Kiva-mongering

David Roodman, a fellow at the Center for Global Development, set off a storm with a post on the popular microfinance organization Kiva. Many lenders on the sight probably had the impression this was a peer-to-peer lending sight, but David reveals this is not quite so. Kiva connects lenders to microfinance institutions, not individual microentrepreneurs. His post even prompted a piece in the New York Times yesterday that compares Kiva to partially discredited child sponsorship organizations. But make sure to check out CGAP's even-handed take on the whole issue.

On the heels of that controversy, Kiva finds itself dealing with another. Premal Shah, Kiva's president, apeared yesterday on Press: Here and discussed the concerns of some Kiva users over the site's expansion to include U.S.-based borrowers. Premal points out (in the very beginning of Episode 33 Part 2) that Kiva gives you choice: "The whole idea of Kiva is that it gives you, the person who wants to make a difference, choice. So if you want to lend to a goat-herder in Ghana, go for it. If you want to lend to a bakery in Oakland, California, that's your perogative."

Yet because of David's post (or at least it seems likely because of David's post), Kiva changed the language on its home page. CGAP explains:

It no longer promises: “Kiva lets you lend to a specific entrepreneur, empowering them to lift themselves out of poverty”. Instead it more accurately describes its role as: “Kiva connects people through lending to alleviate poverty.”

The messages seem to be a little misaligned. To be fair, the site is pretty clear about how the whole process works if you click on the prominently displayed Learn how Kiva works. But I'll admit that when I first made a loan through Kiva, I didn't realize the money wasn't really going to an individual, but an institution that could allocate the money as it sees fit (since cash is fungible and the institution can choose to cover defaults and late payments for a particular entrepreneur to keep up its rating on Kiva).