I don’t want to seem all excessively dramatic and things, but I’m feeling a bit shocked and betrayed because of a blog post I read today about Kiva, the scheme that in their words
connects people through lending to alleviate poverty.
I joined Kiva in May 2006 and have made a dozen loans in that time, as I believed, to named individuals I had selected.
Here’s an excerpt from the post, but I suggest you read the whole thing to really understand what’s going on:
This personal connection is something Kiva wants to foster. It’s central to Kiva’s philosophy and it is very appealing to lenders. I like that I was able to help a woman in Nicaragua expand her corner store. I like that I got to choose where my investment went.
But that isn’t quite how Kiva works.
Kiva does not let you lend directly to its entrepreneurs. The loans are disbursed by “field partners,” which are microfinance institutions (MFIs) in the entrepreneur’s country. Kiva allows you to lend your money to the MFI, who loans it to your entrepreneur. This is indicated prominently on Kiva’s site and shouldn’t surprise anyone.
What might be a surprise is that nearly all of the loans have already been disbursed by the time the entrepreneur even appears on Kiva. Often Kiva does not know they exist until the loan is paid out. If you look at almost any entrepreneur’s profile you will see that the loan was “pre-disbursed” before Kiva even posted the entrepreneur’s situation and needs, and asked its users to lend.
The personal connection
I posted here in 2007 about how I believed I’d changed one person’s life: I made a difference:
About 12 months ago I discovered that, thanks to Kiva, I could make a direct difference to the life of one woman in Kenya: I lent her a small sum of money — it represented a couple of hours of my income. She wanted to expand the range of vegetables she sold in the local market. … It gave me a great feeling: I was one small business lending money to another.
I don’t recall how I heard about Kiva and what research I did before lending. Perhaps it was there in the small print that I was really lending to a microfinance organisation disbursing funds to people including the individual I selected.
But the clear impression I had was that Gloria or Maria couldn’t go about building her business until the loan was funded by me (or others). I believed my loan was directly helping the individual I had selected on the loans page.
I had a sense of relationship with my loan recipients
Things I’ve read and heard, and my own personal beliefs about the status of women led me to sift through the list of loan recipients with care. I thought I was lending specifically to women.
Research I can’t point you to tells us that it’s extremely effective to fund women’s development. More so than funding men’s activities. My own personal politics mean I prefer to support women with my ‘woman’s money’.
Several times I was thrilled to be able to lend the whole amount a specific woman needed. My business was directly funding the business of a woman like me: a small business owner struggling to get on in life. I had a personal connection and the personal satisfaction of a one-to-one relationship.
Or so I thought.
I’ve still made a difference
Just yesterday I loaned $25 towards one woman. She needed only $25 for the loan to be complete. I was a little surprised to read on the checkout page that the funds had already been disbursed — I don’t recall ever having seen that message before.
I almost backed out at that point to search out another potential recipient, but didn’t in the end. I sent off my $25, ‘knowing’ that it would still be funding this business. In fact the confirmation email says this:
Loan to Justina Sudaria in Philippines (Activity: Farming): $25.00
It sure looks as though my funds are directly ‘connected’ with Justina.
But maybe they’re not.
If not, and I’ve simply contributed towards assorted loans to assorted recipients then at least I’m still making a difference in the world. Someone somewhere is being given a hand up, and that’s a good thing to do. I guess I’ll continue to lend money through Kiva.
But I’ll feel a bit less positive about it, and a bit less connected, and a bit less satisfied.
The connection counts
I’ve stopped donating money to quite worthy charities because although I’m nominally ‘buying a goat’ for a family in need, or ‘contributing to a well’ for a community, there’s no personal connection. Other organisations have been more obvious that ‘goats’ and ‘wells’ are a convenient fiction to make the abstract of giving more concrete.
I’m happy for those organisations to do that — it’s a very useful fiction. As a teacher and trainer and writer I know all about making the abstract concrete so it can be understood.
But, quite honestly, that fiction hasn’t been made so obvious with Kiva. I really did believe I was directly contributing to a named individual and that connection was a powerful factor in my choices.
Now, as I said earlier, I feel a bit betrayed.
I’ll get over it. I’m not about to withdraw my remaining funds over it. But still, the feeling’s a bit strong today.
I still encourage you to join Kiva and lend money to entrepreneurs who are trying against poverty to improve their lives. I still say that for the price of a movie ticket and coffee you can make a difference to the whole life of someone in another country. And what’s more, you usually even get your money back. It’s a loan not a gift.
Just know who you’re lending to.