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Joanne Fritz

How Kiva Makes Microfinance Transparent

By March 16, 2009

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In recent years, "microfinance" has been one of the most promising developments in the nonprofit and philanthropic world.

It is part of the democratization of philanthropy, where donors can directly choose and benefit individual recipients, and in a way that is infinitely sustainable. Instead of seeing one's donation disappear into a fund somewhere, donors pick a recipient, loan (not donate) a sum of money, get repaid, and then can loan that money again.

Microfinance is not the easiest concept to understand for donors accustomed to writing a check to a traditional nonprofit. At least it wasn't until we met Kiva, a wildly successful player in microfinance. Kiva has met the challenge of explaining microfinance to lender-donors.

On its homepage, Kiva's header features a simple chart that immediately tells you what you can do, and how. Its tagline is direct: "loans that change lives." And its mission statement is the soul of simplicity: "To connect people through lending for the sake of alleviating poverty."

Kiva's "How It Works" page says "Choose an Entrepreneur, Lend, Get Repaid." The ensuing explanation consists of four simple points and an easy-to-grasp diagram that features photos of a real lender and a real entrepreneur.

Kiva is a great example of what more nonprofits should do, and can do. Even the smallest nonprofit, with the minimum of resources, could explain itself this directly and simply.

How does your website stack up?



July 28, 2009 at 3:07 am
(1) Euwyn Poon says:

For everyone interested in microfinance, I’d urge you to also check out Wokai. We love Kiva, but unfortunately they don’t serve China. We’re working to raise microloan capital for rural Chinese farmers.

March 8, 2010 at 1:34 pm
(2) Bev says:

I would appreciate your providing information about other Kiva-like nonprofits. I am not sure Kiva is as transparent as it could be and may be responding to recent criticisms of them about this. There are others more transparent, and one (name I can’t remember) actually allows you to make sure your gift goes directly the purpose or people you intend.

January 28, 2011 at 1:01 pm
(3) Amy says:

Bev, check out “Opportunity International’ is a fantastic micro-finance organization. They start actual banks that loan to the poor & they have a 97% repayment rate.


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