KivaFriends Liaison: call write-up (most recent: 10 JANUARY 2011)

[Guest]

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[howard]

I remember that, apart from USA, we have had recent references from Kiva to plans for Argentina, South Africa (possible), India (but still regulatory problems), Papua New Guinea and Armenia. Perhaps asking about these would be more useful than new countries not previously mentioned.

Howard

[RichardF]

Diane, Great reporting, as usual!    I'm posting some of my replies to the discussions.

Here are the notes I took and wrote up for the second KivaFriends Liaison call with Liz Harmon, Thurs. 05 Mar 2009.

Here are the points I sent to Liz to address, each followed by a brief summary of our discussion.

[1]  A concern has surfaced regarding the fact that actual loan payments from borrowers to their MFIs may not be on the monthly schedule assumed by Kiva’s software, and hence are inaccurately reported (and not transparent).  ...

DISCUSSION:
Roma has been working on this concern for some time, as it was never Kiva’s intention NOT to provide actual information regarding repayments “on the ground”.  She has created a spec and designed a new way to display borrower repayments on their loan pages.  Liz has seen it and really (REALLY) likes it, she believes lenders will really like it also.  It has a HIGH priority on the list for Engineering team implementation, so stay tuned…

This is great news for transparency.  I hope this is implemented in a way that also can help address related issues, such as reporting the actual cost of loans to entrepreneurs expressed as annual percentage rates (APRs).

[2] There have been repeated discussions about the actual interest rates paid to field partners by borrowers, and how those compare with the reported interest rates for those MFIs.  In particular this thread (Estimating entrepreneur interest rates from repayment term details) has a discussion on that topic, ...

A good example of the mismatch between reported and actual interest rates can be examined here.  Could someone comment on whether, and when, the interest rates paid by individual borrowers will reflect their situations and not a misleading MFI average?

DISCUSSION:
It turns out that MFIs don’t just charge a single interest rate to all their clients.  They charge different interest rates depending on the particular “loan product” the individual has qualified for (business loan, housing loan, school fees loan…).  Kiva takes the average of all these interest rates and publishes that figure on the partner page.  The majority of MFIs post loans for only one type of loan product through Kiva, but some mix them up, so the rate is often artificial.  For now, the best we’ll be able to get is that average.  The next two steps for Kiva in this regard will be first to provide better average interest rates in some way, and later on to consider a feature that would show the actual rate for each borrower.  This is not in their Engineering roadmap now, but it fits with their goals for the site and would provide an interesting addition for individual lenders and for classrooms using Kiva in their curriculum, so at some future time we may see this appearing on the horizon.  But not right away, since other things take priority.

As an aside, Liz could not comment on the correctness of the examples shown in the KF thread, because the data is not Kiva’s data.

Kiva always has stated it reports average interest rates.  That's not the issue.  The issue is the extent to which the numbers reported on Field Partner profile pages misrepresent the actual interest rates / total costs of loans to entrepreneurs.  If reporting repayments collected form entrepreneurs is a HIGH engineer priority (as just reported in item [1], but reporting interest rates for these same repayments is not even on the engineers' road map, then the repayment information obviously is incomplete.  Annualized interest rates can be calculated directly from complete repayment schedules.  As far as the aside goes, the examples on the mentioned thread all illustrate - using Kiva's data - that several loans are not based on flat interest rates.  They are based on declining balance interest rates - a typical Western-style loan product.  These simply are more examples of Kiva misrepresenting what is taking place "on the ground."

[6]   Is it possible to get more information about the quotas Kiva applies with its field partners?  ...

DISCUSSION:
To answer the other sub-questions:
Is there a fixed quota for each MFI?  Yes.

Liz recommended that everyone go visit the “Risk and Due Diligence” center on the Kiva.org website, ... You may find it helps clear up some questions about the rating and quota process.

http://www.kiva.org/about/risk/overview
and in particular
http://www.kiva.org/about/risk/kivaRole/

• What are the criteria and procedures by which Kiva determines Field Partner listing quotas?
• What are the exact listing quota's for each Field Partner?
• What are the criteria, possible ranges of scores, relative weightings, and auditing procedures by which Kiva determines Field Partner risk ratings?
• What are the exact risk ratings for each criterion for each Kiva Field Partner?

