BellaOnline Forums Money Charity Traumatized about Kiva

Jase just sent me important news about Kiva -

Kiva in the NY Times

I have to say - I'm feeling traumatized. Here at BellaOnline we send them *millions* of free ad views every month. I actively support them myself, I save up money to donate and then I carefully choose the person I want to give it to. I read their profiles, and go through page by page. I want to make sure I'm really doing a good job of choosing the perfect person.

And now they're saying it all goes into a lump fund, sent out to banks???

Not only does it seem I've been wasting my time, and that my money could be funding people I feel strongly against, but also I feel the Kiva organization has been incredibly deceptive in what they are marketing!

I am seriously thinking of taking all the Kiva ads down and focusing on the other groups we support. It's not that the ads would go to "waste" - there are plenty of other charities who need our attention.

I was *so* enamored of the Kiva model, and I am feeling very disillusioned.

What are your thoughts?

It is dissappointing - however it is clear that money is used for microfinancing it's just that the loans have already been made.

Maybe we could look at rotating charities? A new one every year? That way we can spread our good will and funds around.

Lisa
I too spent hours deciding whom to help with my small loans to Kiva. I tried to always help a single mom when possible and one who was working to better her world.

I am at a loss for words, and I am extremely sad at this moment after reading the article.

I am wondering how much truth is behind the individual stories themselves now.

wow...

After reading Lisa's Tweet, I immediately did a search before visiting the BellaOnline forum. I found the blog post written by David Roodman and the subsequent response by Matt Flannery, co-founder of Kiva. I see the David Roodman post is noted in the Times article.

I joined Kiva because of the advertisement here. I read all of the information available on the Kiva site and elsewhere before I sent any funds to them. I was a familiar micro-loans but never thought I would be involved with any. I am very disappointed to learn that the Kiva organization has not been up front about how funds are dispersed. Lender's should have been apprised when the original process changed. I will not stopping giving to Kiva but I will keep an eye on them.

Thanks Jase.

I was slow to warm up to Kiva but have been excited about my contributions this year for the most part because I thought they were going to specific people -- otherwise why search through the database. Their website is very misleading with their individual descriptions of how much money they've raised for their loan etc.

Once my loans have been paid back I will withdraw -- as it is not what I signed up for.

Even more odd - one of my early loans was to a woman in Kenya who ran a grocery store. She had issues and defaulted, so I "lost my money". But if they are now saying that my money didn't really go to this woman in Kenya, why did I lose my money?

It is just so frustrating that I spent hours and hours looking through the profiles and choosing women who were in groceries or farming - I wanted to make sure my money was going to a specific area I felt strongly about. All of that was wasted time, time I could have spent much more productively.

Lisa, I know you are frustrated - but know above all else that your heart was in the right place. I hope that can give you some comfort. Maybe not for the money - but for the time and care you put into it.

I am ashamed to say I never got involved in this, so my vote really shouldn't count much; but looking from the outside in it seems like BellaOnline's time and resources would be better spent elsewhere - especially now as the holidays are about to hit.

That is very upsetting and it is disillusioning. I know the money does good but I don't see why they had to "sugar coat" it by making up nice little stories about small business people. I too take the time to check out those who need loans.

I currently have a couple of $25 loans, not sure if I will reloan the money now. It is something I'll really have to think about.

I too was upset when I read the news. However, even though they were not completely honest in how the funds were allocated, I believe that they are doing good. In essence when the picture is taken of the person needing the loan for the website, Kiva has already given them the loan from a larger money pool. From the articles I have read about them it seems that they do disperse the money they get.

Years ago I used to sponsor a little girl in India and after I found out that the money went to the community instead of directly to the child's parents I stopped sponsoring her. I wish I had not stopped - because ultimately she would have benefited from my sponsorship.

Lisa,

I don't blame you for being disappointed, to say the least. It does raise the question about how to fully 'vet' organizations we choose to assist.

Regards,

Cheryl

Lisa, I too don't know how you could have "lost" your money.

Perhaps a different option is DonarsChoose which focuses on donations to specific classroom projects?

Lisa, I had this same situation - a default for $25. It seems the bank or microfinance institution should 'eat' these, not us. It seems quite hypercritical that our money goes into a group fund at these institutions instead of to the individuals we select, but then when the person we select defaults, the loss goes directly to us. We are shouldering the risk without the direct connection benefit that we thought we were getting.

However, I am going to think about this one a little more before stopping with KIVA, because I still do believe in microfinancing in general, and no one seems to be questioning that KIVA facilitates a lot of amazing loans. I just think they need to do some major explanations on their website now...So personally, I am not opposed with continuing the ads on BellaOnline, but I also support whatever decision you make...

