8 ms·

The Kiva Fairytale

89 points by jkurnia 13y ago

curiouscats 13y ago
I agree Kiva should have more results data. The article is fairly lame though. In one quote is says "With interest rates often exceeding 100 percent," which I am pretty sure is completely false. I have made hundreds of loans and I worry about rates above 40%. I seek lower rates (often between 20-30%) and find them often. The article says Kiva doesn't discuss the rate - but it is shown on every lending page, as a lender you can select based on loan rate (I know, I do). The article also doesn't provide data either on the failure of Kiva to help. Granted I think Kiva should provide more data on the impact of loans and whether it is helping or not - I like to believe it is but <a href="http://investing.curiouscatblog.net/2009/10/16/micro-credit-research/">I http://investing.curiouscatblog.net/2009/10/16/micro-credit-... do question how useful Kiva really is</a>. I don't know about expenses for Kiva (though sites like Charity navigator rate it highly). But as a lender on Kiva it really doesn't matter. Kiva expenses are paid by donation. To lend using Kiva you can make donations but you don't have to. High expenses matter it seems to me if you are choosing who to donate to. Kiva does take advantage of human psychology in a smart way it seems to me, connecting lenders to people that need loans. It is a bit of a fiction as the article points out but it is also real - your re-payments are based on that loan. I see the benefits of that human connection as worthwhile (people like that human connection - showing their photos adds to that) though agree if you want to find fault it is something you can question. I like another site that provides charity to local groups directly http://www.globalgiving.org/ http://www.globalgiving.org/ I do figure there is more chance of fraud given the nature of having lots of little organizations that it is hard to monitor. But I like getting directly to small groups that are making an effort and being able to target what you like. Some sites that have published research on micro lending http://microfinanceresearch.org/ http://www.microfinancegateway.org/p/site/m/ http://www.cgap.org/
- ploxiln 13y ago
  The article claims that when you look for specific loans, you're being fooled: the loans have already been made, and the interest rates listed are inaccurate. Quote: Kiva’s initial attraction was that it was a peer-to-peer lender, but it is not in fact a peer-to-peer at all. The loans featured on the website were made months before, and Kiva users are essentially buying them from the banks. But the deception does not end here. Kiva cleverly chooses to reveal out-of date portfolio yields instead of actual interest rates on loans, conveniently and consistently under-estimating the real cost to the poor.
  - curiouscats 13y ago
    Kiva publicly states, and has for years, the loans are made prior to individual funding via Kiva. While I do believe the majority of users don't know this, I think Kiva does a decent job of disclosing it, saying they are being deceptive, I believe is inaccurate. It is true the yields are quoted as portfolio yields (average for the lender overall). This seems adequate to me. If the yields are not representative (out of date, etc.) that is bad and Kiva should fix. I didn't notice evidence that this was a widespread problem. Kiva also lumps in all costs to the lender so it isn't like many financial institutions in the USA trying to fake low interest rates with lots of hidden fees etc. (though regulation has made it more difficult for financial institution to make loan rates deceitful - not that they don't try but it is much harder than 15 years ago). It is peer-to-peer at the essence I think, though it is often not directly that way and I don't think Kiva hides how it works at all. Though I do agree it is easy for someone to not make one or two extra clicks to read a bit about Kiva before making a loan but I think Kiva's balance is fine. Kiva also has a new thing called Kiva Zip that is more "pure" peer-to-peer for people that want that. I have given to another organization that just made grants (instead of loans) for over 10 years now. Trickleup.org It doesn't have the neat peer-tp-peer psychology going for it. And it is straight charity, not a loan. I have also wished trickleup.org did (or arranged for professors to do) studies on the impact. They have done a bit more in the last few years on the research piece. I would like more study of Kiva. I want to understand if it is helping and what factors matter. I steer toward lower loan rates but does that really make sense (I figure too high a rate increases risk for the person). I try to lend to purchases of equipment that will increase productivity (though I can't always find those loans) - is that really effective? I also like loans to buy things to rent out devices to increase productivity (some people buy washing machines and lend them out...). I am very lucky. I like to help give others a chance to gain economic success in the very limited ways I can afford to. I hope Kiva helps, but I do question if it does. And I question if they are focused on growth so much (as most USA based organizations are) that they grow beyond what is helpful. It is possible there is a core that is now say 20% of the Kiva's loans that are hugely beneficial. 