What would you say?

[Guest]

.

[abc]

What do you answer when someone says something like this:


"..after hearing what happens to such 'entities' like the Red Cross after Katrina when people do bad things and take money that isn't theirs to take, we know that there are people everywhere who would take the money and run.  How do we know they won't do that with Kiva money?  In any country, anywhere? What kind of safeguards are in place for Kiva monies?..."


This isn't someone I know well, or at all really. I suspect he was
just arguing for argument's sake, although he did later describe himself as someone
"...who has considered giving to Kiva but can't get past this issue..." (which I
seriously doubt and assume it was just a CYA statement).

I was at a loss for words  as to how to deal with that sort of cynical attitude,
but would love to hear what you all would have said to him.

[Dottie b]

Sounds to me like you're the cynic! 

The guy isn't familiar with Kiva and has legitimate questions one should ask of any charity. It's not just the Red Cross - in the DC area, the United Way had all kinds of scandal a few years ago.

As for a response, you could say that your experience has been positive and there is a lot of information available about Kiva. (If it were me, I would add that I've met Premal and found him to be knowledgeable and sincere and one of the brightest people I've ever met.) Which guarantees nothing, of course, but you could suggest that this guy not lend more than he can afford to lose. $25 isn't a real big risk.

Dottie B

[cpbailey]

When Oprah, Bill Clinton and the Wall Street Journal agree on a concept, it is a pretty sound one.  Sometimes one does get taken advantage of in life, and for some it is by those they should be able to trust most.  Yet, the alternative to trusting that 98% or so that people do right by me is unbearable.  Loans are meant to be repaid, so this is a way to let those who want to work themselves into better situations do so.  No handouts, and I get to recycle my money.

Sometimes you have to move on to someone who is more receptive to the message...

Colette

[Soriak]

Why Kiva won't run away with the money or why the MFIs wont?

In case of the MFIs, they don't do it for the same reason Citibank doesn't. You don't stay in business long when you run off with a couple bucks... way more profit if you stick around.

When charities lose money to theft/corruption, it's because someone can cleverly reimburse personal expenses or fake receipts. With Kiva, none of this is possible. You see exactly where your money is and it goes to the MFI, the borrower, back to the MFI and back to you. Now donations to Kiva are a different matter. There's no way to know how effectively they are spent and how much of it disappears without helping Kiva. If that's a concern, the option would simply be to lend money but don't donate. The latter is entirely voluntary, after all.

[charity]

The way I understand many/most of the loans given out by MFIs is that the borrowers they work with start out in group loans (even if you see them later on Kiva as individual loans).  The group loan scenario does two things: 1) there is peer pressure - if one person doesn't keep up their part of the loan, all their fellow borrowers have to make up the difference - so it is obvious to most that they wouldn't be stealing from a bank or faceless rich people in a far away country, but from their neighbors as bad off as they are.    And 2) the group loan amounts are very small.  In order to work up to a more sizeable amount that might be more worthwhile to take, they have to pay off multiple loans.  But on the pathway to get to that point, their situation is hopefully improving, and they see that the availability of future loans may be more valuable than a one time sum they run off with. 

Of course, I know from experience these kinds of concepts are far easier to write down here in retrospect than actually answer in-the-moment to someone who is asking questions. 

[Tatiana]

Wouldn't advise to use my reply, but wanted to share it anyway:

Where there are humans
You'll find flies,
And Buddhas.

~By Kobayashi Issa
(1763 - 1828)

You are never completely sure. But the only way you will ever be able to make positive changes is to give people the benefit of the doubt. For more practical replies I join the previous answers.

[fredr1c]

...and you can show him some examples of well-documented loans, like this Cambodian construction loan to Ung Sokha:

http://www.kiva.org/app.php?page=businesses&action=about&id=27912

[s_shewan]

Sounds to me like you're the cynic! 

I think that`s a bit harsh. Some people aren`t good at putting into words their feeling about an organization like Kiva and also explaining how it works. I think abc is just looking for a concise (if there is one) answer for an `unbeliever` or sceptic.
I think Kiva`s record, so far, stands on it`s own. Of course, there will be an unscrupulus person at an occasional MFI but they won`t last long on Kiva, hopefully. Kiva tries to oversee to the best of its ability by sending Kiva fellows and having audits done.

Of course, some people don`t trust anyone with their money and would just rather horde it under their mattress so no amount of explanation or effort will help convince them.

Susan

[Henry]

I'd tell them to Join KSC and shop online - that way they would have plenty of KIVASurance! 

[redstarr]

My hubby and I had a discussion about this a couple of days ago.  He was curious,too, about whether the loans are safeguarded from the people being able to just take the money and run and from Kiva just  closing up shop without paying out first.  He's a bit of a skeptic about human nature in general, and he's fiercely protective of me.  What started the discussion was that my first loan had just paid off, then the new credit for the partial payments came in, and he was really happy about it.  He was kind of worried before I'd actually gotten any money back that I was setting myself up to lose money and get my feelings hurt from being scammed when I was trying to do something nice.  When my credit came in, he was happy to see that Kiva worked like they said they would and did what they promised, but still a little curious. 

I was totally honest with him that , no, there wasn't any guarantee. That yes, our borrowers could borrow the money and never pay it back.  But I also told him how incredibly low the default rate is and that the majority of that is because of the violence in Kenya. I told him it had happened in the past that a couple of MFIs in Africa had scammed Kiva and took the money and ran, but that they'd learned from the experience and try and reduce the risk of that happening again.  I reasoned that if Kiva itself were some sort of fly-by-night organization that was in danger of either willfully taking the money and closing up without paying us or in danger of accidentally going belly-up and us losing our money in the process, then it would have happened before now.  If they were going to run a scam charity, they're not going to ride it untill there's millions and millions of dollars and tons of people involved.  They'd cash out much sooner.  If they were going to mismanage things to the point that they were going to go under, they would have long before now. 

I told him that there wasn't any sort of insurance that would protect our investment if people defaulted or Kiva went out of business, but that's why I lend carefully.   That's why I never lend more than we could afford to donate.  If something bad happened and our money disappeared, it would be a bit of a disapointment, but not a serious crisis. 

Yeah, there's an element of risk involved.  You do have to take a bit of a leap of faith.  But it's a small risk.  There's a lot more good people out there than scammers.  I'll take the small risk of losing a little money in exchange for feeling great about helping people.  It goes back to the old "Better to have loved and lost than never to have loved at all." for me.  If you go through life afraid to do anything nice for anyone because a handful of bad people might be out to take advantage of you, you are going to miss out on a lot of joy.