colleagues and friends, they are initially skeptical – anything that involves investment usually stirs the fires of skeptism – and I must be able to fully describe both the vision and the service.
This article is an excellent step in the right direction. I feel confident that I have a handle on exactly what it is I am participating in. I hope you continue efforts to fully disclose the details of the processes and they evolve.
Thank you! I am about to make my 17th loan at this very moment!
November 1st, 2009 at 5:38 pm
I am not certain that I completely understood how Kiva works. However, I do not want a relationship with umpteen MFI’s across the world. I do like spreading my loans out across cultures. (Including the US). I want Kiva to be as efficient and effective as possible. Kiva allows me to do something with my funds that would be very difficult to accomplish on my own and it is simple on my end.
November 1st, 2009 at 5:52 pm
is that it? A controversy? Why is MFIs putting up capital first not a good thing? Does that not just mirror the MFIs trust in KIVA? And thus in us as lenders/financiérs? Micro-lending is not about the creditor, it’s about the entrepreneur.
November 9th, 2009 at 2:26 pm
I’m pleasantly surprised at the intelligent and cordial discourse that I have found on this blog. This is what blogging should be all about!
Thank you!
November 9th, 2009 at 6:00 pm
I am very disappointed, as I really thought that we have the contact to the real people which are stated on KIVA’s web. I have made recommendations this way. If I have to lend to a Pot from which the loans go (maybe) to the Entrepreneur, I will find an entrepreneur myself to lend to.
November 10th, 2009 at 12:16 am
I’m surprised that this is such an issue. In reading through potential “donors,” I’ve seen statements that the loan has already been disbursed, so clearly the “loan” is going to the MFI that’s already dispensed the money. Fine. In my opinion, the information’s there for anyone to see.
November 10th, 2009 at 1:01 am
I am happy with your response to Dave’s article, Matt, but I am still a little confused – what happens if a loan that has already been disbursed by the MFI is not funded on Kiva?
November 10th, 2009 at 10:09 am
I have grown to love Kiva. It creates a sense of connection across the world, both to the entreprenuers and with the lenders who jointly fund the loans. I knew that the loans were disbursed before they were funded. That makes sense and is a credit to the strength of the Kiva community. But, to me, it makes no difference. I still feel that I am providing the funds to that person. If Kiva did not exist, that loan might never have happened.
I am a bit surprised that the MFI might step in for an entreprenuer who did not repay his loan, though ultimately that probably makes sense. I am disappointed, however, that the entreprenuer does not know about Kiva’s involvement in their loan. It seems to me that it could help bring the world together a bit if an entrepreneur understood that people across the globe had come together to support him or her.
November 11th, 2009 at 1:52 am
For anyone who feels a bit deceived, you are completely free to have that feeling, but I’d encourage you to try and take a trip to see development work first hand. You’ll quickly realize every organization, religiously motivated or not, has problems. BUT, the work most of us are trying to do is well worth not doing it perfectly.
I knew Kiva had and still has issues in regards to payments, clients privacy and others. Even knowing those issues, I still support Kiva and use their product.
In my opinion, Kiva’s greatest success is not in P2P lending or even in raising money for MFI’s. Their greatest success is bring transparency to MFI’s. They are currently the largest global MFI regulating body (that I know of). And since they’re not a true regulating body, their desire isn’t to hurt all the MFI’s that aren’t perfect, rather they work along side MFI’s and try and get them up to international standards. Of course they will not support shady business practices and you can look at Kiva’s Partners page to see many MFI’s that are no longer allowed on the site.
November 11th, 2009 at 7:36 pm
Hi David,
Today was my first visit to your blog which was brought to my attention as a result the New York Times picking up on your posting “Kiva Is Not Quite What It Seems”. What a negative view on Kiva.
In contrast to the compliments you received, I was extremely disappointed and surprised at the underlying negative and somewhat misleading message you created for Kiva. How else would the New York Times find this news exciting enough to publish?
I would like to commend Matt Flannery for his extremely polite and complimentary response to what I thought was an over the top commentary on a known and easily corrected issue.
Technically of course, you are correct. My issue with the posting is one of perspective. You used a sledge hammer on a thumb tack. This is not good for Kiva and not good for the industry.