50% that are sometimes great, sometimes bad... the value is questionable overall... And say 30% that are likely to just make things worse. But those figures could be anything (from what I know - I don't have any data). Given what I know I think it is worth lending some money through Kiva. If I were one of those huge foundations giving Kiva millions I would spend at least 20% on research until there was good data on how successful it is and what are the keys for making it work.
- mfheretic 13y ago
  Kiva does not state interest rates. You are viewing portfolio yields, which are not interest rates and consistently underestimate the actual rates. For a post specifically discussing this topic with 10 examples using actual data comparing actual interest rates versus the portfolio yield stated by Kiva, see: http://blog.microfinancetransparency.com/whats-wrong-with-kivas-portfolio-yield-statistic/ http://blog.microfinancetransparency.com/whats-wrong-with-ki... If you want to see an MFI with rates approaching 100%, look at Mexico in particular. Before the MFI quit Kiva, Brac in South Sudan had a portfolio yield of 88%: http://www.microfinancetransparency.com/evidence/PDF/11.24a%20Kiva%20-%20BRAC%20South%20Sudan.pdf http://www.microfinancetransparency.com/evidence/PDF/11.24a%... This MFI quit Kiva, but you can see it here: http://www.kiva.org/partners/107 http://www.kiva.org/partners/107 note that Kiva now states the portfolio yield is "only" 69.03%, but you can't lend through them anymore as they are one of the many MFIs that have quit Kiva. Portfolio yields do not include the impact of forced savings, some fees etc. and can be manipulated, and for a discussiong on why these are absolutely critical in understanding how much a loan costs, see the excellent website www.mftransparency.org, an NGO dedicated entirely to revealing the actual interest rates charged by microfinance banks, many of which exceeed 100% (but are not all Kiva partners). It is not possible to generalise about the ratio between the portfolio yield and the actual interest rates, but as a rule of thumb, a yield over 50% is likely a little too close to an actual interest rate of 100% for me, but this is a very broad rule of thumb that I use if I can't get more accurate data. But it is good that you look at this, albeit flawed statistic, and try to only make reasonably priced loans. If everyone does this then the MFIs offering lower rates will receive more funding, encouraging those charging high rates to reduce them. Competition basically. Please do not think this is a trivial detail. As the post above demonstrates, this can make a big difference in the overall cost of the loan that the poor person actually pays, so if you are trying to avoid exploitative interest rates you really must consider this. But, the more interesting question that is harder to answer, and has far reaching implications, is why Kiva does not publish these rates. See the comments on the Next Billion article. Is Kiva unable, or unwilling to do so? They manage to get all sorts of other information - why not the interest rate? How hard can it be? The bank presumably knows this crucial piece of data, and yet this is replaced with a knowingly flawed portfolio yield statistic. Why?
  - 13y ago
steve19 13y ago
The article boils down to 1) Kiva spends to much money on marketing and is therefor inefficient. 2) Kiva gets to much media attention. 3) Kiva are attracting more than their share of micro-investors. 4) Kiva does not export Western cultural values. Regarding number 4, I think individual investors should decided what and what not to fund. I find cock/dog-fighting to be inhumane, but I enjoy hunting, many people would say hunting is inhumane and immoral and a smaller group would go as far to say "eating meat is murder". What about businesses using malnourished horses to transport goods? Should Kiva not fund anything animal related? As far as only funding legal organizations. I am sure Kiva does not fund narcotic production or gun running. But how can they possibly be sure all businesses they fund are 100% legal, complying with all health, zoning, retail, licensing etc. laws of the local county/state/country?
- wsc981 13y ago
