On June 10th Kiva announced that it will open its loans to US based field partners ACCION USA and Opportunity Fund.  The response was pretty overwhelming.  Most people took either one side or the other, both for and against.  Kiva immediatley took action to get more and more feedback from its readers, including:

• Dissecting emails they received by their customer service team, at contactus@kiva.org
• Initiated an online poll that asked “Do you support Kiva’s decision to allow loan requests from the U.S.?”
• Read users comments posted to the letter posted on this blog on June 19
• Monitored messages posted to Lending Team message boards (Here’s a look at some of the notes for the Seattle Group)
• Monitored discussions hosted on KivaFriends.org
• They hosted a Community Conference Call on July 15th in which lenders were invited to give their feedback on the U.S. pilot

Here is a summary to their response to the main criticisms after Kiva collected data from it’s supporters:

Through the previously mentioned feedback channels, we have monitored the questions and criticisms that have been raised by the Kiva community. There are a number of themes that recurred throughout. We’d like to address the major themes of these criticisms here:

1 – “Loans to the developed world do not serve Kiva’s mission.”

There have been a number of criticisms of Kiva’s U.S. launch that fall within this theme. They include “U.S. borrowers are not poor”, “Kiva has strayed from its mission”, and “Loans to the developed world do not fight poverty.” The themes that connect these criticisms together are:
1. Definition of poverty: how poor is “poor”?, does poverty exist in the developed world?
2. Definition of Kiva’s social mission: do developed world loans contribute towards Kiva’s social mission, or do they detract from it?

We believe poverty is relative. There are many definitions of poverty that exist. One very common global definition is those who live on less than $1 a day. Many countries measure income to create their own “poverty line”, below which those living in that country are considered “poor”. The United Nations Development Program uses a Human Poverty Index that considers life expectancy, literacy, unemployment and income level. Others believe that poverty is something more abstract.

We believe there is no exclusive definition of poverty that defines who is poor and who is not poor. We respect that there are many different opinions of what it means to be poor, and we respect an individual’s interpretation of poverty that is most meaningful to them. We also believe that, within any poverty definition, one might further distinguish moderate poverty from extreme poverty, and we respect that there are many different ways an individual may understand the various levels of poverty that may exist.

We believe there are many factors that contribute to poverty. These can include access to credit, access to employment, access to education, access to health services, and access to food and clean water. As there are many contributing factors to poverty, there are also many solutions to poverty, none of which can eradicate poverty alone.

We also believe poverty is an impermanent state. We believe that it is possible for an individual to move out of poverty, as well as to fall into poverty, according to circumstances that take place.

As such, Kiva does not define poverty for each individual entrepreneur on the Kiva website. Instead, we strive to provide an environment where people can choose who to support based on their own definition of poverty.

2 – “Loans to the developed world dilute Kiva’s brand.”

Kiva’s brand has been built on the concept of individual loans, to individual people, for poverty alleviation.

The first loans on the Kiva website were to entrepreneurs in East Africa. Over time, Kiva added Field Partners in different regions of the world, such as Asia, Eastern Europe and the Americas, and loans to entrepreneurs from these regions were funded on the Kiva website.

We have always considered Kiva to be a global organization, and, as such, we consider our brand a global one. We have celebrated each new country added to our global portfolio, as we have Kiva Lenders who have joined the Kiva community from new countries around the world.

While we recognize that early perceptions of Kiva may have been that our intention was to stay within one region of the world, defined by geography or development, this was never a part of our vision for the organization.

We believe that the addition of the United States to Kiva’s global portfolio does not dilute our brand, but strengthens it, as it emphasizes the global nature of the Kiva platform, reaching across nations, continents, and economies. We recognize that the addition of the United States to Kiva’s global portfolio may be the first time many in the Kiva community have been exposed to this idea.

3 – “Loans to the developed world take money from the developing world.”

Many Kiva Lenders have expressed concern that the addition of developed world entrepreneurs to the Kiva website would negatively impact the amount of money loaned to developing world entrepreneurs. The implication is that developing world entrepreneurs are more deserving, or more in need, of Kiva loans than developed world entrepreneurs.

We neither define poverty for our community, nor do we define which countries are more deserving, or more in need, of Kiva loans than another. Each time a new country is added to Kiva’s global portfolio, there is a risk that loans to entrepreneurs in this country might be more highly desired by the Kiva community than loans to entrepreneurs in another country. For example, loans to entrepreneurs in a post-conflict area that is experiencing high exposure in the media may be more popular than loans to entrepreneurs in a peaceful country with little attention by the media.