Yes. The world does need a critic such as you, to assist the playwrights to expand boundaries and deliver maximum value. However critique doesn’t do any good if you spend 70% of your content critiquing another playwright’s play.
The title was “Kiva Is Not Quite What It Seems”, yet over 70% of the content is highlighting fraudulent practices in the NGO arena from the 90’s.
You go to great lengths to explain the negative issues uncovered in Child Sponsorship programs (not even remotely linked to Kiva activities) where irresponsible and fraudulent behavior was exposed. With so much content weighted towards the 90’s NGO issues, it infers by association that Kiva is dancing close to those despicable practices and we know this is not true. I am sure this was not your intention.
Just consider some of the below extracts jumbled into the critique under the Kiva title. .
• If a charity obscures how it operates, should we trust its claims about its impact.
• So while Kiva is feeding a misunderstanding, it technically isn’t hiding anything.
• Less than 5% of Kiva loans are disbursed after they are listed and funded on Kiva’s site. ( “So what. I am more concerned that 100% goes to the microfinance lending organization”)
• In short, the person-to-person donor-to-donor connections created by Kiva are partly fictional. I suspect that most of Kiva users do not realize this. Yet Kiva prides itself on transparency.
The points you make are technically correct, and Kiva has acknowledged these areas where improvement is needed and in some cases corrective action has already been taken.
I do share your concern that the microfinance industry can be severely impacted if individual organizations are not transparent, upfront and totally honest with the market.
Maybe you could post a blog that deals with these issues from an industry perspective and generate ideas that can help steer the directing and pace of transparency and clarity. If anything Kiva is guilty for not being clear and not guilty for not being transparent. Come on guys, this whole posting reflects the sentiments of the title by a famous playwright “ Much to do about Nothing”.
And in conclusion:
To all of you who said they would not lend through Kiva again, please rethink, because nothing in this posting changes the fundamental benefit and reasons why you lent the money in the first place. The reality is that Kiva activity provides funding to real people, in real situations and all of the individuals posted are real. The borrowers receive 100% of the funding collected and Kiva does not charge interest.
Go Kiva.
November 14th, 2009 at 9:18 am
I read the pieces in the Times and, rather than put me off from Kiva, it reminded me that I have been meaning to make a loan for a couple years and have not gotten around to it.
Thank you, Matt, for your forthrightness about the “controversy,” and for facilitating the loans. Even though I went onto your site knowing that I wasn’t actually giving money to the exact same person I clicked on, I still enjoyed the feeling of connecting with another human.
Thanks again,
Meghan
November 14th, 2009 at 11:07 am
I recently joined Kiva. I’ll admit I did not delve deeply into the exact functionality of the process. I’m not surprised at how things actually work, having been on the Board of a local chapter of an international charity. The basic truth is that my loan helped make a borrower’s situation better. The personal aspect does have an impact, as the MFI’s and KIVA have to present loans that people will sponsor. That means that they will fund entrepreneurs that the lenders want to lend to, even if not sending my money directly to the one I chose. I’ve been impressed by KIVA’s willingness to post critical comments so I can read about issues and decide for myself. I will continue to make loans and contribute occasionally to KIVA so they can do the checking and management to ensure my loans are used constructively.
November 15th, 2009 at 4:22 pm
Let’s focus on impact for a minute… Is Kiva having as amazing impact as people think?
I must start by disclosing that my desire is to help donors make the most effective donation decisions possible, I work to give individuals access to expert information and perspectives that might otherwise only be accessible by a privileged few, and my organization will soon be releasing expert-perspectives about Kiva.
I have thoroughly enjoyed reading David’s initial blog, Matt’s guest blog reply, and all the thoughtful comments/replies to both of these. Personally, I am very passionate about the potential of Microfinance to change lives and also about effective giving. I believe the tension that David highlighted between effective fundraising and transparency is quite important, and I very much appreciated the balanced critique and Matt’s reply to address the communication challenges inherent to web-commerce and efforts to improve communication.
However, I believe the real question is about impact. I have often asked myself the question: is Kiva having as amazing impact as all the talk about it?
