KIVA– Case Analysis

KIVA– Case Analysis

Introduction

Inspired by Mohammed Yunus, Jessica Jackley and Matt Flannery launched a microfinance website in 2005 aiming to fight poverty by supporting small business entrepreneurs through lending. Kiva identifies those entrepreneurs in need and connects them with the Kiva lending community. KIVA supports entrepreneurs to create a sustainable business to support family and community members. These entrepreneurs typically pay back the loan after 6-12 month lending period. By the end of 2018, the organization has facilitated $1.2 billion in loans to 3 million borrowers worldwide. Kiva strives to create transparency and cultivate an honest, giving community. Microfinancing shares many principles with crowdsourcing — a small amount of money is gathered from many contributors to create a large impact.

Problem Analysis

Grameen Foundation was an established leader when Kiva was incorporated in 2005. However, the newcomer took a more creative approach by taking advantage of technology. With the help of Flannery a computer programmer at TiVo, Kiva adopted many of the core principles that define Web 2.0. As a nonprofit, Kiva did not charge its users any interest, platform fees, or commissions. Its sustainability depends on tips from users, bank interest accrued, and unclaimed gift cards. Nevertheless, Kiva is faced with two threats: fraud and transparency. For example, Moses Onyango was caught posting fake borrower profiles and diverting funds. $250,000 had was defaulted and Kiva had refunded the affected lenders. Besides strives to build trust between the organization, entrepreneurs, and lenders to develop meaningful, long-term relationships, the organization has been criticized for not having sufficient transparency about its new field partners charging borrowers interest.

Recommendations

Through their impact on the microfinance program, Kiva needs to improve on its transparency policy in all parts of its activities. Kiva does a great disservice to its users by not presenting them the whole picture when it comes to the impact that microfinance has had on borrowers in the past. Research has proven that borrowers often became saddled with debts. Kiva must mention potential negative consequences on their website, despite the many that exist, and microfinance is held up as the ever-elusive "magic bullet" to end poverty that has been sought in development for so long. To avoid frauds, Kiva needs to partner with local nonprofits with the same vision to assist with all the process before an entrepreneur receive a loan. 

Personal Application

Mohammed Yunus taught “poor people work the hardest but get the least. That’s why they are poor”. Poverty is not merely a lack of material goods but is instead a condition that occurs when an individual faces some combination of marginalization, discrimination, chronic material want, and general lack of opportunity for a better life. By providing its users with a better understanding of what poverty is and how to address it effectively, Kiva will scale to a newer height.

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