New Unused Credit Policy

[Guest]

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[B. Right]

Hey! Kiva has no problem withdrawing funds from my Norwegian bankaccount whenever I make a loan. Really! It cannot be rocketscience to return it back where it came from? (After a loan is repayed, and the money has been sitting as kiva-credit for a while.) - Unless one insists on playing submissive bondagegames with PayPal.

 I love financing hard working entrepreneurs. But, I mind being ripped off tenthousands of dollars, if my life forces me to look another way, for a brief moment.

 Most of my loans are 18-monthers. I hold up to 24-month-loans, if my memory doesn't trick me. Even if I may frequently logg on now, as things are fresh and exciting. I may not do so in the future. My plan was to get a certain number of active loans, then just let them tend themselves for some time.

 My overall experience as a kiva-lender, is that Kiva has no respect for my hard earned cash. And view me, as a lender, as some kind of a economical speedbump. Whenever somethings happends that may effect my money, I am guarantied to be the last one told about it. So, I have decided to slowly withdraw. And look elsewhere for some microfinance-organisation who actually understand it's dependency on the goodwill of their "investors". I'll probably keep two or three loans, just for fun. What will not be as fun, is to withdraw all my endorcements on Kiva, posted everywhere. But I can not state my reputation on something as inconsistent and unreliable as this has proven to be.

 I just can't find the time to investigate how Kiva will screw me over next, all the time... I regret to say: I've lost faith. i am getting off this bumpy ride, while I still can.

[wthepoo]

Most of my loans are 18 months. I hold up to 24-month-loans, if my memory doesn't trick me. Even if I may frequently logg on now, as things are fresh and exciting. I may not do so in the future. My plan was to get a certain number of active loans, then just let them tend themselves for some time.

Just as a small consolation (maybe): As long as you still do have active loans, your account will not be regarded inactive, even if you don't log in. So you will have at least 12 (+6) months to log in again after your last active loan has been paid back completely.

As you may have noticed, I still do share your concerns regarding this policy change - but this makes it a little more bearable (though it shows a questionable attitude towards lenders' funds, I agree).

Best wishes,
Wolfgang.

[B. Right]

Just as a small consolation (maybe): As long as you still do have active loans, your account will not be regarded inactive, even if you don't log in. So you will have at least 12 (+6) months to log in again after your last active loan has been paid back completely. [...]

This I know. What I was trying to say, was that with longterm loans, one can go for long periods of time, without having to check in every week. So one can easily be forget to log in for a year or three.

I cannot see how Kiva have any rights to my cash? It should be the easiest thing in the world to return funds to the bankaccount they originated from, after a certain while. I understand that Matt likes money to be working, and not just sitting there, but who is he telling me what to do with my money? If he doesn't like it to be sitting as Kiva credit, he can just return it to me!

Oh... that's right, they can't. They've sold their soul to the PayPal...

[AccountAbility]

Perhaps I am just being a Pollyanna, but I think this is a case of youthful enthusiasm coupled with Matt's genuine desire to get monies working, overlaid with an anxiety about the funds needed to keep on track as an organization.

I don't think (at least I certainly hope not!) it was motivated by greed or other selfish motive -- other than the desire to stay afloat.  I think the bureaucracy from outside which naturally starts sticking to a larger organization is starting to catch up with them. 

When you are a little guy with a wonderful dream, you can be about as flexible as your mind can invent.  But as you become a large organization you find yourself amidst a maze of regulations, restrictions, and requirements that you hardly dreamed of, let alone finding yourself having to comply with.  And these are expensive compliance issues, all of which detract from fulfilling the original dream.

In many respects, this is the same transition most entrepreneurial businesses face as growth brings them to a size where management, organization and compliance become significant issues.  Kiva is in this phase.  They were given the "gift" of some large infusions of cash to develop some of this.  But the current financial climate is not the best time to be forced to expend all this money on "internal" things. 

Most charities cannot operate on 10% for administration.  The current lender base is not even providing that.  Without these additional grants from outside, there just isn't enough.  Lenders apparently are very willing to loan -and even give-- to the borrowers/entrepreneurs, but look at the pipeline that makes it all work with askance-- even negatively.  Hence the urge to donate just isn't there.

That said, I would reiterate the basic objections already expressed.  Just because you have run out of money gives you no right to take what doesn't belong to you.  I hope that great minds can come up with a better way.

Dan

[Eli]

To me the unclaimed property laws were set into place for the exact purpose of preventing what Kiva is trying to do.  If the company where the unclaimed property is held gets to claim the funds for operational expenses, what is the incentive to locate owners?  Or in Kiva's instance, what is the incentive to keep their lenders active?  There is definitely a conflict of interest with this concept by Kiva.  That is why states get the rights to the funds, and (depending on the state) is the responsible party for locating the rightful owner, or at least providing the information for the rightful owner to step forward for claiming the funds.  If they continue on this path, they will only tangle their web further into mistrust.

