When we reported on Kiva.org’s decision to open up its micro-lending platform to U.S. entrepreneurs, Kiva CEO Premal Shah told us he was concerned about backlash in the community. Shah acknowledged that the decision to open lending to U.S. recipients may draw criticism because it goes against the idea on which Kiva was founded—lending to help development in third world countries where credit options are limited.
It looks like Shah’s prediction was correct. There is now a lending team on Kiva’s community platform titled “Unhappy Kiva Lenders.” The members, which total 375 lenders from around the world, are angry that Kiva is extending loans to U.S. entrepreneurs. The team’s page states that “including borrowers from the USA has undermined the very core of what made [Kiva] so unique and special; small, impactful contributions to entrepreneurs in impoverished situations in developing countries.”
The tirade on the page is harsh, calling the decision “shameful and disgraceful” and a deviation from Kiva’s core mission. The group cites an example of a recent Kiva loan request from a U.S. entrepreneur who had a college degree and a career in architecture who wanted to start a business in website design. The loan he requested was for $7000 to start the business, an amount the lenders suggest could help 7 to 10 different borrowers in other parts of the world.
Kiva’s stated mission is “to connect people through lending for the sake of alleviating poverty.” The anti-U.S. lenders claim that lending to U.S. entrepreneurs doesn’t alleviate poverty because Americans aren’t living in true poverty, compared to people in underdeveloped countries.
**US borrowers do not have to pay to send their kids to elementary school. **They don’t have to build their own house. **They don’t have to walk miles to get the bare minimum of medical care….if needed they can access FREE, generally high quality medical care. **They have a system of laws and courts in place that work. **They enjoy police and fire protection. **They generally have access to inexpensive and dependable public transportation. **They take for granted electricity, clean water, inspected food and indoor toilets. **
Some of that may be true. On the other hand, Shah makes a compelling case for the need for a micro-lending platform in the U.S. He says more than 10 million U.S. business owners face difficulty obtaining capital—even before the credit crisis and economic slowdown which made lending tight. And there’s no doubt that with the credit crunch creating a drought of lending, small businesses in the U.S. are finding it tough to find funds, especially if their financial history isn’t stellar. Finally, there is nothing wrong with giving U.S. lenders the opportunity to boost entrepreneurship at home, especially at a time where jobs created by small businesses can help lift the economy out of a recession.
It seems to me like the angry protests are misdirected. Kiva’s lending program has long been hailed as one of the more innovative platforms on the web and its ambitions have always been towards helping foster entrepreneurship (as well as alleviating poverty) in various areas of the world. Kiva’s decision to offer microlending to U.S. entrepreneurs reflects a genuine need for additional lending in the U.S. economy. And who knows? Kiva’s policy may attract a new crop of lenders who want to help at home first, and once they get hooked, spread capital overseas as well. The more capital that goes into the Kiva system, the more chance borrowers everywhere will have to eventually tap into it because many Kiva lenders simply recycle their loans as they are paid back.
We’ve contacted Kiva.org for a formal response.
I think I agree that something like Kiva loans don’t need to be available in the U.S.
However, there are certainly people with great ideas and absolutely no means to accomplish their goals here in the U.S. I just hope the money finds its way to the right people.
Lastly, if you are a lender, just don’t invest in U.S. based businesses …. right?
Yes, if they don’t like it, they don’t have to lend to US entrepreneurs. Moreover, if the owner(s) want to make the site a US-only or non-US lending institution it’s their prerogative to do so.
How quickly everyone seems to forget that the US is the most generous nation on the planet. Whatever laptops these users have were probably purchased with US aid.
Yup, the US is the most generous country in the world using other peoples money (China).
The US is also #1 exporter of weapons, in case you forgot.
We started a lending team on Kiva called Happy Kiva Lenders. http://www.kiva...py_kiva_lenders
The team supports Kiva in its effort to support loans in all countries including the US. We think the people lending the money should decide where to send it!
Please join our team and lend some money with the Happy Kiva Lenders!
The comments about the US are a little harsh themselves. “[We] take for granted electricity, clean water, inspected food and indoor toilets.”
Whoever stated that, where do you live? Because unless you live in a third-world country yourself, you have no room to talk. I’m pretty positive you don’t walk into your bathroom before bedtime, get on your knees and pray to it and thank it for what it’s provided to you that day.
Oh wait, you probably consider puking into it after a night out on the town thanks enough.
That jackass alone that made that comment needs to be smacked.
They could of created a separate site for lending to US companies with only the lenders that were in agreement.
