Monday, November 09, 2009

Confusion Over Where Money Lent on Kiva Goes

NYTimes.com: "Last month, David Roodman, a research fellow at the Center for Global Development, pressed a button on his laptop as his bus left the Lincoln Tunnel in Manhattan and started a debate that has people re-examining the country’s latest celebrated charity, Kiva.org.
Oprah Winfrey extolled Kiva on her TV show. Nicholas D. Kristof, a columnist for The New York Times, sang its praises. “I lent $25 each to the owner of a TV repair shop in Afghanistan, a baker in Afghanistan, and a single mother running a clothing shop in the Dominican Republic,” Mr. Kristof wrote in a 2007 column.
Kiva, a nonprofit organization, promoted itself as a link between small individual lenders and small individual borrowers like Maryjane Cruz in the Philippines, who recently sought a $625 loan to support her family’s farm.
But Mr. Roodman’s blog post said that lenders like Mr. Kristof were not making direct loans. Borrowers like Ms. Cruz already have loans from microfinance institutions by the time their pictures are posted on Kiva’s Web site.
Thus, the direct person-to-person connection Kiva offered was in fact an illusion. Kiva’s lenders were actually backstopping microfinance institutions, and since Kiva and other online giving and lending models pride themselves on their transparency, Mr. Roodman and others suggested it might better explain what its lenders’ money — about $100 million over four years — was really doing.
“The person-to-person donor-to-borrower connections created by Kiva are partly fictional,” he wrote. “I suspect that most Kiva users do not realize this.”"

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