I need to go read the link you provided, but my first reaction is to suggest keeping Kiva. They are still providing the micro-loans. People are still being helped. That is the ultimate goal and what is being achieved.

I do agree completely that they are doing good in general, I should probably make that clear. They are giving loans to people who need them. However if my choice is to support a taxi driver in a big city who wants to buy more taxis, or a single mother in Kenya who needs food for her family, I really want to make sure my money is going to the mom who needs food. At least for my own personal cash donations. I will look around and see at least for my cash, if there's an organization who has that more precise focus. I suppose Heifer is always good for that - their whole focus is on those very basic life-support missions where they help the people learn, grow and become self sufficient.

I nearly signed up to loan a woman money a few days ago, before I saw this post.

What bothers even more than the NY Times article is that I just went to the Kiva site and they are saying nothing about it. If I had anything to with running Kiva I'd have something posted as an answer you can be on it. Their silence is simply not a good sign.

I don't know how you can qualify a non profit 100%. If you go with the bigger ones, well, you know they all have those large funds and there is a % of waste of money there.

I'm glad I decided not to become one of their lenders now. But, it's such a beautiful idea that I wish either they'd make their system work or that some other org would!

Nancy
BellaOnline Yoga Editor

I think with any charity you are essentially giving up the ability to choose where your money goes. You just have to trust they will use it to the best of their ability to help the cause. So for me, that means my choice lies in which charity to let them use my money for.

I like what the Humane Society does. I like what the Wildlife Defense Fund does, and the Red Cross. I do not get to choose if my money goes to paying their president, running their marketing campaign, or actually feeding a homeless pet. But it is my hope they my contribution enables them to help the cause, ultimately.

I know you know this, lisa. I also understand that you feel wronged by Kiva misleading people into thinking the funds were directly earmarked to certain folks in need.

However, if you think about it, that makes no sense for ANY charity. They need funds to run the organization, to pay rent on their offices, to buy computers, to market themselves, to design their website and ads, to do the zillion things any organization does. If everyone is sending money directly to a donor, then where does the money come to run Kiva itself? It makes no sense to bypass the general fund - the system would quickly fall apart.

I don't see this as a problem, personally, the misleading part. I think it is part and parcel of charities. You 'adopt' a polar bear. You 'buy' an acre of rainforest. You 'feed' a child. It gives the donor a nice sense of ownership. And your funds really DO go towards those things...just in a more indirect fashion.

You just have to trust the charity will do what they see fit with your money and that ultimately the people you 'chose' to loan to will benefit.

A little off topic here, but connected. I just clicked on the "Obama wants moms to go to school ad" (dancing cherries?), and my "Web of Trust" software flagged the site (Classes USA) as having a poor reputation. Anybody know more about that?

The thing is, when you make a donation to 'an individual' on KIVA they ask you if you also want to donate a certain percentage for KIVA's overhead expenses, so they make that separation very clear. And none of the articles seem to be questioning whether the 'loan' money actually goes into the 'overhead' fund, it's just that us loaners don't seem to actually be selecting and therefore helping to determine who gets loans, since they've already been given out. So, like Lisa Shea, I thought I was essentially donating to women, because that is who I selected...but really, if I want to help women specifically, I am probably better off going to a women-centered organization...my selecting women on KIVA wasn't necessarily influencing who was getting loans, from what I am reading in these articles...

After reading the NY Times article, I felt a whole range of emotions from sadness to disillusionment to anger. To me, giving people a wrong impression of what is actually taking place with their money shows a lack of integrity even if,in the end,they really are using that money to improve the circumstances of the poor in the world. Therefore I feel that the organization should not be supported nor should any other organization that isn't totally above board to their contributors about what they are doing. This reminds me of a slick used car salesperson who lies about a car. If I know or think he/she is lying I would never buy the car whereas if I am told the truth, I might be able to live with the defect and buy the car anyway. Kiva should have been upfront about how the money was being handled.

To be honest, I've never been that comfortable with the concept of Kiva. Unless I've misunderstood it, then I'd love someone to set me straight...

It would be one thing to me if Kiva was providing loans directly and because donors were fronting the money and taking the risk that it was done at low interest rates. But my understanding is that interest rates for microfinance loans range from 10% up to even 40-50% (Kiva's site says about 10-36% in their examples). My understanding is that microfinance is an interesting investment because it is very high risk but very/relatively high reward.

But Kiva seems to use regular microfinance institutions, but the donors are fronting the money and taking all the risk, and the bank/MFI is keeping all the interest profit and returning the principal (generally redonated). If the money is lost, the bank loses nothing. So I don't get it.. it seems more like charity to bank to me, than to the actual people. Am I misunderstanding???