I agree with you completely. I have lended money and a lot of my friends have on Kiva. And the only reason was to help third world countries. By adding US entrepreneurs Premal is diluting the importance/relevance of Kiva a lot. I am not saying that US entrepreneurs don’t need money, they do, and I am one of those who are looking for funding right now, but Kiva is not for that.
Microfinancing, like microblogging is a great idea, and Kiva proves how useful MF actually is. However, trying to make KIVA the microfinancing portal is not good IMO.
Kiva could have it both ways: have a checkbox that says where the money should go.
Take a look at the site. Every time you loan, you choose exactly who it goes to. No need for a check box.
I probably won’t loan to US borrowers, but that’s entirely my choice, and I’m fine with the choice being there and other people choosing otherwise.
That’s not how Kiva works… it doesn’t lend money to individuals, it lends it to banks. The people you see in the photos have already received the loans.
When you lend to Kiva, you’re lending to a microfinance institution. Nothing wrong with that… but don’t think you have control over where the money is going.
agread
Agreed. Separate site, maybe even a separate brand name.
There are a few players (mostly offline) in the “lending to US businesses” space… and they are doing a fantastic job (not as well publicized of course).
Totally agree. This would have been the best option.
Opening up to US borrowers means growth, which means more profit potential, which means Kiva is in a better position to fulfill its core mission, which is to support entrepreneurs in developing countries. The “Unhappy Kiva Lenders” need to get beyond their bigotry (yes, bigotry) and see the bigger picture.
You mean profit potential for lenders? Opening it to US entrepreneurs will mean more lenders investing in US (of course more profitable), thereby, diluting the mission statement.
Neither lenders nor Kiva make any profit from the loans, which are offered to partner organizations interest-free. I suggest you go look at Kiva’s FAQ before you make assumptions about profit motive.
While I agree that opening things to the US carries a *risk* of loss of focus, the people in charge have said loud and clear that they are monitoring closely to make sure the US loans do not detract from the growth in lending to other countries.
This is a pilot program. They are finding out if they can lend all the way up the spectrum of poverty. If they can’t, they’ll scale back.
MY TAKE ON IT: I’m glad Kiva opened it up to US loans, whether or not they keep them in the long-term. It’s opening up the conversation on what poverty means, and pulling up the rug to sweep out a lot of unexamined bigotry and “othering.” To quote Premal, “There is no them.”
Kiva has to protect their brand. As a long time Kiva lender and U.S. small business owner, I believe while the micro-lending platform can meet the needs of both causes however the Kiva brand must stay true to the mission of its Community.
Create a new brand leveraging the same platform, and invite members of the Kiva community to participate if they’d like.
Either way, if you have the means I welcome you to join the lending community at Kiva. We are truly helping those in need around the world everyday.
http://www.kiva...g/lender/abbott
I completely agree with you.
They should have offered the same service under a different brand, it doesn’t belong in kiva. Give it a different name under a different mission statement and there’s no backlash.
I have no idea why people are getting so angry. It’s the lenders’ money, and they can use it to lend to whoever they like.
No one has the write to decide who is more deserving of receiving my money than me.
Are people angry because they think opening up US on Kiva is going to compete with other people around the world? C’mon, this will bring a lot more people on board to lend as well.
And if you don’t want to be part of it, then just don’t lend to an American entrepreneur.
By the way, I am from a ‘third world’ developing nation.
And also a Kiva lender (not a big one though): http://www.kiva...er/whoisvaibhav
I’m a big fan of Kiva and I have been lending money there for over a couple of years, but I have to disagree with their decision to lend to US entrepreneurs.
Yes, there are plenty of Americans who could use some help and probably would use it for good reasons, but I don’t think it belongs in Kiva.
I grew up in Brazil and lived in the US for 7 years. Poverty in the US doesn’t even come close to poverty developing countries. But most importantly, there ARE opportunities available for anyone in the US. Anyone! If you can’t get loans, downgrade your standard of living, get a job or 2 (yes, there are still a lot of jobs available) and save up some money. These kinds of things are just NOT possible in developing countries.
Now I live in Canada and for every person I see on the streets of Montreal asking for money, there is a store with a “Help wanted” sign right next to them. There’s just no excuse for it here in North America.
Personally I wouldn’t lend to any American entrepreneurs (as long as there are those in developing countries who need), but I’ll still use Kiva as I have been. I just wished they had created a new site for all other entrepreneurs (for developed countries).
I am a Kiva lender and I think backlash is overstating it, 375 lenders is not that many and when we got someone trying to drum up anti Kiva support on the London lenders page (http://bit.ly/bJgsu) I would say the comments were 80% pro Kiva.
