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Diane R
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« Reply To This #12 on: February 19, 2009, 02:50:26 PM » |
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The third monthly Kiva Community Call was held on Wed. 18 Feb 2009, at 2pm PST. There were about 30 callers on the line, and over 20 attenders in the KF chatroom (which was being monitored by Gerard this time, and several in the chatroom were also on the phone and relaying questions and answers through chat to those who were unable to call in. (THANK YOU, kind reporters! Well done.) With my editorial hat on, I will say that this was by far the best call yet. It was organized, began by addressing some known concerns, the Kiva staff listened to concerns and responded clearly without being defensive, and they asked for input. It was very good two-way communication, and bodes well for the future, I think. OK, editorial hat removed.
Kiva staffers in the conference room for the call were introduced. While I missed some of the names around the table, I noted the following:
Premal, Fiona, Gerard, Reggie?, Tim, Liz, Michelle, Roma, Austin, Ben Elberger, Naomi, Ben community director, Zack, and several interns.
Liz, Kiva's customer service manager, reported that Diane Reese had been "elected" the first KF Liaison, and that discussions had already begun to establish an open communication channel for that relationship. She suggested callers check out KivaFriends if they haven't already done so.
Tim, Kiva's portfolio risk director, reported on the current state of MFIs. He mentioned first that stresses are being felt by all MFIs --
1: with their individual portfolios, commodity prices are decreasing, and the general level of economic activity is decreasing
2: not only are their portfolios suffering but also their funding sources -- they are losing some altogether, the cost of funding is increasing, and there's a mismatch between borrowing and lending currency
Some specific risk cases being worked since last call:
1: HELP Africa -- a small partner in Togo, they sent a message to Kiva that they were experiencing internal challenges, this MFI lost a portion of its external and grant funding for staff salaries, had to lay off staff. The next action point is in March after they have a board meeting locally.
2: AN:K (Action Now: Kenya) -- a partner impacted by civil strife in Kenya, they tried to cover their losses and work through it but because of their small size and low capitalization they could not do that. It was found they had not disbursed about 30 loans they'd raised, which is "simply unacceptable", Kiva has asked them to reimburse and is waiting to hear about working out a reimbursement plan.
3: FSMA -- in Dec. they reported a "major incident", a rather large internal fraud, perpetrated on the management of FSMA by part of its staff. Kiva paused them; for loans raised but not disbursed, the funds were held back until Kiva could get a better sense of the situation, upon determining this was a material issue those loans were refunded.
At this point questions, began from the phone and chatroom.
Q: What are Kiva or other partners doing to help these MFIs with economic stresses they're facing?
A: As with FSMA, Kiva is trying not to overreact, we want to continue to provide funding/liquidity as long as we're protecting lenders' capital. We are working hard to come up with some way to manage foreign currency risk, and hope to talk about this in the next two conference calls. Kiva lends in hard currency ($) which are disbursed in local currency, which is now not working very well for MFIs, Kiva is working to mitigate or attenuate that risk.
Q: The cycle of loans/repayments happening on the 1st/15th is not working very well.
A: Premal: There is internally lots of discussion at Kiva about this "lumpy" funding pattern throughout the month, different people have different perspectives.
1: Some think it makes more sense for it to be smooth and settled on a real-time basis.
2: Some think Kiva should aspire to work with more and more field partners throughout the world, as now they're running out of loan profiles and the Internet community appetite to fund loans is outpacing what they're able to get on the site. So, does Kiva attack the core problem and find/vet/train more MFIs to bring them on board faster? Or do they change something in the billing cycle? They are still working both questions.
Q: We need to get more info on our loans in our portfolios, when they're due, repaying....
A: Roma: -- Engineering is working on improvements now, they hope to get them out by end of March -- when is money going to field partners, coming back, when to lenders, when it's delinquent.... hopefully this should be visible soon.
Q: What is the status of missing repayments on three MFIs:
1: ADMIC?
A: Michelle Kreger: ADMIC is delinquent on their repayment to Kiva. There have been significant changes in ADMIC management recently, the new team needs to understand how the Kiva process, amount due, etc. works, and Kiva is hoping for an update soon.
2: Yamida? (no payments since PA2 conversion)
A: They are in Indonesia, Kiva is trying to figure this one out. They posted a few hundred dollars worth of loans initially then seemed to "drop Kiva", they have not paid and are not returning phone calls from Kiva. Kiva has a portfolio development partner in Indonesia who is now going to physically visit them to see what is up.