Personally, unless I'm way off here, I'd rather see our support go elsewhere.. especially given these latest revelations.

Nicki :-(

This tends to be why I 1) really read any fine print when I choose to support a charity and 2) do most of my charitable giving to organization that are close to me or in which I am actually some sort of involved volunteer and not just a financial contributor.

Right they get their money for the overhead fund separately and they do actively draw in that money. I did an origami speaking engagement recently (demonstrating origami at a women's club) and when they gave me my $50 check I asked that it be made out to Kiva. That went to their general fund, that's the only way they accept check donations. So they most definitely get money to cover their admin costs, as a separate stream.

Nicki - I understand their policy of supporting the local "credit groups". If Kiva themselves tried to create the infrastructure to have lenders in all these little villages and go collect the monthly payments and so on it would cost a TON of money in time and personnel and training and security and so on. By using the local network that exists, they help that local lending group become more sturdy and become able to help more locals by themselves over time, as they build up that reputation iand stability and so on. So I think a key part of an area becoming financially stable is that the local lenders become solid and viable. So I think Kiva does an awesome job of both helping individuals and also helping the local financial situation become a stable one.

If Kiva wasn't sending money in through that stream, then the local financial groups would have to themselves borrow money from bigger banks - meaning *they* would be paying interest, which they then pass along to their clients. So while a farmer getting a Kiva loan might be paying say 20% interest, if they had to get a loan without Kiva through that same institution they'd have to pay say 50% because now the institution would be re-lending money they themselves are paying interest on.

So I very much feel that using the native infrastructure is absolutely necessary in these cases.

Rae has an awesome point that in general if you donate locally and are involved with the group that you can actually see where your money is being spent and know it's being done in a way you agree with. Also, investing your time is one of the most useful ways you can help out!

There's an expression that says charity begins at home. To me that expression means those we know, as we'd know family members.

I've always kept that in mind and give directly to individuals I know need help.

I've been burned giving to a group, as you can probably tell from my attitude.

very disappointing...

Bottom line: They were intentionally dishonest. If we continue to support them, we're giving a message that what they are doing is okay. So what if you spank me on my hand as long you continue to give me money. It sounds as if they are playing on peoples' emotions. Plus, what other half-truths are being told? I say; move on.

I have already posted that I don't think that Kiva should be supported. However, you have a difficult decision to make Lisa. It is easy for me as an individual to donate to local charities. I am also lucky to have trusted friends who do volunteer work in other countries so I can give them money that I know will go directly to the people that need it with no admin costs deducted or governments or other organizations involved in determining what will be done with the money. However, if you decide not to support Kiva, you have to decide who you will support. Since the support is through free advertising for them, it will necessitate supporting another organization which needs that advertising. That will be another difficult decision. Whatever you decide I am sure it will be the best one.

I reviewed the posts here and then went to the Kiva site where the original article is posted as well as a response by the Kiva CEO is also posted. I understand the emotional response that says that they have not been telling us that our money is not going directly to the person we so carefully picked out from the pictures and information and I admit I'm a bit upset about that fact. But I did read how the financing was handled and did not absorb the truth that the business had changed. And we must all understand that this is a business -- not Kiva's end of it, but the microfinance lenders. Kiva's model has been so successful that the lenders have changed the way they do their business -- they can now make loans based on their criteria with a good chance of acquiring the money to fund that loan from small lenders at Kiva. Do remember that Kiva has made $100 million dollars available that would not have been available otherwise. This is a remarkable feat and they deserve a lot of credit for providing the framework.

We need to take a look at why we are lending through Kiva. I do so because it makes me feel like I'm doing something to help someone else even though I have only a little bit of money to help with and Kiva makes it easy to do so. The person-to-person business model provided me with choices based upon my own internal criteria and provided positive feedback each month to make me continue to feel good. That has not really changed with the insertion of the MFL into the equation, I still can help and feel good about it. It is just not quite as personal as it was.

So what does that mean? I plan to go back and download information on all the loans I have made and review the MFLs that have appealed to me previously. Rather than look at the picture of the person, I will look at the MFL. Which ones lend with the lowest interest rates? Which ones lend in the areas I am the most interested in? And instead of lending to those borrowers who chose short term payouts I will find the longest term loans from those MFLs that I have chosen. Short term loans are more administratively expensive than long term loans. That way I can maximize my impact. I can still get the positive feedback each month from repayments and the occasional loan to feel good.

Don't take your money out in a knee jerk reaction to what is essentially the price of success -- changes in the original business model which cannot be sustained when the amounts of money involved get too great.