[AccountAbility]

Here's a question for Kiva, Diane.  Is it really true that the three most frequent questions Kiva gets asked are:
1 Is Kiva a 501(c)(3) organization
2. What is Kiva's Federal Tax ID number
3. What is Kiva's address

I just can't believe they remain the top three (as claimed by the auto-response email).

Dan

[KFLiaison]

Here is the list of questions I sent Liz on Wednesday, followed by responses from our call on Thursday.

[1] Partner updates (paused partners, countries with previously-active MFIs, and new additions).
After hearing the good news about possible new MFIs in Ecuador, there was discussion about some other countries where there used to be MFIs which are now closed/paused, some MFIs we're waiting for updates on, and new countries.
(a) Could we get a quick update on the status of FDM? Has Kiva had any contact with them lately?
(b) Is there any new news on MIFEX?
(c) Are there any plans underway to find new MFIs to replaced paused/closed MFIs in Bulgaria?  Chad?  Côte d'Ivoire?
(d) Where is Kiva actively looking for new field partners? We heard on a recent Conference Call a mention of Argentina, South Africa, and India as possibilities, and Matt has mentioned Papua New Guinea and Armenia at other times, can you tell us where else?  (Interest was raised in the forum for Bangladesh, Laos, Bhutan, Burma, and Tibet.)

DISCUSSION:
FDM:  Kiva is able to receive payments from FDM now and we should see repayments in the next cycle.
MIFEX:  No new news at this time.
Liz was not able to respond to every country listed in our query, because not all of the partnership managers for each country or geographic area were available, but told me what she was able to find out.  I do not have details on the "why?" of each of these, sorry.

• There will be no new MFIs coming from Chad or Côte d'Ivoire. There will probably not be any new MFI from Bulgaria.
• Tibet: There are entry issues here similar to getting established in China, but this has been in the works for a long time and is a possibility.
• Liberia is being looked into, and there may be another MFI from Sierra Leone.
• South Africa is not looking promising.

She is investigating ways to provide a more complete list of where Kiva is investigating partnerships, and will look into an appropriate place to share this on the website or KF or blog.  She's asked Tim to consider a "partnership update" as a regular part of the monthly Kiva Community Conference Calls.


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[2] Beta / QA testing before things are released.
With recent embarrassing errors in all-hands mailings (the annual donation confirmation statements having the wrong names, the survey in the newsletter being messed up), some questions were raised about the extent of any beta- or quality assurance testing Kiva does before rolling out new website/software changes or sending out all-hands emails.  Could someone describe Kiva's processes in these areas?

DISCUSSION:
Roma is overseas for several more weeks, but Liz will ask her to provide a response describing Kiva's QA/beta-testing processes when she returns.  As far as specifics on the items I mentioned above, they are looking into increasing their oversight on mass mailings like the donation confirmation statement to avoid a repeat of this problem.  As for the survey, they will in the future include wording in the newsletter if there is a survey with a limited number of opportunities to participate, and will work with the provider to be sure there's a reliable message provided in an "overflow scenario" when there are too many respondents.  In response to the question of how the survey results would be used (in what way would it "improve the Kiva experience" as we were led to believe in the newsletter?), Liz wrote:

Kiva participated in the survey, because its purpose is to research online giving marketplaces.  Kiva falls into that category, so the results should be helpful to us and there’s an added bonus that we’re advancing a worthwhile study.  For more information about the group behind the survey, go here:  http://www.bridgespan.org/.

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[3] Tax-advantaged status in countries other than the USA.
Premal mentioned on the February Conference Call that there was a set of countries where Kiva would be looking into tax-advantaged status for donations made by lenders.  Could you confirm that Kiva is looking into this, and provide us with a list of which countries might be on the list of possibilities? Canadians in particular are quite eager to know whether they might be able to treat their Kiva contributions as tax-deductible, and the sense is that this may raise Kiva's donations totals noticeably.

DISCUSSION:
Kiva is not actively deploying resources on this right now, because they don't have a complete sense of the amount of resources required to go after it, so it's a matter of priorities.  They do, however, talk about the issue often.  Liz has brought it to Premal's attention again, to keep it a fresh issue.  When they are able to work on it, they'll assign priorities based on the size of the lender base in a country; Canada will be first on the list.  Liz wondered whether there might be an EU-wide policy that would apply, or if each country's rules would be different, does anyone know?

