Comments on: Kiva.org and the Social Capital Markets http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets Fri, 05 Sep 2008 18:15:42 +0000 http://wordpress.org/?v=2.5.1 By: Rachel http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2732 Rachel Wed, 13 Feb 2008 15:51:27 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2732 It's true that liquidity and credit are frequently a problem in developing nations, but a big part of the reason why they are a problem is that IMF structural adjustment programs instituted over the last 30 years discouraged government lending programs, particularly low cost agricultural loans. So poor people who cannot get significant, low interest government loans are now offered small high interest loans for projects in the informal economy. Loans that support jobs like peddling food or making handicrafts, jobs without security, and benefits, and that don't really build a sustainable economy in developing nations. Microlending funds african basket weavers, who then are undercut when their markets are flooded by cheap Chinese baskets. Microlending is a more attractive face on neo-liberal economics, it functions as a poverty tax by charging poor people higher interest rates than wealthier people pay, and it's never going to address the structural issues behind global inequality. It’s true that liquidity and credit are frequently a problem in developing nations, but a big part of the reason why they are a problem is that IMF structural adjustment programs instituted over the last 30 years discouraged government lending programs, particularly low cost agricultural loans. So poor people who cannot get significant, low interest government loans are now offered small high interest loans for projects in the informal economy. Loans that support jobs like peddling food or making handicrafts, jobs without security, and benefits, and that don’t really build a sustainable economy in developing nations. Microlending funds african basket weavers, who then are undercut when their markets are flooded by cheap Chinese baskets. Microlending is a more attractive face on neo-liberal economics, it functions as a poverty tax by charging poor people higher interest rates than wealthier people pay, and it’s never going to address the structural issues behind global inequality.

]]> By: Lamont http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2731 Lamont Wed, 13 Feb 2008 07:32:28 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2731 I like the fact that kiva is not "strictly" philanthropic. Ideally a $500 loan produces not only a the repayment of the loan, but additional profits which continue over time. And then the repaid amount can be reinvested again producing hopefully another bootstrapping of a small business. Given enough time and enough bootstrapping you can hopefully create stronger economies. Third world economies are chronically lacking liquidity and credit, which is one of the reasons why they don't function. Microlenders are attempting to provide it. I like the fact that kiva is not “strictly” philanthropic. Ideally a $500 loan produces not only a the repayment of the loan, but additional profits which continue over time. And then the repaid amount can be reinvested again producing hopefully another bootstrapping of a small business. Given enough time and enough bootstrapping you can hopefully create stronger economies.

Third world economies are chronically lacking liquidity and credit, which is one of the reasons why they don’t function. Microlenders are attempting to provide it.

]]> By: Sean Stannard-Stockton http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2670 Sean Stannard-Stockton Tue, 05 Feb 2008 05:00:48 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2670 Rachel, I can understand your point. Kiva is not a model for donors to give money away. It is not philanthropy in the traditional sense and it will not replace philanthropy. But lending money to people without charging interest (which Kiva users do not charge, although the middlemen they lend to do charge interest to the end borrower) who would otherwise have limited access to credit and doing so with the knowledge that if you do not get paid back you have little or no recourse for collecting your money, is an act of kindness. In the evolving social capital markets, there will be a need for both donations and lending (and many other financial transactions). Kiva is not better than philanthropy, but its approach moves the field forward. Rachel, I can understand your point. Kiva is not a model for donors to give money away. It is not philanthropy in the traditional sense and it will not replace philanthropy. But lending money to people without charging interest (which Kiva users do not charge, although the middlemen they lend to do charge interest to the end borrower) who would otherwise have limited access to credit and doing so with the knowledge that if you do not get paid back you have little or no recourse for collecting your money, is an act of kindness.

In the evolving social capital markets, there will be a need for both donations and lending (and many other financial transactions). Kiva is not better than philanthropy, but its approach moves the field forward.