  I thought the main gist of the article was that Kiva in the end just doesn't work. The only thing Kiva seems to achieve is to sate our conscience. This concerns me, since I actually did lend a bit of money through Kiva thinking this would really get results. In the end I'm happy I didn't advertise Kiva to friends and family. I'd have to be 100% sure about the results of any such organisation before recommending it to other people and I guess in the case of Kiva, I never was.
  - mfheretic 13y ago
    It is interesting to see how readers come away with different gists of this article. I do think that Kiva could be a lot better than it currently is, and other similar companies have addressed some of the issues, only they are not as well-known, perhaps because their PR/marketing is not as effective. See some of the later comments in the Next Billion article when Zidisha is mentioned, for example. But I think you touch on a CRUCIAL point - it helps our conscience. Phil Mader's original post, which I reference, is well worth reading: http://governancexborders.com/2013/12/10/kivanomics-101-or-dkyc/ http://governancexborders.com/2013/12/10/kivanomics-101-or-d... It is a short piece and eye-opening. I cite a phrase from this article in my piece: Kiva enables us "to consume the feeling of charity without financial loss" To say that Kiva simply "just doesn't work" is tricky, because we have to define "work". It depends what the objective is. If the idea is to make people feel that they have done something useful with their $25, which they get back a few months later, it works wonderfully. If the idea is to efficiently transfer spare capital in "rich" countries to "poor" countries (forgive the simplification of terms), it doesn't work very well, as there are far more efficient mechanisms. If it is to provide low-cost funding to entrepreneurs, then it has pretty mixed results which are hard to verify as Kiva (mysteriously) don't publish the actual interest rates. In some cases you can find them out though. In summary, you are very wise to suggest that an endorsement requires you to be convinved that this is a good business. It appears Kiva did not meet your standards, and I am inclined to agree with you.
skybrian 13y ago
If you're interested in this sort of thing, you might want to give to GiveDirectly instead. It gives grants instead of loans (so interest rates aren't an issue) and is one of the very few charity organizations to do randomized controlled trials to prove its effectiveness. More detail than you probably want to know: http://www.givewell.org/international/top-charities/give-directly http://www.givewell.org/international/top-charities/give-dir...
unclebucknasty 13y ago
Another thing that's interesting is that it's really not all about enabling entrepreneurship. Increasingly, I have noticed loans for education [1], home-building [2], and other needs. I point this out not to be a jerk. Certainly, these are worthwhile causes in themselves, but there is no lack of traditional charitable giving opportunities elsewhere. I suspect Kiva knows this and is really selling the more differentiated and compelling idea of helping people to stand on their own, as the article mentions. To be fair, most of their loans are still around enterprise, but I cannot help but wonder if loan requests for such needs reveal that the very idea behind Kiva is unrealistic to some extent. That is, when you have people who don't have homes or basic subsistence wherewithal, is it realistic that they can launch or run a successful business? Is it also realistic to expect that a significant portion of their loans won't end up redirected to other needs? This concern is not helped by the fact that the only updates I've ever received are regarding loan repayment, and not how the recipient is actually faring. It's also not encouraging when I see people requesting loans to pay off other loans. [3] Recent articles posted on HN have shown that just giving money to poor people with no pretense or payback requirement is surprisingly effective. Maybe Kiva is selling a dream that has greater marketing appeal, but less actual effectiveness. [1] http://www.kiva.org/lend/667533 http://www.kiva.org/lend/667533 [2] http://www.kiva.org/lend/667257 http://www.kiva.org/lend/667257 [3] http://www.kiva.org/lend/652349 http://www.kiva.org/lend/652349
- curiouscats 13y ago
