Most people in the Kiva debate have stated that the fact Kiva loans have already been funded prior to them appearing on the Kiva website is misleading, but that this pre-funding approach is better for the entrepreneurs that Kiva’s users are trying to help. However, it has also been pointed out by many that DonorsChoose, a website that let’s donors support projects in public schools, really does offer the opportunity for donors to directly fund a project.
Here’s a comment I just received from Mike Everett-Lane, former executive director of DonorsChoose Northeast:
The central issue, to me, isn’t that the pool of money is fungible (i.e., my donation goes into a large pool, out of which the partners are funded, out of which individual loans are made). Nor is the question of microphilanthropy vs. the need to fund overhead. The issue is that Kiva implies that the lender’s choice helps determine who gets a loan.
Kiva gives the impression that if lenders do not fund a project, that project will not happen. Right now there’s a project with $250 left to go, and it “expires” in 8 hours, 15 minutes. That gives me a sense of urgency. I might even give the whole amount. But if the loan has already been made, then the “expiration” isn’t true. There is no real choice.
I worked for a number of years at DonorsChoose.org, and I can tell you that giving donors an actual choice is hard. Good projects will go unfunded. You have to return credits to donors who have partially funded a project that never happened, and convince them to reapply those funds to a new project, which itself might not be fully funded, etc. Tracking it all is no piece of cake, either. But if you don’t do all of this, you’re not being transparent, and you’re not giving your donors real choice.
I don’t believe that microphilanthropy (or microfinance, peer-to-peer giving, etc.) is a good solution for most problems. DonorsChoose.org has an advantage, in that they are funding discrete classroom projects within public schools, but do not have to fund the infrastructure of the schools themselves. Most problems just couldn’t be solved in this way. (”I’d like to fund only the violas in the orchestra, please.”) But if you’re going to advertise yourself as giving choice to the donor, you’d better do it.