Should Kiva Adjust Its Formula?

Good for discussion, but I think they should stay with their current model. It's more pure.

February 06, 2008

Should Kiva Adjust Its Formula?

The founder of Kiva, a charity that encourages donors to make loans to needy entrepreneurs, took questions about his organization's supply-demand dilemma during Tuesday's weekly Chronicle online discussion.

And one of the most pointed questions came from Sean Stannard-Stocton, a financial consultant and the author of Tactical Philanthropy, who suggested that the organization change its lending terms to direct less money to the recipients of its small-business loans.

Mr. Stannard-Stockton suggested that Kiva should keep 10 percent of the pledged money as a contribution. That money would then be used to build a support staff that can identify more potential loan recipients.

During the discussion, Mr. Flannery dismissed the idea as being incongruent with Kiva's mission.

"It's really powerful to say '100 percent of your loan goes to the entrepreneur' and that's something we are not going to back away from as long as I'm here," Mr. Flannery said during the discussion.

In a follow-up blog post, Mr. Stannard-Stockton says his question might have come across as "kind of obnoxious".

But he says that it is important for groups like Kiva to listen to outside suggestions to help it achieve its goals.

"These social-capital markets belong to the public. As we shift towards a social capital market, it is important that those people with a vested interest in the outcome speak up and make their voice heard," he writes. "As a member of the public, we are all 'shareholders' in the social capital markets and the organizations that are creating them."

Is Mr. Stannard-Stockton proposing a smart solution to Kiva's recent supply-demand issue? Or is the organization's strategy more in line with its mission?

Click on the comments link below this post to share your thoughts.

� Peter Panepento