  While you are right about lots of Kiva loans, you can pick what you lend to, which is what I do. I agree with you about the attractiveness of direct cash. One thing to remember is microfinance has been around a long time. My guess is there is more evidence of effective microfinance than of direct payment. That is not to say direct payment isn't as effective but just to remind people while I think microfinance should have more evidence for effectiveness there has been some good research. Based on the initial success it has grown a ton. And conditions change (including the large amounts of money being thrown into micro-finance). Studying how effective it is today, how effective specific orgs are (Kiva, but also specific banks Kiva works with) and specific methods and factors (how much does interest rate matter, does purpose the funds will be put to matter...) is important. I think the rush to increase funding to microfinance has probably been good. You can suffer real costs to people by moving to slow and needing too much research. But I do think today, there should be more research going on (in a lean startup kind of way - what is successful, mini-experiments...).
nmridul 13y ago
- Interest rate : You should understand that these are people that no mainstream institute would be willing to lend money to, even at high interest rates. So Kiva's high interest rate is not really high. - Marketing expense : I joined Kiva because they said they will make the first contribution on behalf of me. I chose the borrower and Kiva sent the money. I didn't spend anything. I'm sure this would come in as marketing expense. This was one of their largest marketing campaign.
erickotieno 13y ago
After failing to get loan from kiva and kiva zip to fund my business because they were refering me to their trustees whom i couldn't manage to reach because their contacts are hidden yet you are told to find them.Someone refered me to zidisha.They are very transparent to both lenders and borrowers.Since then the loan they gave me is transforming my life.Bellow is the link of my account https://www.zidisha.org/microfinance/loan/erictiz/4832.html https://www.zidisha.org/microfinance/loan/erictiz/4832.html
shehi 13y ago
I heard about Kiva long before I learnt about zidisha (in fact, i learnt by accident after a google search on phone tools landed me on zidisha)but I never had a chance to meet up with Kiva field officers in over six months. So naturally zidisha got my attention from August 2013 to date. I also cannot say much about KivaZip. A friend told me about it but when i went online I found out that someone at KivaZip had to read your "expression of interest to join" then on their on discretion offer you a chance. Its been 3 months of waiting for a email reply ever since, apparently, KivaZip responds almost immediately on "Trustee-ship" requests. As a result am on my third loan at zidisha. Here is a link to my current loan that is 21% repaid https://www.zidisha.org/microfinance/loan/Shehi/4590.html https://www.zidisha.org/microfinance/loan/Shehi/4590.html . in addition, at zidisha we have a very lively and transparent forum that gets everything sorted fast (http://zidisha.org/forum/members/samuel-shehi.1253/ http://zidisha.org/forum/members/samuel-shehi.1253/ ) I am grateful that I found zidisha in time to help my stagnating business. Through zidisha loans, I have co-financed power connection ($400) with a business patner to lower operation cost of my business (I previously rented power connection from a nearby business), I have paid the deposit($120) for a laptop that I use on frequent power outages in my town (mazeras,kenya). I dont know what I would have done without Zidisha loans, they look real small but they really assist me. In contrast, I would have to depend on very expensive loans form Milango, SMEP or KWFT loans here. Thank you zidisha lenders for subsidized loans without collateral requirement, (i had no collateral).
JEANWKABORE 13y ago
Hi all My name is Jean Wendpanga KABORE and I live in the city of Bobo -Dioulasso in Burkina Faso. Some time ago I had to put me on Zidisha Incorporated to receive a loan online. I've received my first loan last year and I have to repay any and then I've received my second loan in the month of December past. On the Zidisha site I exchange with my lenders at any time through the comments . With loans Zidisha I enlarged my business trade spare parts for two-wheelers and I earn a lot of profits . With these interests, I get to meet my basic needs and those of my family . Currently I think Zidisha is the best microfinance institution in the world with becaufe funds that lenders give the intermediate Zidisha , borrowers are able to develop their activities in particular to develop and reach their daily lives in general . Thank you again Zidisha Incorporated. Here is the link to my profile on Zidisha https://www.zidisha.org/fr/microfinance/loan/JEANWKABORE/4610 https://www.zidisha.org/fr/microfinance/loan/JEANWKABORE/461....
jasoncavnar 13y ago
Yay for pseudo-journalism! @mfheretic, fact checking your work wouldn't be hard. Kiva's Response: http://www.nextbillion.net/blogpost.aspx?blogid=3731 http://www.nextbillion.net/blogpost.aspx?blogid=3731