If Kiva is having impact (and especially impact at scale), then I would urge donors and lenders alike to continue supporting Kiva and to encourage Kiva to improve communications, as Matt is doing. If Kiva is not having impact, then I would raise some serious concerns.
While I cannot answer this question in a definitive, factual, 100% objective manner, I believe the signs are pointing to yes. And, I want to give readers and donors alike confidence that the answer to this questions is nearly-definitively “yes, Kiva is a top performing nonprofits in the field of microfinance!”
In a soon-to-be-released research effort by Philanthropedia (www.MyPhilanthropedia.org) that brought together over 100 experts in Microfinance, Kiva was one of a handful of nonprofits that was most consistently identified by the experts as being top-performing.
Within the next couple of weeks, donors will be able to view expert commentary on what elements of Kiva were identified as their greatest strengths, and what experts collectively believe are Kiva’s greatest opportunities for improvement.
Donors will also be able to easily donate to Kiva, or to a Donation Mutual Fund that supports all of the Microfinance nonprofits that the group of experts agreed were top performers. Microfinance will be the fourth social cause covered by Philanthropedia.
As part of my full-disclosure, Philanthropedia, launched its public-facing website earlier this month. Climate Change, Bay Area Homelessness, and U.S. Education are the first three social causes covered.
I hope that Kiva supporters do not reduce their support for Kiva, and that Philanthropedia is able to help connect donors with the knowledge of experts in the social causes they care about.
Best,
Howard Bornstein
November 18th, 2009 at 9:59 am
I am surprised at how people like to throw good things to the dogs because of their own selfish reasons. Kiva is doing a very good job in helping the poor because you find that before Kiva, some MFIs could not serve their poor clients because of lack of funds; but with Kiva, poverty alleviation is pushed a step away. It is these clients that the lenders fund to and no one else. Even the MFIs themselves are trying so hard to ensure transparency say for example, when you look at some of those group photos from some MFIs, the exact person interviewed is displayed in the small photo, here, the lender gets to know who exactly they are lending to. But how about for those where there is no photo of the one interviewed, but only the group photo? Does it mean this client does not exist? It’s like some one is giving me food and dictating that i take it for lunch or the following day. Just like in banks, savings are not just kept in the locks for the owner to come and withdraw but are used as loans but ensuring that this money is available when the owner needs access to them.
November 22nd, 2009 at 12:05 pm
I have read the article on NY Times and now the responce by Matt and feel also deceived somehow by Kiva.Matt says that Kiva does not charge any mony from the MFI’s. Can he tell us how much interest the MFI’s charge the Entrepreneurs? In some responses I received from my fellow landers the interest rate might be as high as 60-70%. Is that correct?
Sloudn’t Kiva’ as part of transparency policy publish these figures in their web site?
I’v been lending for about 3 years now and really don’t know if i’ll continue.
November 28th, 2009 at 2:35 pm
Let’s not sweat the small stuff!!…The real point here is that money is flowing in the right direction, giving opportunities to people who had little chance of creating these possibilities without microfinance. C’mon – let’s continue to share some of our good fortune! Erica
November 29th, 2009 at 1:50 pm
Matt acknowledges knowing that most lenders, responding to the presentation on the Kiva website, misunderstood the Kiva loan program. He justifies this on the basis of the good that the Kiva program reportedly accomplishes, in other words, that the end justifies the means. This raises the inevitable questions about what else is misleading at Kiva: interest rates, reliability of local lending organizations, compensation and expenses of Matt and others? I am very sad that a worthy program was misrepresented. I am very glad that some corrections have been made. I don’t know if I will ever loan through or donate to Kiva again.
December 1st, 2009 at 5:55 pm
Kiva keep up the good work, to be honest there really has been a lot of confusion on how Kiva operates and this confusion has created a lot of misunderstandings and mistrust. However I think it is important that you are adding value and improving on the standards of living of quite a number of families.
My organization back home in Zimbabwe once applied to be a field partner of Kiva but the application was rejected on unclear basis and the partner eligibility criteria back then also was not very clear but the purpose was. All the same – thumps up for Kiva
December 3rd, 2009 at 8:52 pm
I’m sorry but I was a fervent supporter until learning that the whole individual storyline is a fiction. Now, I’m just mad. I don’t see how the revised about page really clears up anything. The bottom line is that Kiva uses borrower profiles the same as other charities use “feed the children” poster children.