To ensure that Kiva’s global portfolio does not become “overwhelmed” by loans to entrepreneurs in one country, or one region of the world, Kiva enforces fundraising limits on each Field Partner, which contribute to a country limit of no more than 10% of the entire global portfolio. These country limits allow Kiva to both minimize risk to Kiva’s loan portfolio as a result of events on a national scale, and also to maintain a well-balanced global portfolio.

4 – “Loans to the developed world have fundamentally changed what Kiva is.”

We understand that for some in the Kiva community, facilitating loans to developed world entrepreneurs feels like a fundamental shift in what Kiva is and stands for. While we recognize that this sentiment exists, we respectfully do not share it with those who feel that way.

To us, Kiva has always been about making loans to people around the world. As the fundamentals of Kiva, for us, were never defined by country, we don’t feel that we have fundamentally changed.

5 – “Listing developed and developing world entrepreneurs side-by-side, on the same platform, is insulting to the developing world entrepreneur.”

There have been suggestions that Kiva should build a second website to facilitate loans to developed world entrepreneurs, in order that they not be listed alongside developing world entrepreneurs. The implication is that entrepreneurs from the developing world are so different from developed world entrepreneurs, that grouping them together is offensive to either group.

Our opinion contrasts entirely with this sentiment. Kiva believes that loans promote dignity and mutual respect, and we endeavor to carry these qualities through all areas of the Kiva platform.

By separating entrepreneurs according to the part of the world they are from, we would be highlighting the differences between them, based on geography. Kiva strives to highlight the similarities between entrepreneurs across the globe, not the differences, based on personal qualities, not geographical location. By focusing on personal qualities, we believe we can encourage the type of dignity and mutual respect developed when meeting a person.

Furthermore, the feedback we have received from our contacts in the developing world, Field Partners and entrepreneurs, demonstrates that listing developed world entrepreneurs beside developing world entrepreneurs is a source of pride, not insult. No longer are individuals differentiated according to the wealth of their nation, rather entrepreneurs from the poorest nations of the world are situated alongside entrepreneurs from one of the wealthiest nations of the world. We believe this promotes equality and engenders dignity, not insult.

There is a great article on Kiva over at the Stanford Social Innovation Review written by Bethany Coates & Garth Saloner. It gives a good overview of how Kiva got started, some of the challenges Matt and Jessica have faced, and where they are currently.

Kiva rocked the microfinance world today by announcing on Good Morning America this morning (RyanC, thanks for the heads up on Twitter) that they have now opened up loans to the US as well.  There has been quite the press on this issue this morning already, I’m sure it will get more attention as the day goes on.  There have been positive and negative comments surrounding this announcement.  Some people like the fact that microfinance is making a bigger push here in the US, while others think that the focus should be more on third world countries where capital is harder to raise.
Here are some of the recent comments this morning from people here in Seattle on the SeaMo Team on Kiva:

“While I do not necessarily agree with lending to US entrepreneurs (although many such people in the US face redlining/discriminatory practices when attempting to borrow), none of us is required to lend to these people and can continue to lend outside the US if that is our preference. I suggest that we refrain from inferring that people are rich just because they live here and refrain from inflammatory statements.”

“Kiva has started to lend to US entrepreneurs in 2009. These US entrepreneurs might have more money than most Kiva lenders do. Why don’t these US entrepreneurs use their own savings or get a loan from the bank to start their businesses. Why US entrepreneurs shift the risks to Kiva lenders and getting interest free loans from Kiva lenders for their personal benefits? The altruistic meaning of helping the poor is lost. If lending to US entrepreneurs is for business reasons, then Kiva.org should require these rich US entrepreneurs to pay interest and share a percentage of the interest return to Kiva lender so both Kiva.org, Kiva lenders, and US entrepreneurs or First World entrepreneurs can benefit from this. To sum it up in one sentence, Kiva Lenders should ask Kiva.org to demand interest payment from these First World Rich Borrowers who might have higher networth than their Kiva lenders. Please message Kiva.org and spread the words if you agree.”

“I agree with ####. I am also disappointed in Kiva’s decision. Sources for funding businesses in the US are vastly more available than in undeveloped countries. Kiva is diverting financial assistance from those who need it most and have the least access to it. Bad idea, in my opinion.”

“Of course is it for altruistic reasons #####. But did you know that Kiva is starting to lend to US entrepreneurs who are looking for interest free money to start their businesses? These US entrepreneurs might have more money than most of us but still asking for free loans on Kiva rather than using their own saving or going to the banks. The meaning of helping the poor is lose and there are many people lending to these US entrepreneurs for free or no knowthing that they won’t get interest. Kiva should at least require interest payment from these rich borrowers and share some percentage of the interest to the lenders.”