]]> By: Rachel http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2667 Rachel Mon, 04 Feb 2008 16:21:00 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2667 It frustrates me that all of the discussion of Kiva as “philanthropy” ignores the fact that “donors” are only lending their money, not donating it, and lending it in relatively small amounts. Perhaps the reason why other charities don’t have this problem is that they are asking donors to actually donate their money, their time or their experiences, rather than feel good for lending $100 to someone who is probably paying upwards of 20% interest (Kiva is totally nontransparent about the interest rates charged by their partners) for the privilege of receiving their “charity.” It frustrates me that all of the discussion of Kiva as “philanthropy” ignores the fact that “donors” are only lending their money, not donating it, and lending it in relatively small amounts. Perhaps the reason why other charities don’t have this problem is that they are asking donors to actually donate their money, their time or their experiences, rather than feel good for lending $100 to someone who is probably paying upwards of 20% interest (Kiva is totally nontransparent about the interest rates charged by their partners) for the privilege of receiving their “charity.”

]]> By: Reza http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2637 Reza Thu, 31 Jan 2008 22:40:09 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2637 Dear Friend, A group of researchers at University of Nevada, Las Vegas, are investigating effects of Weblogs on ?Social Capital?. Therefore, they have designed an online survey. By participating in this survey you will help researches in ?Management Information Systems? and ?Sociology?. You must be at least 18 years old to participate in this survey. It will take 5 to 12 minutes of your time. Your participation is greatly appreciated. You will find the survey at the following link. <a href="http://faculty.unlv.edu/rtorkzadeh/survey" rel="nofollow">http://faculty.unlv.edu/rtorkzadeh/survey</a> This group has already done another study on Weblogs effects on ?Social Interactions? and ?Trust?. To obtain a copy of the previous study brief report of findings you can email Reza Vaezi at reza.vaezi@yahoo.com. Dear Friend,
A group of researchers at University of Nevada, Las Vegas, are investigating effects of Weblogs on ?Social Capital?. Therefore, they have designed an online survey. By participating in this survey you will help researches in ?Management Information Systems? and ?Sociology?. You must be at least 18 years old to participate in this survey. It will take 5 to 12 minutes of your time.
Your participation is greatly appreciated. You will find the survey at the following link. http://faculty.unlv.edu/rtorkzadeh/survey
This group has already done another study on Weblogs effects on ?Social Interactions? and ?Trust?. To obtain a copy of the previous study brief report of findings you can email Reza Vaezi at reza.vaezi@yahoo.com.

]]> By: Sean Stannard-Stockton http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2620 Sean Stannard-Stockton Wed, 30 Jan 2008 19:29:34 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2620 Very good point. Kiva wants to compete like any other organization, but there's a strong argument that to further their mission they should be referring people elsewhere. What do other people think? Very good point. Kiva wants to compete like any other organization, but there’s a strong argument that to further their mission they should be referring people elsewhere.

What do other people think?

]]> By: Basti http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2619 Basti Wed, 30 Jan 2008 18:53:28 +0000 http://tacticalphilanthropy.com/2008/01/kivaorg-and-the-social-capital-markets#comment-2619 Maybe Kiva should point to alternatives instead of limiting investments to 25$. <a>MicroPlace</a> for example offers a similar service but wasn't able to attract all that buzz so far. Actually I would even favour them since they confront the microfinance institutions with much less transaction costs than Kiva and their business model seems to be easier to scale. Of course their feel-good-factor might be much smaller, but for everyone who cares more about the poor than himself that shouldn’t be relevant… Maybe Kiva should point to alternatives instead of limiting investments to 25$. MicroPlace for example offers a similar service but wasn’t able to attract all that buzz so far. Actually I would even favour them since they confront the microfinance institutions with much less transaction costs than Kiva and their business model seems to be easier to scale.

Of course their feel-good-factor might be much smaller, but for everyone who cares more about the poor than himself that shouldn’t be relevant…

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