3: Ariana / Afghanistan? (20-30 loans marked paid within 30 days without explanation)
A: Kiva is working to resolve that, the loans were incorrectly marked as repaid early.
Q: Any new countries coming along in the pipeline soon?
A: Kiva is targeting some larger MFIs that will be better able to weather some of the financial stress of the current climate, and considering going deeper in existing countries. They are looking at India (but some regulatory issues still exist there), Argentina, and perhaps South Africa as new partner countries in 2009.
Q: Will Kiva be monitoring MFIs more closely to minimze risk?
A: There's a split emphasis in 2009: growing the website, or defending the current website and making sure lenders have good experience. The loan offerings are constrained right now, but if Kiva doesn't monitor the MFIs for early problem identification with a good sense of what's happening with them, lenders won't be satisfied, so we need to do both.
Q: Kiva needs to be more consistent about updating info about MFIs -- some updates are dated some not, one of the Philippines changed grading without dating or explanation...
A: Premal: If we're changing ratings we need to say why, and consistently date those responses. Ratings that bounce around like rubber balls are meaningless, we need to give indication about why, so existing lenders have some sense what's going on.
Q: Kiva says we're going to do this or that by this date, but follow-up doesn't always come through, the ball gets dropped.
A: Are you asking, if we say something will we really mean it? Yes, but here's an example. One suggestion from the last call was to put an indication up on a partner page that there'd been a change. It's a great idea, but fixed constraints in terms of engineering make a programming change not always possible, engineering needs to set priorities -- right now the priorities are more on fixing billing problems. We have a long to-do list, and our ability to get things done relies on an ability to change the website, with only 7 engineers. The current breakdown has Engineering time devoted 3/5 to the public website, 1/5 to partner admin tools (PA2), 1/5 to open APIs to make it easier for people to volunteer as engineers to help build tools. On the previous noted suggestion from last month, Kiva can and will provide more timely dated manual updates on the partner pages for now, but be sure to use the monthly call to "keep us honest".
Q: It's hard to find things in the transaction history, maybe it should go newest to oldest?
A: There is a new version of the website rolling out TONIGHT (!) -- in My Portfolio there will be a Transaction History direct link which is sortable and shows a running balance.
Q: A loan came up this week with repayment schedule of 93 months -- is that an error?
A: Yes, the maximum repayment schedule allowed on the website is 36 months, they will fix the error.
Q: Why are loans incorrectly dated in terms of duration? They say 3 months but really 6-8 months to repay lenders.
A: Fixes to this will be included in fixes being pushed out to improve info on the borrower pages by teh end of March. In reality, this is 3 months of repayments from borrower, but it takes a couple more months based on dates and monthly cycles plus waiting for partners to send Kiva the money. The current number is a borrower-facing number rounded down; but not useful for lenders, Roma's fix will reflect that for lenders.
Q: Will Kiva expand to loan in the US?
A: This is something we are exploring, one of the ways to get the most out of it is to make it a big deal in the press, so we don't want to be too public about this fact, but are in conversations with US MFIs because wealth is everywhere and poverty is everywhere and want to make sure the site is truly global.
Q: Related to exploring programs in the US -- another global entity is in the process of putting together a mentoring program between business people and low-income entrepreneurs to help with human capital to grow their businesses. Although Kiva discourages direct one-to-one communications between lender and borrower, but especially w.r.t. loans in the US, have you looked at enabling mentoring opportunities?
A: Premal: I don't know if we frown on lenders contacting partners, we offer email addressses on partner pages and that contact is welcome. People borrowing through Kiva already know what they need to be successful (he used the "they only need a loan to buy a fishing net" comment); there is nothing like actually working with someone to developing a mentoring relationship, which can take many forms (technology, human development, etc) -- I can imagine that one day Kiva would be successful enough that a borrower might appreciate connecting with lenders, maybe holding a conference call like this one, with a Kiva fellow being interpreter, enabling a direct exchange with lenders. This could be a great cultural exchange oppty in addition to mentoring. We're looking to see if we can borrow innovations from MicroMentor eventually but not for 2009.
Q: Could you give us a MIFEX update?
A: Kiva did retain counsel in Quito, Ecuador to take a look at the case. Counsel has concluded that there is a case to be brought. Kiva is now looking for a litigator in Guyaquil where MIFEX is headquartered. They had been looking originally for a pro bono counsel, but is now looking now for other counsel to hire.