Susan - I agree that business models often need to change over time, but I also feel that we as the ones fronting the money should be told about these changes.

If we think solely about the time issue, how many productive hours did all of the thousands of supporters waste on doing "worthless clicking"? Clicking that Kiva *knew* was meaningless but actively encouraged us to do anyway?

I agree 100% with Susan. I have worked for 6 or 7 non-profits and I know firsthand how difficult it is. They are trying to help people. This is the model that has been working - really working and making a change. And as i said earlier, many very respectable non-profits have been doing the same kind of thing with this kind of 'adopt/sponsor/feed' program.

Does that make a rainforest group not worth supporting..."but I though my money was going to THIS rainforest, not THAT one..."

Does anyone at all see what I am saying. Maybe you wanted to send Red Cross funds earmarked for new Orleans after Katrina and they went to Biloxi, or Mobile. Or maybe they went to some small town that had a completely different disaster that no one has heard of and that Katrina was convenient for drumming up general funds: in which case people were helped. Bottom line.

I am trying to give them an out here, having seen the not for profit world from the inside. Its is very difficult work, with limited funds and the sense of always being in a crisis situation. You get very little accolades and a whole bunch of logistical nightmares to wade through. You have to be happy when the end result is something positive at all.

I am afraid that if we start digging too deep into any charity - at least the successful, long term models - that we are going to uncover less-than-totally-truthful elements. Does that mean we can't run ANY of their ads? No more Red Cross, no more Humane Society, no more Rainforest Action Network or Wildlife Defense Fund.

The only alternative would be to go local and small, as many have suggested...or make run regular paid-for-ads and earmmark the funds towards good causes each year...or forget the non-profit angle completely and run ads for worthy small businesses/artists; that kind of thing.

I kind of think that last one could be very creative. We could be helping an artist, crafter or small business get a leg up, be able to feed themselves/family, achieve their dreams. That sounds like us. $50 to someone trying to make a monthly living from their art is $50 in their pocket where they can not have to worry about whether they can pay the rent.

Just some suggestions.

If we are going to toss out Kiva, then I am afraid we will start seeing lots of large charities doing things that seem underhanded as well. It's so easy to throw rocks from where we stand. I don't know if we really want to start digging like that. Better to dig at truly evil companies than someone trying to help and using the model that actually works.

I have thought about donating to Kiva, but have never taken any action on it. I did browse through some individuals on their website a few weeks ago and was impressed with the "personal" feeling of it all.

It is extremely misleading and I don't blame Lisa for being disappointed/frustrated/angry/upset. There should not be a place to select a profile of a person if there is no way to directly help that person. It makes you question if the profile is a "composite" or an actual person.

Kiva would be wise to match people with lenders, because people feel much better about donating to something concrete and specific. Several years ago my museum started a "Capital & Replacement" campaign where each department creates a wish list of items we would like to have, along with a price for purchasing it. Donors send checks for a specific purchase for a specific staff member. Even in the midst of this recession, we are still getting donations for our 2009 campaign. People like knowing exactly where their money goes.

I understand that people are still being helped, but once the integrity of an organization is brought into question, it is like a house of cards. What else aren't they telling us? How much of the lenders' money actually funds people's projects and how much goes to some mysterious "overhead" charge?

It just feels wrong to me. I think we should look elsewhere for a project to support. If nothing else, rescinding our free ad space will send a powerful message about what the CEO has spun as "miscommunication."

Just my two cents!

I do appreciate all the different points of view on this and will keep pondering it. I know for my own personal investments, once the money gets repaid that I will be putting that money elsewhere. I really like to choose who, specifically, gets the money.

There are other charities which specifically support women's education, and for example I would rather support them vs supporting a "random" microfinance group which supported male taxi drivers who already have cars. It's just not what I feel is highest on the scale. Yes they have a need, but there are others with what I feel is a more pressing need, and I have limited funds. So I want to make sure I use them in as targeted a manner as I can, to align with my beliefs.

If I had millions then certainly I would support lots of charities that were more generic

It's truly sad. You can't be sure that what you give is going to the intended place.

Kiva has been very deceptive in their practices. They have failed to fully disclose their practices.

Perhaps it's just time to move on to a more proven charities that completely disclose their practices.

Kiva did respond to the articles, here is their statement -

Kiva Response

So is there any conclusion to this on your end, Lisa?

When Kiva repays my loans back to me, I've been withdrawing the funds to consider a fresh use for them. So I still have the Kiva ads in the ad mix, but I am no longer supporting fresh accounts with our BellaOnline money. I thought that was a fair compromise while we saw how things moved forward with them.

That sounds fair. Are you still happy with heifer.org?