On Kiva, birthday loans, and mixed feelings

Happy Birthday, Love.

Happy Birthday, Love.

Today is (my beau) Andrew’s birthday so, among other things, I have made a zero-interest microloan to an entrepreneur in Ukraine, his country of origin. I did this through Kiva–the first person-to-person micro-lending website–a secure forum that makes it possible for ordinary people, like me, to lend as little as $25 to other ordinary people in around the world. (I’ve blogged about it before if you’d like to take a gander.)

Andrew’s birthday loan will assist a female entrepreneur named Varvara Leonova–a clothing vendor in Zaporozhye– in purchasing some new seasonal wear for her small business.

Varvara Leonova

Varvara Leonova, clothing vendor in Zaporozhye Ukraine

Now, if you read my original blost post on Kiva you’ll see how much zeal I had in promoting the Kiva model–that is, helping people lift themselves out of poverty using their own ideas and entrepreneurialism. I still think Kiva is amazing for making it possible to offer a hand-up instead of a hand-out…but I’m still deciding how I feel about the latest change to their mandate.

Originally, Kiva exclusively facilitated loans towards people in underprivileged areas in the global south/developing world. Recently, however, Kiva has created some controversy by launching  pilot partnerships in the United States. Although many media releases tout it as wonderful effort to address problems in Kiva’s own backyard (as it is a San Franciso-based organization), and although American borrowers are being fully funded, hundreds of lenders have expressed their discontent. The fact is that Kiva has built its success on a certain image, thus every big change it makes is also a big risk.

You see, Kiva is also approaching a stage in which it may be inaccurate to call it a small NGO. It is definitely transitioning into a larger entity.

Shawn Smith—the president of GAFC–is a huge supporter of Kiva, but he believes it will face new issues as it increases in scale and as the realm of possibility expands before it: “If [Kiva’s] goal is to have a meaningful impact on the overall microfinance movement, then there are some compromises [the Kiva team] will have to make in terms of what they’re representing or in what they’re actually able to do.”

Is there a point at which we might argue that Kiva is taking on too much?

To be honest, I see good points on both sides and the debate is a bit too complicated to discuss before I run off to Andrew’s birthday dinner, however, I do wish to post some great points articulated by various members of the Team Canada lending team on Kiva.

Personally, I will continue to make loans…but I don’t doubt that this change has sent shockwaves through the Kiva community.

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Points to Ponder

“First and third world Kiva borrowers are not on a level playing field and should not be treated as such. Third world loans are building democracy, female entitlement, employment and self-worth, frequently in amounts less than $1000 used simply for inventory, making the actual difference between food on the table for the family of the recipient and none; while the US loans so far are to those who cannot go to regular banks (bad credit rating?), for items that are more luxurious (a new website), in amounts of the $10000 range, and will not make a sociological or material lifestyle difference…the new US loans do affect its credibility and diminish its focus”.–Ex-pat Canadian Family

“Everyone has a right to request funds, but it is up to the supporters to dig through the chaff and search for who are the worthwhile entrepreneurs. I think even Kiva can only provide us so much information before we ourselves need to make that choice”.–Jason

“Although microloans in the US do not fit within my personal goals in reducing global poverty, my charitable contributions are not exclusively to fight poverty abroad. I also give to local charities to help the poor in my community, and I wonder how many Canadians would provide microloans to Canadian entrepreneurs if it were available through Kiva. As such, I believe we need to respect a person’s decision to support microloans in the US, and Kiva’s decision to make it possible.” –Luk Arbuckle

“…US borrowers receive very large sums of money, many magnitudes greater than that requested by third world borrowers, at very low interest rates (check out the interest rates third world borrowers pay), and have typically three years to repay…What if you proudly patronized a store that sold only hand-made Canadian products, then they started also selling goods made in third-world sweat shops by child labor alongside the Canadian-made goods. The products you liked are still there, but you don’t feel so good about supporting the store anymore…”–Deb

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