I noted that we have concerned and eager-for-an-answer people all over the world here, and asked if it would be helpful to solicit KF volunteers to find out the details of what applying for tax-advantaged status would take in each of their own countries to enable a sizing, and perhaps even offer some volunteer assistance in getting it underway.  She will query Premal and staff and let me know if that would be helpful; I assured her that the interest here was high on this issue and that success in this area would almost surely result in higher donations.


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[4] Details on MFI posting quotas.
Could you address any of these follow-on questions raised after last week's discussion about MFI quotas being reset at the start of each month?
(a) What are the criteria and procedures by which Kiva determines Field Partner listing quotas?
(b) What are the exact listing quota's for each Field Partner?
(c) What are the criteria, possible ranges of scores, relative weightings, and auditing procedures by which Kiva determines Field Partner risk ratings?
(d) What are the exact risk ratings for each criterion for each Kiva Field Partner?

DISCUSSION:
Tim Hassett is planning to address some issues of quotas on the coming Kiva Community Conference Call so we did not go into details today.  There will be notes taken on the call (and an audio playback may be available), for those who are unable to participate in the call.


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[5] Refreshing the "Top 5 questions".
The auto-response email received when one writes to contactus@kiva.org says that the three most frequently asked questions are:

1. Is Kiva a 501(c)(3) organization
2. What is Kiva's Federal Tax ID number
3. What is Kiva's address

Are these really the most frequently asked questions? Will anyone be looking at these, and the FAQs, to refresh them?

DISCUSSION:
Liz is actively working on overhauling the Help Center in the first half of this year, and the FAQs are part of that.  The auto-responder which sends out the "we got your email" messages will change also, along with some (unspecified) changes in how the Customer Service (CS) staff takes emails.  As part of this refresh, it will be easier to find the Kiva contact email on the site.  Also without going into technical details too far, the CS back-end tracks the subject matter of incoming emails, but this is not currently synched with the Help Center; Liz is hoping to get these in synch, after which the FAQs will truly reflect the most frequenly-asked questions.


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[6] It may be time to do a stale link check.
It was noted that many of the lender page links on the Kiva staff page on the website are no longer fresh (Gerard's in particular was mentioned, since he's changed his lender page name and the link on the website was not updated).  Are there plans to do a stale link check on the kiva.org site any time soon?

DISCUSSION:
Liz forwarded the report of the Kiva staff page stale links to Roma (who is away for a few more weeks) and assures us this will be addressed.  Whenever you run across a page on the Kiva site with broken or stale links, she asks that you copy and paste the URL of that page into an email and send it to contactus@kiva.org and report the broken link.  It will be filed as a bug and they will fix it.


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[7]  What's up in Nicaragua?
And in an aside, we wanted to be sure you all were aware of Kendall Mau's update on Nicaragua, since things don't look so hunky dory there right now.... 
"In Nicaragua, we are still slogging along. Doing business there is very difficult right now as the government is supporting the idea that micro-credit organizations are no better than modern day usurers.  Some cheaper subsidized funds have entered the country via Chavez-Venezuela.  There is a new Anti-Repayment Movement forming which has the backing of the government.  We are re-evaluating our business model and will make some major changes and decisions in the coming months.  We expect delinquencies to start climbing. "
Several of us have stopped lending to Nicaraguan borrowers in a cautionary move, would you have any comment on that?

DISCUSSION:
Liz spoke with Giovanna who manages the Nicaraguan partnerships.  The situation reported in Kendall Mau's blog is from January, and there's been a rather dynamic situation in Nicaragua since then.  At this time, President Ortega is no longer behind the anti-repayment law ("no pago").  Repayments will continue uninterrupted, and Kiva believes that mass defaults are unlikely.  There are widespread issues of over-indebtedness in the country, in part because Nicaragua is among the countries most saturated by a wide range of microfinance providers.  Kiva partners with those MFIs that have a social mission as part of their charter, and the MFI issues in Nicaragua are mostly with those which are lending at usurious interest rates for high profit or which employ "questionable debt collection processes" including garnishing wages.  Liz hopes to provide some links to news reports on this issue, but has not received them yet.  I was able to find this article in Spanish which confirms Ortega's backing away from the "no pago" movement.