89 points by jkurnia 13y ago

I agree Kiva should have more results data. The article is fairly lame though. In one quote is says "With interest rates often exceeding 100 percent," which I am pretty sure is completely false. I have made hundreds of loans and I worry about rates above 40%. I seek lower rates (often between 20-30%) and find them often. The article says Kiva doesn't discuss the rate - but it is shown on every lending page, as a lender you can select based on loan rate (I know, I do). The article also doesn't provide data either on the failure of Kiva to help. Granted I think Kiva should provide more data on the impact of loans and whether it is helping or not - I like to believe it is but <a href="http://investing.curiouscatblog.net/2009/10/16/micro-credit-research/">I http://investing.curiouscatblog.net/2009/10/16/micro-credit-... do question how useful Kiva really is</a>. I don't know about expenses for Kiva (though sites like Charity navigator rate it highly). But as a lender on Kiva it really doesn't matter. Kiva expenses are paid by donation. To lend using Kiva you can make donations but you don't have to. High expenses matter it seems to me if you are choosing who to donate to. Kiva does take advantage of human psychology in a smart way it seems to me, connecting lenders to people that need loans. It is a bit of a fiction as the article points out but it is also real - your re-payments are based on that loan. I see the benefits of that human connection as worthwhile (people like that human connection - showing their photos adds to that) though agree if you want to find fault it is something you can question. I like another site that provides charity to local groups directly http://www.globalgiving.org/ http://www.globalgiving.org/ I do figure there is more chance of fraud given the nature of having lots of little organizations that it is hard to monitor. But I like getting directly to small groups that are making an effort and being able to target what you like. Some sites that have published research on micro lending http://microfinanceresearch.org/ http://www.microfinancegateway.org/p/site/m/ http://www.cgap.org/