“I do not agree with you. We are in this, not for the money, but out of altruistic reasons. Since the money is disbursed immediately and is not earning interest, out of what funds do you think Kiva should pay us interest? Any funds should go to finding more people in need and training field staff.”

“I think Kiva should consider giving lenders some interest payment for doing good and lending to there people. what do you guys/gals think?”

“I just went and checked out the US listings on Kiva (see my note below for my initial reaction). Now I am even more outraged after reading the following:
For 15 years, Mark worked in architecture offices as a graphic designer, producing websites and scale images of architecture projects. He liked the work, but the jobs were inconsistent and had long dry spells that were difficult to manage. Mark knew that he could do it better as his own boss, so in late 2008 he decided to start his company, Urban Digital.
Urban Digital specializes in marketing and visual tools for builders and architect engineers. With a degree in architecture and many years of experience, Mark is an expert at producing technical images, websites, marketing kiosks and other materials that architects need. But getting started is hard, especially given the high upfront cost of all the hardware and technical software he needs to complete the projects he is pitching to clients. With a $7,000 loan from Opportunity Fund, Mark will be able to make these purchases and truly get his business up to speed.
Mark is saving money right now by running the business out of his home, but his goal is to bring in enough clients that he can hire employees and establish a real office.
Visit: www.urbandigitalworks.com
Excuse my French here, but holy crap, what are you thinking and what have you done?? THIS guy is in need of $7000 more than, say 7 truly destitute families in Africa????
Yes I can still choose to loan to any country I want, but the OTHER folks who contribute to the US borrowers are taking (perhaps literally) food from the mouths of babes to give it to the rich. THIS guy has a MILLION other avenues to get where he wants; a family in Africa is desperate.
I am totally ASHAMED of Kiva’s decision on this matter and outraged you didn’t think it through farther. I urge you to ABANDON this program immediately.”

“Hi fellow Seattleites,

Kiva announced today on Good Morning America, BBC, NPR and other major media outlets that it will be facilitating loans to US entrepreneurs. The first set of loans are now available on the site, so it is a great time to invite additional friends and family to the site, or to use up those repaid loan funds.Thanks to everybody for helping our team to reach $25,000 in loans. Let’s see if we can catch the Atlanta lending team, which has made almost $50,000 in loans. We can do it!
Ryan
Seattle Team Captain”

Personally, I like this idea that Kiva had.  People are not forced to donate to the US companies.  If you are opposed to giving to a US borrower, then don’t.  You can always choose one of the many thrid world countries that Kiva allows lenders to donate to.  I think that by opening Kiva up to the US,  more first time lenders will be attracted to the cause.  Many people do not know what is going on in different countries, and are hestitant to donate to causes they don’t know about.  By having microfinance be local,  it allows lenders to donate to borrowers who are closer to their community.

Could just be my outlook on things, anybody else have any thoughts?  Please share.

…even in the developing world. There is a great story over at Kiva Stories from the Field that demonstrates that anything is possible for those who put their minds to it and have access to small loans.

Thank you to the Kiva Fellows like Kieran Ball who share stories like this that humanize microfinance for the general public.

Kiva.org just released an announcement that they are hiring for two positions. With the economy going the way it is, there aren’t to many new jobs in microfinance.  So this is a great opportunity for someone looking to get into the field.

Here’s a description of their openings:

Product Manager, Consumer Applications:
Kiva is seeking an enthusiastic, seasoned Product Manager to guide the lender experience of the world’s leading micro-lending marketplace. You will bring your experience and excitement for consumer web applications and apply everything you know to help Kiva reach its potential to the fullest. We really are changing the world, one person and one loan at a time.

Software Engineer:
Kiva is seeking an enthusiastic, sharp software engineer to join our rapidly growing team full-time, and help us change the world even faster.

Responsibilities Include:
* Build new functionality for our website
* Collaborate with business owners and other engineers to find solutions
* Write efficient and maintainable code
* Testing (both manual and automated test suites)
* Participate in design process, prototype new functionality
* Anything else that Kiva needs to get done!

I manage the Zillow API program as part of my day job, so the release of the Kiva API (myKRO coverage) a few weeks ago certainly caught my attention given my microfinance interest to go along with my background with APIs. For those of you who don’t know, “API” stands for Application Programming Interface (yes, it’s a geek term). The new Kiva APIs have all sorts of potential to help Kiva over the long haul. I see it serving two main functions:

1. Enabling others to spread the Kiva brand, which will likely increase the number of lenders & the amount of funding on the site
2. Ability to automate tasks that are currently manual. I believe all the current APIs are designed to send Kiva data out to other sites, but it would not surprise me one bit if there were soon Kiva APIs to accept incoming data to populate Kiva. MFIs (field partners) could automate their loan repayment updates, posting of journal entries, etc.