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In another aside, I asked Liz if it would be possible to record the 18 Mar 2009 Kiva Community Conference Call so it could be played back later, and she said she would look into doing this.

We agreed that the calls will now be EVERY OTHER WEEK rather than weekly, as it's just too much work for both of us to do a good job every week.  We will skip 19 MAR 2009, since there will be a Kiva Community Conference Call the day before (which I'll be taking notes on, ha), so the next KF Liaison call will be 26 MAR 2009.

Thanks again for the great questions.  I want to stress to all of you that I think this relationship is working very well -- I think we're getting a fantastic response from Liz and the staff, and it's gone a long way towards improving my thoughts about some issues I'd been concerned about.  Keep the cards and letters coming, folks!

--Diane.

[wthepoo]

Thank you, Diane! Excellent...

Kiva is not actively deploying resources on this right now, because they don't have a complete sense of the amount of resources required to go after it, so it's a matter of priorities.  They do, however, talk about the issue often.  Liz has brought it to Premal's attention again, to keep it a fresh issue.  When they are able to work on it, they'll assign priorities based on the size of the lender base in a country; Canada will be first on the list.  Liz wondered whether there might be an EU-wide policy that would apply, or if each country's rules would be different, does anyone know?

AFAIK (and that's not very far, I am afraid), there is no EU/EC-wide policy. In fact, the system how it works is quite different between member states.

* In the UK ("Gift Aid"), the (UK) recipient of the donation can - if authorized by a UK-taxpayer to do so and under certain circumstances - directly claim a tax refund in the amount of the basic tax rate (22%). In case the donors pay more than basic rate income tax, they can reclaim the additional tax with their tax return. (see: http://en.wikipedia.org/wiki/Gift_aid)

* In Germany, the donors can file for a tax benefit/return, and deduct charitable donations to certain German recipients (i.e. basically non profits/charities) from their taxable income. Arguably, this rule has to apply to charitable non-German EC recipients, too - but it won't apply to non-EC recipients.

In both countries, AFAIK, a US recipient like Kiva will not be able to either claim Gift Aid or issue donation receipts that are acknowledged by the local tax authorities and lead to tax benefits. Kiva would either have to set up a subsidiary in the EC or cooperate with an EC charity as a middle person.

I may be wrong about all this, though - so don't take it for granted, please.

Best wishes,
Wolfgang.

[Natasha]

Thankyou Diane!! 

[dh]

Many thanks, Diane.

Kiva friends interested in what's up in Nicaragua should check out the latest blog entry from Kiva Fellow Megan Montgomery:

http://fellowsblog.kiva.org/2009/03/13/microfinance-challenges-in-bluefields-nicaragua/

--Don

[TheTatiana]

I think the change in schedule to every other week will be fine.  Thanks for all your hard work.  This is working out really well, I think.  =)

[KFLiaison]

Liz was traveling last week and asked to postpone our call from last Thurs. until early this week, but I am feeling slightly under the weather, so we have scheduled our call for Thurs. April 2 (it had been originally on the calendar for Thurs. March 26).  Thank you all for your patience, especially at this time of much upheaval.

--Diane.

[AccountAbility]

Here is the list of questions I sent Liz on Wednesday, followed by responses from our call on Thursday.

DISCUSSION:
Liz is actively working on overhauling the Help Center in the first half of this year, and the FAQs are part of that.  The auto-responder which sends out the "we got your email" messages will change also, along with some (unspecified) changes in how the Customer Service (CS) staff takes emails.  As part of this refresh, it will be easier to find the Kiva contact email on the site.  Also without going into technical details too far, the CS back-end tracks the subject matter of incoming emails, but this is not currently synched with the Help Center; Liz is hoping to get these in synch, after which the FAQs will truly reflect the most frequenly-asked questions.

--Diane.

While all this sounds good, the question was focused on the auto-responder email which hasn't changed in months (if not years).  Surely that email can be readily changed with some frequency.  It's another communication link which is under-utilized.  Since the blog is now starting to have news about developments on the website etc, why not at least put a hot link to the Kiva blog in the email.

Dan