If people don’t want to lend to US entrepreneurs (who are by no means rich) then they don’t have to. In fact the publicity may bring more people to the site who will then lend to the developing world.
Well if it’s supposed to be for “entrepreneurs in impoverished situations in developing countries,” we’re heading that way. We’re not there yet.
However, with increasing regulation in small credit markets like credit cards and other smaller loans, there is going to be an increased need for this kind of thing here. You can’t just make it harder and harder to do business and expect the same amount of business to get done.
So any possible way for people here to have access to credit, I say great.
True, the lenders can choose who they want to lend money to. But this is also a matter of Kiva’s core philosopy – to fight poverty in a new (and social) way. If the U.S. is now considered a third world nation, then by all means start lending in the U.S. (and that case could be argued, considering our crumbling infrastructure, millions without health insurance, antiquated power grid, outdated energy policy etc.)
Dear Kiva i’m just wondering what’s next in your business plan – Sub-prime mortgages? 120 month Auto Loans? Payday Loans? You Core philosophy is great, don’t screw it all up by caving it to the temptations of the most materialistic consumers in the world (me and my fellow Americans) help those who needs it the most.
PS. There already IS a similar service available to U.S. (over)consumers and entrepreneurs, it’s called prosper.com – Let KIVA focus on the third world.
These concerns are unwarranted. Kiva should aspire to be THE global micro-lending platform where lenders and borrowers can connect using multiple criteria. It’s the most pure form of an open market exchange and everybody wins if more people are involved.
On a personal level, I sponsor a child in Africa with clothing, financial support for food, etc. I also donate to U.S. charities. Both groups had to spend marketing budgets to find me, which isn’t efficient. I had to evaluate these opportunities separately, which also isn’t efficient. Now apply what I do to aspiring entrepreneurs. Can’t I efficiently do both?
Kiva provides an efficient way to find, evaluate and invest in opportunities of all kinds and manage it through a single platform – and there’s a lot of value in that offering.
I’m a big Kiva fan and have been recommending them in a variety of places. The only reason I can think of to lend in the US is if Kiva can’t find enough opportunities in the developing countries. This has happened before.
Otherwise, they should focus on these countries, since the band on the buck (quality of life improvement vs loan amount), it much more significant there.
Here’s another idea. Work with the SBA to use government funds to fund a US based Kiva.
Have you ever tried getting an SBA backed loan? I didn’t think so.
how it work
Why don’t they just create a new organization for this and leave Kiva as is? Kiva.us or USkiva.org -
It is very easy to accumulate $7000 cash in America. No credit is needed. The borrower is just making up a story.
Huge Kiva fan (and a lender), and while I agree with extending it the US, it should have been under a different brand.
It’s really not “micro lending” when most of the US loans are 5-20K (vs a few hundred dollars in many third world countries, unless they’re group loans).
It’s peer to peer lending, which is a very different issue.
Also, many of the US loans are for things like printing materials, marketing, website design, etc… where foreign loans are for things like, literally, seeds, chickens, material to make clothing…
One is providing real things that people turn into real things to sell to real people that want them NOW. The other is just helping to potentially grow a business, where returns might or might not happen.
New brand, new site, and I’m sure there’d be lenders for US businesses.
Isn’t micro-lending a relative term? In some places a $50 loan will make a world of a difference, in others it might take $2,000 to make an impact. While the amount is higher in the US, I think micro-loan is still the appropriate term.
By definition “micro” means teenie tiny. The kind of thing a bank wouldn’t touch. A small business getting 10K to grow? A bank would touch that. There are established ways in the US to get that kind of capital.
There aren’t in 3rd world countries.
Either way, Wikipedia defines microlending/microcredit quite firmly as being tied to getting folk out of poverty.
Someone paying for marketing so their website can grow, or for a website so their film editing business can grow doesn’t really qualify.
Should add that I have no *issue* with Kiva doing this. I simply won’t be lending to US folk because it’s not what I use Kiva for. If Prosper allowed canadian money, though, I WOULD lend to US folks via Prosper.
Different $ for different purposes.
Prosper Marketplace is a great way to go. I generally use my gains from Prosper for some of my “giving” loans. Unfortunately, Prosper has run into some SEC issues in the US. For several months now, I have been unable to make loans.
We vote with our dollars. If someone is not happy with the idea of Kiva allowing American’s to apply for loans, they can simply not loan money to Americans.
