(New) Kiva Cycle
Kiva changed the cycle of loan disbursals: they can happen up to 30 days before a request is uploaded; http://j.mp/a5kC4
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Gerrit Eicker
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eicker. Wir sprechen Online. Folgen Sie uns zu relevanten Nachrichten rund ums Web. [RSS, Kontakt]
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Gerrit Eicker 09:03 on 9. November 2009 Permalink |
Kiva: “Kiva provides the funds to our Field Partners by aggregating the loan funds from all contributing lenders. Most Field Partners then use the Kiva lender funds to backfill the loan they’ve already disbursed to the entrepreneur. Disbursals can happen up to 30 days before, or 30 days after a loan request is uploaded to the Kiva website.”
Roodman: “Kiva is the path-breaking, fast-growing person-to-person microlending site. It works this way: Kiva posts pictures and stories of people needing loans. You give your money to Kiva. Kiva sends it to a microlender. The lender makes the loan to a person you choose. He or she ordinarily repays. You get your money back with no interest. It’s like eBay for microcredit. – You knew that, right? Well guess what: you’re wrong, and so is Kiva’s diagram. Less that 5% of Kiva loans are disbursed after they are listed and funded on Kiva’s site. Just today, for example, Kiva listed a loan for Phong Mut in Cambodia and at this writing only $25 of the needed $800 has been raised. But you needn’t worry about whether Phong Mut will get the loan because it was disbursed last month. And if she defaults, you might not hear about it: the intermediating microlender Maxima might cover for her in order to keep its Kiva-listed repayment rate high. – In short, the person-to-person donor-to-borrower connections created by Kiva are partly fictional. I suspect that most Kiva users do not realize this. Yet Kiva prides itself on transparency.”
Flannery: “A main focus of the article has to do with the fact that most of Kiva’s loans are disbursed before they are funded on the Kiva site, which is true. The article points out, rather accurately, that most lenders on the site do not understand this. It goes on to imply that Kiva is taking an active role in perpetuating this misperception. – My response to this critique is two-fold. First, I believe that allowing pre-disbursal is necessary for the success of this model. Second, I think we can do better at educating our users about how and why this is the case. … As Kiva grew, and millions of dollars poured in through the website, we began to work with larger MFIs who could handle the sums of debt capital that the Kiva Lender community was able to offer. As loans began to fund quickly, MFIs began to expect and depend on Kiva loans being funded. Instead of waiting, MFIs began to disburse these loans in advance, assuming that the funding by Kiva Lenders on the website would take place. Good MFIs are client-driven. To make their clients wait unnecessarily would have been bad customer service. So, for many of our Field Partners, pre-disbursal became the norm. – Rather than outlaw this practice, which allowed MFIs to be more efficient and better serve their clients, Kiva decided to just make the practice transparent on the website, and to let the lenders decide whether to fund a pre-disbursed loan or to withhold. Hence, we created a system whereby MFIs were required to list the disbursal date on each and every ‘Make a loan’ page, beside the rest of the information we considered important for lenders before making the decision to lend. … The article also claimed that “Kiva charges 2%” on loans made through the platform, to our MFI partners. This is not true. In fact, Kiva does not charge any interest to its MFI partners, and passes along 100% of the loan funds raised on the site to its MFI partners. That was just an innocent mistake on the part of the author. … We don’t need to be playwrights on the Internet. We are going to do our best to avoid that trap, but certainly value the ongoing help of a critical and engaged user base along the way.”
Gerrit Eicker 08:12 on 10. November 2009 Permalink |
Flannery: “As I originally posted a month ago, I believe that 1) pre-disbursal, our policy to allow MFIs to disburse loans to entrepreneurs before they are fully funded on the site, is necessary for the success of this model, and 2) that we can do better at educating our users about how and why this is the case. … Online philanthropy is already much more real-time, connected, transparent and data-rich than philanthropy 10 years ago, but there’s still a long way to go. At Kiva, you see an entrepreneur profile for every dollar raised on the site. In addition, you see repayment data and can get your money back. As a small nonprofit, we continually seek to increase the quantity and quality of this data. … We will continue to strengthen the feedback loop between our users and our staff so that we can address confusion and criticism, and continue to focus on our mission to connect people through lending for the sake of alleviating poverty.“
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