ploxiln 13y ago
The article claims that when you look for specific loans, you're being fooled: the loans have already been made, and the interest rates listed are inaccurate. Quote: Kiva’s initial attraction was that it was a peer-to-peer lender, but it is not in fact a peer-to-peer at all. The loans featured on the website were made months before, and Kiva users are essentially buying them from the banks. But the deception does not end here. Kiva cleverly chooses to reveal out-of date portfolio yields instead of actual interest rates on loans, conveniently and consistently under-estimating the real cost to the poor.
- curiouscats 13y ago
  Kiva publicly states, and has for years, the loans are made prior to individual funding via Kiva. While I do believe the majority of users don't know this, I think Kiva does a decent job of disclosing it, saying they are being deceptive, I believe is inaccurate. It is true the yields are quoted as portfolio yields (average for the lender overall). This seems adequate to me. If the yields are not representative (out of date, etc.) that is bad and Kiva should fix. I didn't notice evidence that this was a widespread problem. Kiva also lumps in all costs to the lender so it isn't like many financial institutions in the USA trying to fake low interest rates with lots of hidden fees etc. (though regulation has made it more difficult for financial institution to make loan rates deceitful - not that they don't try but it is much harder than 15 years ago). It is peer-to-peer at the essence I think, though it is often not directly that way and I don't think Kiva hides how it works at all. Though I do agree it is easy for someone to not make one or two extra clicks to read a bit about Kiva before making a loan but I think Kiva's balance is fine. Kiva also has a new thing called Kiva Zip that is more "pure" peer-to-peer for people that want that. I have given to another organization that just made grants (instead of loans) for over 10 years now. Trickleup.org It doesn't have the neat peer-tp-peer psychology going for it. And it is straight charity, not a loan. I have also wished trickleup.org did (or arranged for professors to do) studies on the impact. They have done a bit more in the last few years on the research piece. I would like more study of Kiva. I want to understand if it is helping and what factors matter. I steer toward lower loan rates but does that really make sense (I figure too high a rate increases risk for the person). I try to lend to purchases of equipment that will increase productivity (though I can't always find those loans) - is that really effective? I also like loans to buy things to rent out devices to increase productivity (some people buy washing machines and lend them out...). I am very lucky. I like to help give others a chance to gain economic success in the very limited ways I can afford to. I hope Kiva helps, but I do question if it does. And I question if they are focused on growth so much (as most USA based organizations are) that they grow beyond what is helpful. It is possible there is a core that is now say 20% of the Kiva's loans that are hugely beneficial. 50% that are sometimes great, sometimes bad... the value is questionable overall... And say 30% that are likely to just make things worse. But those figures could be anything (from what I know - I don't have any data). Given what I know I think it is worth lending some money through Kiva. If I were one of those huge foundations giving Kiva millions I would spend at least 20% on research until there was good data on how successful it is and what are the keys for making it work.
mfheretic 13y ago
Kiva does not state interest rates. You are viewing portfolio yields, which are not interest rates and consistently underestimate the actual rates. For a post specifically discussing this topic with 10 examples using actual data comparing actual interest rates versus the portfolio yield stated by Kiva, see: http://blog.microfinancetransparency.com/whats-wrong-with-kivas-portfolio-yield-statistic/ http://blog.microfinancetransparency.com/whats-wrong-with-ki... If you want to see an MFI with rates approaching 100%, look at Mexico in particular. Before the MFI quit Kiva, Brac in South Sudan had a portfolio yield of 88%: http://www.microfinancetransparency.com/evidence/PDF/11.24a%20Kiva%20-%20BRAC%20South%20Sudan.pdf http://www.microfinancetransparency.com/evidence/PDF/11.24a%... This MFI quit Kiva, but you can see it here: http://www.kiva.org/partners/107 http://www.kiva.org/partners/107 note that Kiva now states the portfolio yield is "only" 69.03%, but you can't lend through them anymore as they are one of the many MFIs that have quit Kiva. Portfolio yields do not include the impact of forced savings, some fees etc. and can be manipulated, and for a discussiong on why these are absolutely critical in understanding how much a loan costs, see the excellent website www.mftransparency.org, an NGO dedicated entirely to revealing the actual interest rates charged by microfinance banks, many of which exceeed 100% (but are not all Kiva partners). It is not possible to generalise about the ratio between the portfolio yield and the actual interest rates, but as a rule of thumb, a yield over 50% is likely a little too close to an actual interest rate of 100% for me, but this is a very broad rule of thumb that I use if I can't get more accurate data. But it is good that you look at this, albeit flawed statistic, and try to only make reasonably priced loans. If everyone does this then the MFIs offering lower rates will receive more funding, encouraging those charging high rates to reduce them. Competition basically. Please do not think this is a trivial detail. As the post above demonstrates, this can make a big difference in the overall cost of the loan that the poor person actually pays, so if you are trying to avoid exploitative interest rates you really must consider this. But, the more interesting question that is harder to answer, and has far reaching implications, is why Kiva does not publish these rates. See the comments on the Next Billion article. Is Kiva unable, or unwilling to do so? They manage to get all sorts of other information - why not the interest rate? How hard can it be? The bank presumably knows this crucial piece of data, and yet this is replaced with a knowingly flawed portfolio yield statistic. Why?
- 13y ago

steve19 13y ago

The article boils down to 1) Kiva spends to much money on marketing and is therefor inefficient. 2) Kiva gets to much media attention. 3) Kiva are attracting more than their share of micro-investors. 4) Kiva does not export Western cultural values. Regarding number 4, I think individual investors should decided what and what not to fund. I find cock/dog-fighting to be inhumane, but I enjoy hunting, many people would say hunting is inhumane and immoral and a smaller group would go as far to say "eating meat is murder". What about businesses using malnourished horses to transport goods? Should Kiva not fund anything animal related? As far as only funding legal organizations. I am sure Kiva does not fund narcotic production or gun running. But how can they possibly be sure all businesses they fund are 100% legal, complying with all health, zoning, retail, licensing etc. laws of the local county/state/country?