I grew up in Haiti because my parents were missionaries. I am completely aware of the difference between what is called poverty in the US and what it truly is in some countries abroad. I am a firm believer in lending a helping hand to those who are making attempts to help themselves (where ever they may be). At the same time, as an investor I understand that dollar for dollar I get a better ROI by investing in those who are in the worse economic situations. Therefore, that is who I choose to help – but I see no reason to be limited to only being able to help those people.
I think that Kiva’s decision, while somewhat unpopular with some groups, is a good move on their part. It will help to create more awareness of the program in the US, which is where the money is to begin with. Hopefully, this will lead to more loans abroad.
While I commend Kiva for being more inclusive, I will vote with my money and send it overseas. I will do so because that is where I get the best bang for my buck, not because I don’t think American entrepreneurs should be able to participate in the program. All other investors have the same option to exercise.
Who knows, maybe some American entrepreneurs who have benefited from receiving loans will return to lend money.
As long as this move doesn’t place a huge strain on their operations and pull needed resources from assisting those abroad, I really don’t see a downside.
If you think poverty doesn’t exist in the USA and don’t want to lend money to US entrepreneurs, then don’t. No one is forcing you. You’ll still be able to use Kiva exactly as before. My guess is this “backlash” is simply anti-American sentiment expressing itself it yet another outlet.
I’m sure Shah is making a considered personal career move. But really the KIVA brand has ‘jumped the shark’.
I also do strongly believe that this program should not have been opened up to the U.S. as it does to some extents move away from Kiva’s original mission. Nonetheless I also do think that the overall concept of the mentioned “Unhappy Kiva Lenders” is quite ridiculous.
Firstly, nobody is forcing them to lend to U.S. entrepreneurs, hence what is the big deal?
Secondly, how can some of those members within the group even consider themselves ‘Kiva **Lenders**’ [378 members - 51 Loans].
You can only assign a loan to one lending team. And the team is fairly new. They would have more than 51 loans between all the team members. But you can only tell how many by looking at the individual profiles.
Having said that, the guy who’s kicking up a fuss in a team I’m in has only loaned twice.
I can see two reasons why Kiva users might be upset with this:
1/ potentially diverts funds from places where they can do the most good. Micro-loans work because such small amounts of money have an enormous social (not fiscal) return on investment. You cant get that same rate of return in the US where larger capital needs to be invested;
2/ the awkward realization that the difference between the US and many developing nations is that the US hasn’t yet had to default on foreign debt. Just keep on running trillion dollar deficits though…
Unhappy Kiva Lenders is a very misleading name for this group.
The people in that group have donated an average of $3.54 per person. (Yes three dollars and fifty four cents) As far as I can tell the minimum donation on Kiva is $25.
A little math says that the best case scenario for these people is 54 of those people donated at least $25 and the other 327 are complaining about where others lend money, but aren’t lending any of their own.
Source: The groups kiva page http://www.kiva...am?team_id=7326
I wouldn’t call this a backlash, I’d call it TechCrunch pushing a story about the barely perceptible sound of people who like to whine and tell other people how to live their lives without putting any of their own skin in the game.
As a former Kiva volunteer, I don’t think I should voice my opinion either way, but I thought I’d just clarify something about the stats. The number of loans that appear on the team page (51 at the time the previous comment was posted) is actually the number of loans that were made in the name of the team. It is not the total loans made by all the members of the team. When a lender loans, he/she has the option of choosing whether to loan in the name of one of his/her lending teams. I’m not sure about other teams, but I think that 51 loans for a team less than one month old is abnormally high.
Note that if you look at the team captain’s page (tom), you’ll see that he’s made over 200 loans on Kiva, so there’s no way the total loans for all members in the group is under 60!
I agree with what many people have said about the two brand solution. To anyone who believes that the U.S. does not need micro-lending you obviously have never visited the a real Big City. From living in Chicago and Miami I can attest that there are peoples here compatible with third-world countries. In addition about able lending to abused women who are just starting their lives over (and have no other help)? I guess my argument is that just because your section of the woods looks great does not mean that it’s the same for everyone, in every situation. There is a market for micro-lending here. It’s something that can help individuals begin to transform their lives for the better and running a business can teach key skills that everyone knows this country lacks (i.e. How to balance a checkbook).
Yes, I know there’s a typo. I meant “Places”, instead of “Peoples”.
Interesting pic ,hoho
“”*They don’t have to walk miles to get the bare minimum of medical care….if needed they can access FREE, generally high quality medical care. **They generally have access to inexpensive and dependable public transportation.”"
And people say Americans make ignorant claims about other countries.
Wow. I mean it’s true that we do (and too often), but this is a whopper.