Here are some of the cool apps that have already been built:

1. A wordpress plugin showcasing your loans
2. An app that allows you to get e-mail alerts for loans you’re interested in
3. Map based browse feature
4. A facebook app

Some things I’d like to see built (note the API likely doesn’t support the needed functionality to build all of this) with Kiva data:

1. WordPress plugin that shows off the impact of a “Lending Team” (such as the myKRO one)
2. An app to search and browse Kiva Field partners by performance indicators (such as repayment rate, average loan size, interest rate, etc)
3. Heatmap showing volume of loan activity as well as overall $ volume by country
4. Scrolling photo widget displaying photos of all the different borrowers in a particular country or region. The ability to show all borrowers for a specific field partner would also be cool.
5. Heatmap showing average interest rates paid to field partners per location
6. An app that recommends other lenders to connect with based on my lending choices

I look forward to seeing the next wave of applications built with the APIs, as well as the release of some new APIs which I have to guess Kiva is working on. I’ll try to do another post soon with some more thoughts and suggestions of how the Kiva APIs can be utilized to bring the maximum value to Kiva over the long haul.

And speaking of APIs, I have a strong hunch this is going to start a trend in the non profit world of NGO’s opening up their data as a means to spread their message to more people in more places.

I have repeatedly wondered this question with respect to natural disaster since I have begun working in Santiago with Esperanza International and Kiva.  What happens to microfinance bank members when natural disaster strikes?

In the case of the Dominican Republic, natural disaster comes often and in the form of tropical storm and hurricane activity.  Since arriving two months ago I have come across the stories of two individuals, each effected by natural disaster.

Gladys, mother of three, lost everything to tropical storm Olga in December of 2007.  Around midnight on a December evening the Tavera Dam collapsed on the Yaque River and allowed 1.6 million gallons of water a second to enter the surrounding communities.  According to Gladys, hundreds were killed.  She declared everyone was sleeping; it was  unexpected.

Due to the failures of the government infrastructure, the Dominican government has built a housing development for those affected by the collapse of the dam.  Gladys has now been living for nine months in this development and is beginning the process of re-establishing her nail salon with her first microfinance loan from Esperanza International.  In additional to free housing, Gladys is also receiving 300 pesos a month for each child living at home, four gallons of gas a month for cooking purposes, and insurance.  Despite the government’s efforts to aid this population it is clear it is a long road ahead.

Olga, mother of four children, has also suffered the effects of flooding and tropical storm activity.  In February 2009 tropical storm activity passed through Santiago and relentless rains persisted for seven days.  Flooding was inevitable.   Olga, as well as her neighbor and fellow member of her microfinance bank, lost their homes due to the flooding.  In the case of Olga and her microfinance bank, unlike the story of Gladys there is no government assistance.  Olga, on her third microfinance loan with Esperanza, is beginning the process of rebuilding.

Countless stories can be told of the effects of natural disaster amongst other cities in the Dominican Republic and throughout the world.  A trend appears to be evident however; the poorest of communities, due to financial restrictions, live in those areas most prone to the sufferings of natural disasters.  According to the UNDP 2004 Reducing Disaster Risk: A Challenge to Development report, “85 percent of the people exposed to earthquakes, tropical cyclones, floods and droughts live in countries having either medium or low human development”.  A cycle of disaster, recovery and disaster can often be seen that leads to the question of how microfinance organizations can best work in these communities.  It is a question I hope to learn more about as I continue to interact with these two women.

Kiva recently made TIME magazine’s list of “50 Best Websites of 2008″.  As described:

You don’t have to give away money to support a good cause. At Kiva you can make a small loan instead. A unique peer-to-peer lending site that focuses on microloans, Kiva lets lenders pledge funds — from $25 and up — to entrepreneurs in developing countries. As of May 2008, that included a cattle breeder in Azerbaijan and a snack-kiosk owner in Indonesia. Kiva works with microlenders in recipients’ native countries and typically pays you back within a year.

Kiva is the world’s largest publis database of micro-enterprise profiles and earned a well deserved spot on TIME’s list.

I was reading over the Kiva newsletter and came across Buildkiva.org, which is the introduction of a new API where developers can find new and creative ways to expland what Kiva is already doing.  I’ve seen some great stuff come from developers working on things in their spare time and tech companies, so I can’t wait to see what happens when those ideas get applied to microfinance.
For any developers out there who want to work on microfinance stuff in addition to Kiva, we are always looking for volunteers to help us build a bigger and better community here at myKRO