wsc981 13y ago
I thought the main gist of the article was that Kiva in the end just doesn't work. The only thing Kiva seems to achieve is to sate our conscience. This concerns me, since I actually did lend a bit of money through Kiva thinking this would really get results. In the end I'm happy I didn't advertise Kiva to friends and family. I'd have to be 100% sure about the results of any such organisation before recommending it to other people and I guess in the case of Kiva, I never was.
- mfheretic 13y ago
  It is interesting to see how readers come away with different gists of this article. I do think that Kiva could be a lot better than it currently is, and other similar companies have addressed some of the issues, only they are not as well-known, perhaps because their PR/marketing is not as effective. See some of the later comments in the Next Billion article when Zidisha is mentioned, for example. But I think you touch on a CRUCIAL point - it helps our conscience. Phil Mader's original post, which I reference, is well worth reading: http://governancexborders.com/2013/12/10/kivanomics-101-or-dkyc/ http://governancexborders.com/2013/12/10/kivanomics-101-or-d... It is a short piece and eye-opening. I cite a phrase from this article in my piece: Kiva enables us "to consume the feeling of charity without financial loss" To say that Kiva simply "just doesn't work" is tricky, because we have to define "work". It depends what the objective is. If the idea is to make people feel that they have done something useful with their $25, which they get back a few months later, it works wonderfully. If the idea is to efficiently transfer spare capital in "rich" countries to "poor" countries (forgive the simplification of terms), it doesn't work very well, as there are far more efficient mechanisms. If it is to provide low-cost funding to entrepreneurs, then it has pretty mixed results which are hard to verify as Kiva (mysteriously) don't publish the actual interest rates. In some cases you can find them out though. In summary, you are very wise to suggest that an endorsement requires you to be convinved that this is a good business. It appears Kiva did not meet your standards, and I am inclined to agree with you.

skybrian 13y ago

If you're interested in this sort of thing, you might want to give to GiveDirectly instead. It gives grants instead of loans (so interest rates aren't an issue) and is one of the very few charity organizations to do randomized controlled trials to prove its effectiveness. More detail than you probably want to know: http://www.givewell.org/international/top-charities/give-directly http://www.givewell.org/international/top-charities/give-dir...

unclebucknasty 13y ago

Another thing that's interesting is that it's really not all about enabling entrepreneurship. Increasingly, I have noticed loans for education [1], home-building [2], and other needs. I point this out not to be a jerk. Certainly, these are worthwhile causes in themselves, but there is no lack of traditional charitable giving opportunities elsewhere. I suspect Kiva knows this and is really selling the more differentiated and compelling idea of helping people to stand on their own, as the article mentions. To be fair, most of their loans are still around enterprise, but I cannot help but wonder if loan requests for such needs reveal that the very idea behind Kiva is unrealistic to some extent. That is, when you have people who don't have homes or basic subsistence wherewithal, is it realistic that they can launch or run a successful business? Is it also realistic to expect that a significant portion of their loans won't end up redirected to other needs? This concern is not helped by the fact that the only updates I've ever received are regarding loan repayment, and not how the recipient is actually faring. It's also not encouraging when I see people requesting loans to pay off other loans. [3] Recent articles posted on HN have shown that just giving money to poor people with no pretense or payback requirement is surprisingly effective. Maybe Kiva is selling a dream that has greater marketing appeal, but less actual effectiveness. [1] http://www.kiva.org/lend/667533 http://www.kiva.org/lend/667533 [2] http://www.kiva.org/lend/667257 http://www.kiva.org/lend/667257 [3] http://www.kiva.org/lend/652349 http://www.kiva.org/lend/652349

curiouscats 13y ago
While you are right about lots of Kiva loans, you can pick what you lend to, which is what I do. I agree with you about the attractiveness of direct cash. One thing to remember is microfinance has been around a long time. My guess is there is more evidence of effective microfinance than of direct payment. That is not to say direct payment isn't as effective but just to remind people while I think microfinance should have more evidence for effectiveness there has been some good research. Based on the initial success it has grown a ton. And conditions change (including the large amounts of money being thrown into micro-finance). Studying how effective it is today, how effective specific orgs are (Kiva, but also specific banks Kiva works with) and specific methods and factors (how much does interest rate matter, does purpose the funds will be put to matter...) is important. I think the rush to increase funding to microfinance has probably been good. You can suffer real costs to people by moving to slow and needing too much research. But I do think today, there should be more research going on (in a lean startup kind of way - what is successful, mini-experiments...).