Here is a document I located that discusses California's unclaimed property laws:
http://www.sco.ca.gov/col/ucp/holder/stdnaupa.pdf

Another thought, if Kiva's MFI's have to find 70% of their financing from other sources than Kiva, why shouldn't Kiva have to find financing from other sources than their lenders donating?  They could hire a grant writer or train someone on their staff in the art of the grant proposal.  Or better yet, find a grant writer that would take on writing a grant voluntarily.

[AccountAbility]

It will be interesting to see Kiva's 990 for the year that recently ended.  I don't know if it will break out incremental donations made during the lending process with the large grants from outside, (or whether Kiva would separately share that distinction) but I have no doubt that the outside grants this past year will be a large part of the "income" Kiva received.  The problem with this is these mostly are one-time grants and not something they can build an ongoing organization around.  Lender donations are probably considered an ongoing stream of funding, with some increases --and some decreases along the way.

So in large measure they are doing as you suggest.

Dan

[JoanW]

Another thought, if Kiva's MFI's have to find 70% of their financing from other sources than Kiva, why shouldn't Kiva have to find financing from other sources than their lenders donating?  They could hire a grant writer or train someone on their staff in the art of the grant proposal.  Or better yet, find a grant writer that would take on writing a grant voluntarily.

Non-profits cannot base their budget on grants - those that have more than about 25% of their income based in grants are in peril pretty much every year of closing their doors. A non-profit, like any other business, needs to have a stable source of income.  Since grants are by their very nature limited duration, what other options does Kiva have?  They could get foundation donors - who make a large donation to a perpetual find where the interest will generate income. Great - that may end up being about 5-10% of the budget (at most)  What else? Most nonprofits I know get significant amount of funding from government funds (80% of the budget at the non-profit I work for) - something I can't see Kiva qualifying for since they focus on projects out of the US. What does that leave as a funding source? The Lenders or the MFIs

Why shouldn't that income be from the lenders? Think of other businesses - any business will pass along their cost of doing business to the customer/client. How is this any different?  I think the main difference is that Kiva is asking up front and giving us some choice in the matter.  If the cost is shifted to the MFI - we all know it will only be dumped on the back of the entrepreneur...personally I think I can handle that cost better than they can. [Note: Personally, I do not do the 10% donation each loan, because I really want all my money to go to the entrepreneur.  But I will balance up once a year for that year's loans because I know it's the right thing to do and I need to pay my fair share.] 

Kiva is selling a product/service - that product/service needs to generate income for Kiva. There are limited ways to do this. Other possible options - Fee charged for each loan, Annual fee for membership...that's all I can think of. Asking for donations and trusting the goodwill of those who care enough to lend is great...but if it is not working, then other options need to be explored.

I think that Kiva's idea to have abandoned monies convert into donations is a good one - I only have a problem with them not giving the option to opt out. Most of us would not, but it is nice to know we had a choice.  To just change it without that option feels somehow sneaky to me....not a feeling I typically think of with Kiva.

[AccountAbility]

Joan - You make a great point.  The problem Kiva faces is that from the very beginning they have emphasized 100% of your money goes to the entrepreneur you are funding.  Changing that is a major shift.

However, your thoughts might well fit with an "add-on" concept, sort of a Kiva membership for lenders who want to sign up for something extra and provide a membership donation to keep with it.  Those who understand your point would happily do it with no extras.  But "extras" might entice some who might otherwise sit on the fence.  Lots of non-profits have developed appropriate "extras".

Dan

[bthon]

Thanks to all the members who posted on this topic as I couldnt find the details on kiva since randomly seeing the line a couple months back - I remember when I signed up for Kiva that I actually looked for some sort of catch where they would end up with the loan money at the end of the day.  I was pleasantly surprised to find that repayments just sat in your account until you relended or withdrew them.  Then only a few months later I caught the notice about unused credit and thought "I knew it!!"  Couldnt find anything else on it, and I worried that the clock started ticking as soon as a repayment was made. 

Reading through the conference call and other posts, I am not too worried anymore, but it is the principal of it.  I understand the dilemma of meeting operating costs, and even though this will sound really cold and harsh, arent non-profits supposed to be as nimble and streamlined as possible?  I saw that the '09 budget is already being revised, but I just dont think claiming "abandoned" accounts is the way to go - well, not with a short 12 month policy at least.  I know website functionality would be a pain for this, but could an expiration date be placed next to the funds in our accounts?  Or would this be unnecessary since those who log in would not be subject to this forfeiture anyways? I will just keep rolling over the money for now.

[Bramsey89]

At first I was like: =(

But then I realized that if you don't log on to the site in over 12 months, you're probably not that interested anymore.