Confusion on Where Money Lent via Kiva Goes - NYT reactions & fall-out linkspam

[Guest]

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[waywardcats]

This is a response to the lender connection issue from Kiva Fellow Leah Gage.

Kiva Makes it Personal

Less than a year ago, Kiva was taken to task by critics for not being as person-to-person (P2P) as it was claiming to be. But I think Kiva’s continued relevance in the field of grassroots development rests precisely on its continued ability to connect people through lending for the sake of alleviating poverty. There are lots of examples of this; here are three.

In its efforts to present the realities of microfinance on the ground, Kiva allows lenders to learn not just the personal story of their particular borrower, but also the stories of the field organizations with whom Kiva partners. Kiva wants you to know that its work would not be possible without the work of an MFI like WAGES in Togo that provided the loan in the first place and uploaded the borrower’s profile that you chose to fund. And, Kiva wants you to actively engage with that field partner by providing the partner’s contact information.

So it was so cool last week when I went to visit a WAGES field office in Lomé, Togo and saw this email from a Kiva lender named Mark, tacked to the agency’s official bulletin board for all its clients, staff, and stakeholders to see. In his message, Mark thanked WAGES for all the organization did to help borrowers in Togo and further praised WAGES for providing business training programs to its clients. “I’m a stranger to you,” he writes, ”but I’m proud of you and I thank you for your service.”

Stranger or not, one lender’s praise and thanks served as motivation enough to display this individual email on the official WAGES bulletin board for over a year!

The recipients of Kiva loans are often also personally touched by Kiva’s ability to make connections. I’ve met dozens and dozens of Kiva borrowers, the real people that exist behind those profiles and take the loans Kiva lenders fund. Each time I meet a borrower, I explain to them that thirty individuals around the world saw their photo, read their story, and chose to fund their loan. Usually what touches the borrower most is that someone in another country chose him. That choice was real and it was personal – both to the lender and to the borrower. And, after the fact, their choice to lend caused change in that borrower’s life that was personal too.

Take Vladimir Alekyan in Ukraine who, upon learning about the Kiva lenders who funded his loan, took me inside of his newly built greenhouse and exclaimed “This is your help!”

At the time it really moved me the way Vladimir expressed it, equating the greenhouse with the support of Kiva lenders. Of course, it was after a week of hard construction work that the lenders’ financing materialized into the greenhouse, but at the time thats not how Vladimir was thinking of it. The connection was personal, his greenhouse existed because of Kiva lenders, and for that he was grateful.

During a loan officer training I held for HOPE Ukraine a few months ago, I explained to 14 doubtful loan officers that Kiva lenders really don’t make money off their loans; in lieu of monetary profit, lenders profit from stories.

Kiva lenders get this information in primarily from journals – written accounts of a borrower’s progress during or after their repayment of the loan. Recently, Kiva made this personal exchange even more personal by introducing a tool by which Kiva Fellows can email lenders before visiting a borrower to ask if they have any questions for the client. I recently tried this out for the first time and within a day received responses from four Kiva lenders.

For example, Paula from Spokane, Washington in the US asked Félicité Ayawavi Hounsou from Lomé, Togo, “What is your hardest challenge as a working mother?” When I asked Félicité, she told me that her hardest challenge is being the sole provider for her daughter, ten years old, and her younger sister, both of whom live with her. This exchange is really remarkable because it’s a relevant question to a woman like Félicité from Lomé and a woman like Paula from Spokane. This new tool by which lenders can ask their borrowers questions levels the playing field and highlights the fact that on both ends of the Kiva lending process are real people who are probably not so different from one another as they might think.

Kiva is special and relevant precisely because it makes poverty alleviation personal. As people like Paula and Mark are personally touched by what they’ve learned, they’re going to continue to make small contributions that amount to large life changes for the thousands upon thousands of borrowers who have themselves been touched by Kiva. In turn, people like Félicité and Vladmir not only receive financial support from Kiva lenders, they are also personally empowered by the realization that someone is cheering them on! If thats not person to person, then what is?

[waywardcats]

The Stuff You Should Know blog has a two-part post related to The New York Times article and discussion. 

Part One - Discusses how they learned about microfinance and the history of the SYSK Kiva lending team.

Part Two - Talks about why they continue to lend through Kiva "warts and all".

[eileen]

I feel a connection to the entrepreneurs I have lent to through Kiva, even though their loans were pre-disbursed. And I am glad that they did not have to wait to get their funding until enough people picked their picture and story out of the others on the website.

I’m also glad that almost all loans get funded, so that the MFI’s are not in competition against each other based on who can present a more emotionally engaging story. Here is a thought-provoking discussion starting with a blog post by Suzy Marinkovich, on the topic of how Kiva might be affected if a significant percentage of loans expired:

http://www.kivafriends.org/index.php/topic,4490.0.html

Pre-dispersing the loan seems to preserve more dignity for the borrower, and I still feel a connection to the entrepreneurs whose loans I have funded.  I choose to feel that connection, although I could choose to see it the other way – that I have loaned to the MFI, because Kiva is confident that that MFI is doing good work, and with each loan to the MFI, I get a picture of a representative borrower. That is perhaps not as satisfying, but the important thing is that a person got the help they needed to help themselves.

This may mean that there is little point to selecting loans, and that instead, lenders should select MFI’s. If the loan I choose is pre-disbursed, I’m actually funding the MFI’s next loan, or helping all their loans in general. But since each MFI has its own emphasis (for example, one may have more agricultural loans, another may have more retail loans) each loan from that MFI is a fair example of the type of loans the MFI is making.

It only becomes important if a lender has an ethical principle against certain loans. Here is an interesting discussion about ethical dilemmas in lending:

http://www.kivafriends.org/index.php/topic,1279.0.html

If someone had an ethical principle against supporting the sale of alcohol, for example, then if they saw their funds as going to all the MFI’s loans, that would include the loans for pubs, if that MFI had any loans for pubs, and that would be objectionable to them.

And some lenders want to avoid funding high-sugar foods or the production of charcoal or other activities they feel have a bad effect on health or the environment. But then that raises the question of whether we are trying to impose our values on people who need to support their families and are pursuing activities which are standard in their country. 

There seems to be a constant conflict in non-profit fund-raising between giving the donor (lender, contributor) a feeling of personal connection and even control over where the funds go, and the reality that the funds actually have to be combined with other funds to help a number of people.

[AccountAbility]

It only becomes important if a lender has an ethical principle against certain loans.

It also becomes important when borrowers become delinquent.  Kiva lenders take the risk and therefore it is important that the specific loan that they lent to be accurately connected. 

To me pre-disbursal is a non-issue if all that is happening is that the MFI Field Partner is advancing their own funds until Kiva lender funds come through to reimburse the advance.

Dan

[David2051]

[snip] I could choose to see it the other way – that I have loaned to the MFI, because Kiva is confident that that MFI is doing good work, and with each loan to the MFI, I get a picture of a representative borrower. That is perhaps not as satisfying...

It is also not an accurate way to view what we are doing on Kiva.