Either Mr. Flannery doesn’t “get it” or (more likely) he gets it but realizes that the truth would quash his venture’s meteoric growth. I think the fact that it takes Flannery TWELVE paragraphs to get around to sorta, kinda telling you this fact is very revealing. I had to re-read the explanation above several times along with the NY Times article to really get a firm understanding of what was really happening. I don’t think it was an “accidental oversight” that the website remained obscure.
Flannery now uses revisionist history to have us believe that “Kiva decided to just make the practice transparent on the website…whereby MFIs were required to list the disbursal date.” That’s BS for “you caught us and now we have to make it look like we weren’t really trying to pull a fast one.” The Kiva team knew exactly what was happening and turned a blind eye.
Don’t get me wrong, I’m not saying that Kiva doesn’t do good works or that this is not a valuable service. This is just not the case. What I’m talking about is the fact that I can (and do) give cash to any of a million charities out there, most of which also do great work. In fact, I get asked to do so about twice a week — including getting strong-armed into giving my “fair share” to United Way. There’s no shortage of worthy causes. Since we can’t give to them all, we have to pick those we feel connected to or that we feel have great importance.
Here, participation was billed not just as an act of giving cash but a chance to participate in the process. That is, this was to be a chance to not just hand over a check or Paypal receipt, this was to have an opportunity to be a part of the system, to choose not just the country and industry but the very individuals that we felt so strongly about that we wanted them to be selected for funding. Now, we learn that we really are just cash providers and nothing more.
As pointed out by the times article, “If Kiva’s users want to be connected to an individual borrower, Kiva doesn’t do that, and so the big question is, do Kiva’s users want to be connected to a microfinance institution — in which case, why do they need Kiva?”
Individual lenders can support microfinance institutions directly through, for example, Microplace, or make donations to support nonprofit groups like the Grameen Foundation and Acción that support microfinance.
The Times article notes: “Premal Shah, Kiva’s president, said he could foresee a day when Kiva really did provide person-to-person connection, once some legal hurdles are cleared and when people in the developing world began using their mobile phones to use credit and make payments.”
Sounds great, call me when you’re there.
December 10th, 2009 at 6:17 pm
I made three loans on Nov. 24, 2009. I thought I was truly lending to the three individuals presented in the write-ups. Yes, I admit I didn’t read all the fine print. My original understanding of Kiva was reinforced by the prompt “thank you” emails that arrived saying: “Thanks to you and 9 other Kiva Lenders, the 525.00 loan requested by
Hilda Gladys Garcia Peña in Peru has been 100% funded. The loan will be used for the purpose of: Renovations to her parents’ home.”
Now I ask those disinterested readers: Does this thank you note lead you to believe that your loan actually went directly to Hilda Pena? I maintain that it clearly does. Kiva still isn’t the transparent organization that it claims or aspires to be.
I have been trying to get my money back by contacting Kiva’s customer services’ Gerard. But I have been first misled, and now ignored.
Kiva has such potential. But as long as Kiva presents the individuals seeking loans up front as if you are actually funding that person, we’ll be misled. They are NOT seeking loans—they are already funded. The whole premise of presenting individuals and their loan “need” is misleading.
December 18th, 2009 at 12:10 pm
Kiva should have anticipated that some reporter, trying to make a name for himself, would attack on this. Oh wait, but they’re busy actually doing stuff, not ruminating! They owned up to it and are stronger as a result.
“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.”
Teddy Roosevelt
Paris, April 1910
In a year, Kiva will be going strong and nobody will remember who David Roodman was.
December 21st, 2009 at 11:04 pm
Ugh. I just signed up for Kiva TODAY and after a couple loans began to wonder about things. The excitement clouded my initial judgement.
I guess for me is, the biggest disappointment is knowing those profiles we think we are lending to might not be real or could be completely dated. (I read elsewhere they recycle these profiles.) I mean, I spent a good three hours looking at profiles for who I wanted to loan to! Little did I know it was all a facade. I’ll be taking my money elsewhere.