nmridul 13y ago

- Interest rate : You should understand that these are people that no mainstream institute would be willing to lend money to, even at high interest rates. So Kiva's high interest rate is not really high. - Marketing expense : I joined Kiva because they said they will make the first contribution on behalf of me. I chose the borrower and Kiva sent the money. I didn't spend anything. I'm sure this would come in as marketing expense. This was one of their largest marketing campaign.

erickotieno 13y ago

After failing to get loan from kiva and kiva zip to fund my business because they were refering me to their trustees whom i couldn't manage to reach because their contacts are hidden yet you are told to find them.Someone refered me to zidisha.They are very transparent to both lenders and borrowers.Since then the loan they gave me is transforming my life.Bellow is the link of my account https://www.zidisha.org/microfinance/loan/erictiz/4832.html https://www.zidisha.org/microfinance/loan/erictiz/4832.html

shehi 13y ago

I heard about Kiva long before I learnt about zidisha (in fact, i learnt by accident after a google search on phone tools landed me on zidisha)but I never had a chance to meet up with Kiva field officers in over six months. So naturally zidisha got my attention from August 2013 to date. I also cannot say much about KivaZip. A friend told me about it but when i went online I found out that someone at KivaZip had to read your "expression of interest to join" then on their on discretion offer you a chance. Its been 3 months of waiting for a email reply ever since, apparently, KivaZip responds almost immediately on "Trustee-ship" requests. As a result am on my third loan at zidisha. Here is a link to my current loan that is 21% repaid https://www.zidisha.org/microfinance/loan/Shehi/4590.html https://www.zidisha.org/microfinance/loan/Shehi/4590.html . in addition, at zidisha we have a very lively and transparent forum that gets everything sorted fast (http://zidisha.org/forum/members/samuel-shehi.1253/ http://zidisha.org/forum/members/samuel-shehi.1253/ ) I am grateful that I found zidisha in time to help my stagnating business. Through zidisha loans, I have co-financed power connection ($400) with a business patner to lower operation cost of my business (I previously rented power connection from a nearby business), I have paid the deposit($120) for a laptop that I use on frequent power outages in my town (mazeras,kenya). I dont know what I would have done without Zidisha loans, they look real small but they really assist me. In contrast, I would have to depend on very expensive loans form Milango, SMEP or KWFT loans here. Thank you zidisha lenders for subsidized loans without collateral requirement, (i had no collateral).

JEANWKABORE 13y ago

Hi all My name is Jean Wendpanga KABORE and I live in the city of Bobo -Dioulasso in Burkina Faso. Some time ago I had to put me on Zidisha Incorporated to receive a loan online. I've received my first loan last year and I have to repay any and then I've received my second loan in the month of December past. On the Zidisha site I exchange with my lenders at any time through the comments . With loans Zidisha I enlarged my business trade spare parts for two-wheelers and I earn a lot of profits . With these interests, I get to meet my basic needs and those of my family . Currently I think Zidisha is the best microfinance institution in the world with becaufe funds that lenders give the intermediate Zidisha , borrowers are able to develop their activities in particular to develop and reach their daily lives in general . Thank you again Zidisha Incorporated. Here is the link to my profile on Zidisha https://www.zidisha.org/fr/microfinance/loan/JEANWKABORE/4610 https://www.zidisha.org/fr/microfinance/loan/JEANWKABORE/461....

jasoncavnar 13y ago

Yay for pseudo-journalism! @mfheretic, fact checking your work wouldn't be hard. Kiva's Response: http://www.nextbillion.net/blogpost.aspx?blogid=3731 http://www.nextbillion.net/blogpost.aspx?blogid=3731