Thanks for reposting this.

As someone invested in nonprofit program development and fundraising, I am somewhat taken aback by the notion of “when the site runs out completely” (item #3 of Mr. Flannery’s response).

That seems like a worst case scenario, not something to plan toward.

Maya

The New Jew: Blogging Jewish Philanthropy

1) If the supply/demand situation is unbalanced LONG term, then yes, they should put more effort into ways to balance things. Flannery’s response seems based on the idea that they have an excess demand (donors) much greater than 110% or so of supply (projects). But the value of taking a 10% slice for Kiva itself is NOT so much in reducing demand by 10%, but rather, in using that money to hire staff and increase supply.

2) On the other hand, if the surge in donors is temporary, it may be undesirable to change the terms. Look at the Wii - the hot video game system of the moment. It is priced at ~$250, and has been largely sold out almost since it’s release over a year ago. But part of the reason why it has been so popular was it’s attractive pricing relative to other systems (especially the PS3). If Nintendo raised the price, they could bring things into balance in the short term, but might hurt themselves long term, by losing the ‘low price’ vibe they have going.

Kiva, IIUC, has been spotlighted on Oprah and in other places recently. But the effects of this on donor interest may be short term.

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Still, as a donor who thinks hard about how to give effectively, there are several aspects of Kiva’s model that bother me:
1) Clearly, there is some screening cost to finding projects. While it might be more appealing to donors to say that 100% of their donation goes to the project, it strikes me as somewhat misleading too (SOMEBODY is paying for search and evaluation costs), and it may limit the ability of Kiva to grow - as we currently see, it appears that fewer donors want to pay for the backend costs than for the projects themselves.

2) The fact that they are essentially ’sold out’, and perhaps may remain sold out or nearly so, kind of hampers their whole concept, in my mind. The appeal of Kiva is that YOU, the donor, are choosing a project and are responsible for its funding. But if all projects that Kiva offers are basically always fully funded, then your contribution becomes less meaningful - if you don’t fund a project, someone else will.

3) Finally, Kiva’s breakthrough (in attracting donor attention) is also, in my opinion, its Achilles’ heel in terms of effectiveness. Donors like it because by giving $25, they feel like a program administrator, making an identifiable impact in someone’s life. But frankly, a $25 donor really shouldn’t be a program administrator. At that giving level, a donor is probably going to want to read a paragraph or three of text presenting a rosy picture of what their donation will do. We don’t need 1 million program administrators, trying to fix the third world from thousands of miles away, each with a $25 budget. We need money to be given more strategically. Again, I understand the appeal to a donor of the Kiva model, but I think eventually it may fall into a bit of a rut like the dollar-a-day child sponsorship programs - it makes the donor feel good, but isn’t really the best way to help lives, long-term, in the developing world. That’s not to say that neither Kiva nor the dollar-a-day programs do ANY good, but rather, that they’re a relatively inefficient way of helping those in the developing world.

I think I’d like to see something Kiva-like where the donor sees the full cost of getting money/support into the hands of those who need it (appropriately screened, with the screening costs visible), along with context of WHY certain types of projects are likely to be effective. Perhaps such a program would miss a little of Kiva’s feel good vibe, but on the other hand, it might attract donations larger than $25 a pop, from donors who see the limitations of the basic Kiva model.