The Controversy Around Kiva's US Loans

Kiva CEO and President, Matt Flannery and Premal Shah

There is a fascinating and instructive debate happening on the Kiva Friends website about whether or not Kiva should be providing loans to US based entrepreneurs. The first US loans, announced just a few weeks ago, were met with much excitement.

As with any site that has been driven by it's member's participation however, there are many members of the Kiva family who feel that US loaners should be accessing credit elsewhere, and even that having US-based entrepreneurs on the site crowds out others.

A poll started just a couple weeks ago on Kiva Friends asks:

Question: Having loans to citizen's of the world's richest country funded by Kiva members is:

• Taking money from the pockets of entrepreneurs in the third world and should be stopped with immediate effect.
• A good idea, as it doesn't matter where you live, if you can't access credit, you can't access credit.
• Don't know yet.

The debate has been raging for 22 pages of comments. Of those that feel that the site shouldn't be loaning to US entrepreneurs, most of the arguments come down to the fact that credit tends to be more available (in their opinion) for those in the US, that the presence of the larger loans needed by the US will crowd out other loaners, and perhaps most of all that loaning to US entrepreneurs was not what Kiva was intended for, and is somehow an affront to or at a degradation of the mission.

On the other side, supporters point out that no one is committed to supporting US based entrepreneurs if they have personal reservations, that a tiny fraction of the loans available are intended for US entrepreneurs, and that even in the US many don't have access to credit right now.

There are a few things that I think are great about the debate:

1) Although KivaFriends.org is a separate site, it seems clear that Kiva itself is not interested in shutting down this debate. This reminds me of when Barack Obama supported the FISA bill and in response, his supporters used his own organizing site my.barackobama.com to ask him to change his position. Rather than trying to suppress them, he welcomed their participation, even when the group critical of his position became the largest on his site.

2) I wouldn't actually accuse anyone of this, but I wonder if it's harder to feel the flow of philanthropy reversed on citizens of your own nation if you're not accustomed to it. Philanthopy is a powerful force for good, but it is complicated to go about it in such a way that affirms rather than denies dignity. I think Kiva's US loans - loaning to entrepreneurs in general - tends to be a way to do philanthropy that has dignity and ownership embedded at it's core, but it still might produce a different feeling for some in the US unaccustomed to being on the other side of that relationship.

3) I wonder if it's easier for people to be more judgmental about the entrepreneurial capacity of others when the activities of those people feels more familiar? When a US citizen is supporting a bean farmer in Uganda, we don't necessarily know anything about bean farming, and certainly not enough to know whether they're approaching bean farming the right way. We have to trust, and take faith in institutions like Kiva and their intermediary microfinance partners. When someone wants to sell hot dogs down the street from us, however, we may have a different intuition about the supply and demand and likely success of that person, making us be more critical because we have more information (or at least deeper intuitive feelings). I'm not saying that this is the case, but it wouldn't totally surprise me, either.

I'm a supporter of Kiva's experiment. I think their model of making these loans through a nonprofit apparatus may be well-suited to the need and I'm looking forward to seeing how they work.