January 4th, 2010 at 2:32 pm
the person-to-person lending that Kiva pitches is not just partly fictional, it’s entirely fictional. At the front end, the loans are not dependent on your selection of a borrower. At the back end, the “net billing” means that the borrower’s repayment is not linked to your repayment. It is linked to whether there is an aggregate surplus or deficit when accounts are reconciled between kiva and the MFI. You are truly lending only to the MFI, in form and in substance. Your selection of a borrower is pure hype.
Love the cause, but the deception goes well beyond what’s needed for “simplification.” It’s dishonest. Microfinance is great, but I’ll look for a different avenue.
January 6th, 2010 at 5:15 pm
Even today, January 6, 2010 the Kiva website seems misleading. The work of Kiva should be important enough to stand on it’s own with complete transparency. The site still says…world’s first person-to-person micro-lending website, empowering individuals to lend to unique entrepreneurs around the globe. But the money doesn’t go to the individual you select. It should be enough that individual donors or lenders know their money is going to a good cause. Why must there be a false link to an individual? Is this cheap entertainment for those that are privileged enough to lend?
January 18th, 2010 at 4:07 pm
Most of what is being said here focuses on the mechanics of the system kiva runs and the question of its integrity. I think the fundamental issue (which has been touched on albeit rather obliquely) is the state of the western mind and the disproportinate power we wield over the rest of mankind.
The overarching sense in all of this is the need by westerners to feel validated. Strangely, what has led to this is a process (let’s call it progress) that has led to the stripping of societies in the west of their sense of community (the ‘normal’ source of human validation) to be replaced by a void which we seek endlessly to fill (but not even the engine of consumerism can do it).
Conversely, this same process is forcibly exported to the rest of the world. That there could be any alternative to the way we have chosen is something of an affront. It suggests that we may not be right after all. it isn’t just a sense of discovery that leads westerners to want to ‘discover’ any untouched lands or peoples. After all there are plenty of unpalatable things that need to be discovered yet remain stubbornly hidden (both within and without). Our discovery is based on a narcissism that makes us want (nay, need) to impose ourselves. If a man in a single-seater plane flies over the amazon and discovers a new people, his reports are avidly read by the same constituency that will later seek to help these people. If these new people aggressively defend their status as undiscovered, we will come back again and again till they wear the t-shirts.
if later in time these same people no longer have an effective society then we will seek to help them. and that is where organisations like kiva come in. we are all complicit in this. we make a mess and then bask in the spotlight of our valiant attempts to clean it up. all these donors should stop donating and start asking how it came to be. i’m 49 now and i’ve been hearing about aid since i was a boy. others proudly proclaim similar longevity in their giving. perhaps their descendants will do the same.
So my point is keep your money and start asking questions – what we need more than enterpreneurial loans and goats is some honest answers to the question of how these things come to be. the obscenity of the time it is taking the world to respond to haiti or the derisory amount of effort and money involved and the contrast with the endless vomit-inducing (no not the piles of corpses but the narcissistic, self-referential reporting).
ok rant over – hopefully you get my point.
February 5th, 2010 at 1:59 pm
I have repeatedly loaned money to Kiva on the understanding that it was directed towards a particular individual. I’m not quarreling with that aspect of Kiva’s operation.
However, I do have a question for Matt: If my money is not going to a particular individual, but to an MFI, then how is individual default meaningful under this system? Why did Kiva inform me that the particular individual in Africa had defaulted on my $25 loan and would not repay me? It seems that if the money is distributed through MFAs, then all lenders would suffer very partial losses from an individual’s default, not just a few lenders suffering total losses. Please explain.
February 18th, 2010 at 8:09 am
Great point Mainoo@49 but that’s life and that is people, it’s never gonna change but I do agree people like us who are honest about the way humans behave, can actually ‘keep our money’ and come up with solutions that don’t come attached!
February 20th, 2010 at 5:58 am
Great service, Kiva! Great journalism, David.
There are some simple folks with some fantastic ideas to make the lives of so many underserved people better. Sometimes it fails and sometimes, there are errors. We, as responsible stakeholders of the larger human good, need to have an honest discussion around and correct ourselves. I run a company that trains and employs village and tribal youth in Eastern part of India, and this conversation is truly enlightening. We need more of it..Keep supporting Kiva! Thanks, all.