Austin: the practical reality is that because the organization and its assets are all in Ecuador, litigation in the USA wouldn't go very far. Kiva wants to show they're serious about pursuing MIFEX, so addressing the issue on their home turf will be most effecive going forward. Their base of operations, all assets, corporate structure, etc are all in Guayaquil. Trying to locate an attorney aware of the issues involved and with appropraite skills is not easy, managing from a distance, but they are moving forward and trying to be thorough, to maximize possibility for success.
Q: I want to know what percent of loans defaulted as function of MFI vs entrepreneur being unable to repay.
A: Premal: I share your curiosity about that; in future Kiva wants to offer lenders a breakdown of reason why there's a loss. (MFI failure? currency problem? borrower actually defaulting?). So far losses are mostly driven by MFI failure.
Q: Could there be effort expended to create a "double password" login, for organizations that have many people who could authorize lending but still protect some functions such as withdrawals?
A: You're looking for a way for multiple people to access sone Kiva acct -- separate logins for fund withdrawal, one for lending? One example of this already existing is at Paypal -- accounts and sub-accounts can be created with different permissions, so in terms of this sort of thing at Kiva, only one can withdraw, but others could have sub-account logins to see messages, do lending, etc. Engineering could put this on the long-term roadmap, but it won't hapepn in 2009 given resource constraints and current priorities.
Premal then opened a question for the callers and chatroom. He set the scene by hinting that Kiva's revenue stream is not doing very well. They still suggest a 10% donation, but last month was one of lowest income months ever, only 4/10 donated, it used to be 6/10 ("conversion rate"). This is affecting Kiva's operational self-sufficiency.
Q: Premal asked for any ideas of what Kiva can do to "make that page convert better", that is, what tips do you have to get people to help support Kiva and find resources to expand? The following are responses from various participants (with a few comments from Kiva staffers as "answers"). Note that the donation question has changed last night to reflect some of this thinking already.
A: Have the Kiva calendar go out at the end of the year with an insert: "Don't forget year end tax donations, consider Kiva". This evolved into a suggestion for mailers in general.
A: Incorporate the donation directly into the transaction rather than on volunteer basis; if you don't need the 10% just incorporate something into each transaction. Make it opt-out ("10% will go unless you undo this").
A: For international lenders, it's become really expensive, and there are many international lenders, perhaps an annual membership fee?
A: The only place where donation is tax deductible is USA, Kiva might get more if it were tax deductible in other countries. (Premal: we will prioritize next few countries to address tax deductibility)
A: Make it more visible for people to add Kiva to corporate employee charitable contribution campaigns.
A: Ask lenders at checkout, "What percentage of the $25 will you dedicate to the admin cost of the loan instead of sending all $25 to the developing world?" (inverting the psychology)
A: Use all relend money to make new donations, then make a separate donation transaction for 10%. (Many make separate donation already which might not be reflected in the stats Premal noted above.)
A: Some put money in for loans, then reloan-reloan-reloan... if it was impossible to take it out so it was tax-deductible, that might save enough for a USA lender to make a larger donation. (Premal: we're considering a non-removable account which can never be withdrawn and would generate a US tax receipt, or the option to donate all repayment streams to Kiva (with tax receipt). The Kiva staff generally doesn't itemize deductions on their income taxes, so this is new territory for most of them.)
A: Some lenders keep a lot of money in the system and relend over and over again. If you've already donated that $25 five times already, you might not be willing to do it again. (Premal: first time lenders are much more likely to give donations than repeat lenders. Maybe Kiva could be more transparent with the severity of need, there are different funding gaps at different points in history, we don't want it to seem we're crying wolf.)
A: Due to recent frustration with the situation with MIFEX and other issues, some people still want to make loans but are not sure they want to donate. (Premal: there have been times recently when we've done things that have been confusing, and not following up with the force you would expect, we want to change that. We are getting our first audit done, and would like to issue an "annual report". At the end of the day looking at Kiva as it matures vs most other non-profits, we want to be seen as hyper-efficient, and give a sense of how effficiently the donations are used.)
A: Perhaps provide a graph -- show that it takes for instance $1 in donations to get each $8 to the field, and measure how this month's donations fill out that need, defining the gap clearly.
At 3:05pm PST, the call ended, with thanks all around for the professional nature of the call and the constructive exchange on all sides. Monthly calls will continue.
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