Kiva.org Responds

Fiona Ramsey, Kiva’s director of public relations responds to my post speculating on the implications of Kiva turning donor/investors away for lack of available borrowers to fund. Tomorrow at noon eastern, Kiva co-founder Matt Flannery will be in a live discussion on the Chronicle of Philanthropy website. I’ll post a follow up to Fiona’s comments after participating in Matt’s discussion. Just to be clear, I think Kiva is a fascinating, innovative model. I think the issue they currently face does not speak poorly of them in anyway, but I do think that the issue brings up complicated new issues that the social capital markets will have to deal with over time.

Sean:

It’s exciting for me, as Kiva.org Public Relations Director, to read your comments about one of the most intriguing parts of Kiva’s model. I agree with your comment that “Kiva?s problems are a great example of how strongly donors respond when social capital markets are created” – which is an exciting indication of how far lenders/investors will take this!

A couple points of clarification:

Kiva.org does not consider DonorsChoose.org or GlobalGiving.org to be competitors. While these models are similar in that individuals can choose the specific project they would like to contribute to, they are donations, not loans, and Kiva only facilitates loans at this time.

One element of the Kiva model that is often under appreciated is that the platform operates 24/7, so a “shortage” that exists at one time, may not exist a matter of hours later. Kiva’s Field Partners update loans for funding from the developing world as they are received, they are translated and submitted to the live site as quickly as possible. So, we can literally have a site with no funding needs one minute, and thousands of dollars with of funding needed minutes later. This is the beauty of the Kiva platform – needs being delivered from the developing world. Real-time, real people and real needs.

Of course the flip side is that a potential lender can come to the site and not find any lending opportunities at that time. However, that’s what makes the site so “addictive” for many lenders. Because you don’t know what needs will be listed an hour later, and find yourself checking back hours later to get an update.

One additional comment: there is not a shortage of people in need of a loan. What there is, is a bottle-neck. Kiva.org undertakes a significant due diligence before partnering with any microfinance institution, and it takes time to both satisfy Kiva.org’s due diligence and train MFI staff on the Kiva system. As such, the Kiva.org partner portfolio is not growing at the rate of our lender community. The other solution to building our partner portfolio is to increase the amount of funding each partner can raise (each partner has a monthly fundraising limit), but that simply wouldn’t be responsible. Kiva.org is committed to creating an online microlending platform that helps MFIs to scale only at a rate that is healthy for both the MFI and Kiva.org.

On a personal note, watching these “shortages” occur excites me because it sends a strong message to our Field Partners, that Kiva Lenders believe in their work and wish to support their programs, and to developing world entrepreneurs, that Kiva Lenders are supporting them from over 70 countries in the world, and want to give them a chance to be successful entrepreneurs.
As you said, Sean, this is a “great example of how strongly donors respond when social capital markets are created.”

Fiona Ramsey
Public Relations Director
Kiva.org