I wish I had medical care or public transportation.
“”*They don’t have to walk miles to get the bare minimum of medical care….if needed they can access FREE, generally high quality medical care. **They generally have access to inexpensive and dependable public transportation.”"
And people say Americans make ignorant claims about other countries.
Wow. I mean it’s true that we do (and too often), but this is a whopper.
I wish I had medical care or public transportation.
BTW I love your blog!
The hell? I didn’t post that.
Why not? After all the lenders KNOW whom theyare lending to .. it will have to a very different model probably for regulatory reasons. There are indeed many needy entrepreneurs in the US, and another way to limit the impact is to cap the loan amounts.
It’s interesting to see people get upset about this.
There’s no point in objecting as if Kiva is somehow diverting cash from less developed countries. People can go on the site and direct what is after all their own money anywhere they want.
What people appear to be objecting to is losing the opportunity to display their own virtue as a ‘Kiva lender’. Opening up lending to US entrepreneurs dilutes the ‘vanity-bling’ nature of the Kiva brand.
This is exactly as though Toyota were to suddenly start selling a version of the Prius with a gasoline engine that looked exactly the same as the hybrid – all the existing Prius owners who had bought the car as a means to broadcast their virtue (just about all of them, in my experience) would instantly feel their investment had been seriously devalued by Toyota, because suddenly being seen driving a Prius would say nothing at all about their environmental credentials. Boy, would they be mad!
The objectors may have a point if, as with the Prius, the status-enhancement component is much or even most of the brand’s value-added to its customers (who as in every business, are at the end of the day the people forking over the cash).
The team member number is misleading in another way. The only way to read/monitor the team messages is to be a member of the team. I know of several Kiva staff members and other Kiva lenders who joined the team just to keep an ear open to what is being said. It’s also interesting to note that the team has made loans to several US entrepreneurs. So I’d say not everyone on the team is a rabid, caps-shouting blowhard.
Why do I lend (occasionally) to US entrepreneurs? I haven’t really heard this argument put forth yet. I like the loans to day cares and other small businesses which provide services or employment to people who are marginalized or in poverty. As an example, a day care provider I helped fund offers child care to her Hispanic community, and lowers her rate for parents who can’t afford to pay more. She impacts her community, helping lift others out of poverty, because they can now afford to work and still have affordable child care. I think that fits right in with Kiva’s mission and doesn’t dilute the brand at all.
The architect loan was an anomaly, but we shouldn’t presume to know the whole story behind that loan either. I’ve loaned to professionals in other countries; not knowing his circumstances, I don’t mind him being listed on Kiva. I exercised my right to choose, and chose to fund someone else.
For me, the harsh tirades from the this team have done more to undermine the core of what makes Kiva so special. Never heard so much ugly hate talk from a bunch of philanthropists.
Not what I see kiva as being for but dont like it, dont lend to those people.
Only 1 in 8 of those people complaining has even lent. pathetic. personally I have lent more than the entire group.
lets beat something really small up and make a story of it – pathetic journalism thats even worse than the story
I presume you’re going by the team stats. See the comments above.
Kiva has been doing a good job of lending to the poor community in the world. Their service is great. But you must also realize that there are people in the US who have to skip meals because they do not have them. All people are God’s creation.
The problem begins if Bill Gates, Steve Jobs, Buffett and similar people apply for a KIVA loan. I am sure they will not apply.
We need to give a helping hand to entrepreuners to fulfill their dreams and aspirations. What if these borrowers when they become suucessful, start lending as a way of gratitude ” someone helped me and I became succesful, now let me help others”. The people in the US always has a heart to help someone that was why God blessed this nation.
The reason for the recession and other financial problems is because we are rejecting the Living God who blessed this country. We can still repent and return back to God and once again make this country prosperous.
The average Kiva loan is about $400, paid back in 10 months. The average Kiva loan for one US lending group is ten times larger and twice as long. $400 does not go far in the US.
There are several million individuals and businesses in the US with as good a right to a loan as those shown already. And surely Canada, Japan and Germany have poor people too?
This is not US bashing. The issue is allowing those who want twenty times more from KIVA to compete with people who get a boost in income from a $200 loan.
I say Kiva is for Microfinance.
And for those who do not see competition with people wanting $10 000 as a problem, see http://www.kiva...s=15&_tpg=1, 12 people from Bolivia who want $285 each to sell cds, meat, wool, groceries in neighbour supermarkets, shoes, and who do work as shop assistants. They have only 2 days left before their loan expired and they are turned down by Kiva.