Category Archives: nptech

Tactical Philanthropy Community Helps FORGE

OK, enough talk. Let’s see if the Tactical Philanthropy community just likes to debate or whether we can accept a call to action.

A quick recap: FORGE is a small nonprofit that works with refugee communities in Africa to help them gain community rebuilding skills. The organization is on the ropes due to a mismatch between their fundraising strategy and their impact strategy. But changing to a model where refugees provided training instead of outside volunteers (a model most international development experts would applaud) they cut off a key source of funds (the volunteers generally raised significant funds from their networks back home in the United States or other developed counties). The executive director Kjerstin Erickson decided to use her blog on the Skoll Foundation’s Social Edge website to embrace “radical transparency” and lay bare her situation.

Here at Tactical Philanthropy I called her Forging Ahead blog “the most important nonprofit blog” due to her decision to go transparent. In a later post I wrote that I was not explicitly advocating for the refugee cause, for FORGE or for Kjerstin, but I very publicly wanted to support the cause of transparency and Kjerstin’s brave decision.

Then the Tactical Philanthropy community kicked into action:

  • I had lunch with nonprofit consultant Curtis Chang of Consulting Within Reach and told him I wanted to hire him to provide an executive summary type report to FORGE on what they should do next. The hook was that the report had to be published on my blog.
  • I then spoke with Victor d’Allant, who runs Social Edge and told him I wanted Social Edge to publish the report as well.
  • Victor upped the ante and suggested that Curtis take on a larger assignment with FORGE and blog about the experience along side Kjerstin on the Forging Ahead blog.
  • Curtis took on the challenge and decided to do the project on a pro bono basis and work with Kjerstin for an indeterminate period of time.
  • Rich Polt, founder of nonprofit PR consulting firm Louder Than Words left a comment on Tactical Philanthropy giving advice to Kjerstin on her PR strategy.
  • I called Rich and suggested that he offer pro bono consulting in a more formal arrangement with FORGE.
  • Rich suggested a larger contract than I expected and he agreed to provide a minimum of 20 hours of free work.
  • Rich than suggested that a large nonprofit that specializes in financial analysis might be willing to offer their assistance as well. He’s on the case.
  • Another Tactical Philanthropy reader has been busy pitching a foundation on why they should consider funding FORGE and sharing details of the pitch with me.

On Friday I met with Kjerstin (my first time meeting her) and told her what I had put together. I told her that if she wanted to accept all of this, the one requirement was that she waive confidentiality with each group so that I and they had the opportuntity to share their side of the story. Kjerstin didn’t even blink before telling me that they could write anything they wanted.

FORGE needs to raise close to $200,000 in order to close their budget and retrofit the organization so that they have the fundraising capacity to run sustainably next year. That’s a fair bit of money for such a small organization and I don’t know if it will happen. It may be that some large foundations who care about transparency will provide the capital to build fundraising capacity if FORGE can close this years budget gap through broad donor support. If some sort of plan like that can be worked out, than a donation to FORGE would be a high impact grant in support of transparency.

But no matter what happens with FORGE, it is all going to play out in public. Whether FORGE is saved or not, Kjerstin has displayed amazing bravery. Any smart foundation or nonprofit should be figuring out how to lure her to work for them should she become available.

So what about Curtis Chang, Rich Polt and anyone else who steps up to help? Sure they will receive some nice publicity, but they will also have to share their own work publicly. I can only imagine that the smart readers here at Tactical Philanthropy will disagree with some of their recommendations even if they approve of most. But here’s the thing, all of this is going to play out live. If you don’t like where things are headed, speak up and you might just change the outcome.

Over the last couple of years, I’ve heard numerous foundations tell me that they are not transparent about their grantee analysis because they do not want to risk hurting the nonprofit. But let’s look at FORGE as an example. Kjerstin knows that criticism can only make her stronger. She wants to learn and get better because she cares about her cause more than she cares about her organization. FORGE exists to help refugees rebuild their lives. Kjerstin is willing to do whatever it takes to help them. Even if that means publicly taking advice from people who might tell her she should do some things differently.

Kjerstin cares about the cause over the organization and so should all of us.

reCAPTCHA

I use reCaptcha to prevent spam comments on this blog. A “CAPTCHA” is a little puzzle that you have to answer to prove you are not a computer. Around the world, people spend 150,000 hours a day solving these puzzles to prove they are humans and not spambots when they are enter data online. The reCAPTCHA program “recycles” this time by presenting my readers with two words that have been scanned from old books that are in the process of being digitized. The program knows what one of the words is, but not the other. In this way, the program gets human eyes to “proof” the work of the scanning machines that are digitizing books. Pretty cool.

So normally the two words are totally unrelated. But today, as I was typing my response to Ani Hurwitz, who thinks social capital markets are a “chimera”, I couldn’t help but be a bit disturbed by the phrase in the reCAPTCHA box:

Rockefeller’s Guilt
Spooky!

GivingTools.com

I own the domains www.GivingTools.com and www.GivingTools.org. I don’t have any plans to use them. I’m not interested in selling them, but if you would like the domains AND you have an interesting project that you would use them for, let me know and I’ll consider giving them to you.

I apologize for the low volume of posting recently. I’m concentrating on the financial markets right now.

Network for Good & Financial Services

Last year I wrote a piece for the Chronicle of Philanthropy about my “predicted surprises” for 2008. The idea was not to make outright predictions, but to suggest events that could happen even though they would be a surprise. My thought was to create a kind of “stretch goals” list for philanthropy. One of the items on the list was,

“Network for Good will partner with a national bank to enable the bank’s customers to make donations from their online bill-pay account.”

As I understand the story, one of the board members of Network for Good read my piece and asked why they couldn’t actually do it. Conversations were held with a major bank to put the idea in place, but over time the idea morphed a bit. Tomorrow Network for Good will announced that they’ve partnered with Capital One (a credit card company) to allow donors to give to any nonprofit with their Capital One card and Capital One will cover the transaction costs.

This move puts online giving on par with off-line giving. When you write a check to a nonprofit, they get the full amount. But until this announcement, whenever you gave using your credit card the charity would only get about 95-98% of your gift with the rest going to credit card fees. Capital One has launched a special Giving site powered by Network for Good as part of the deal.

Now what about the rest of the predicted surprises? Any takers?

  1. The chief executive officer of a large nonprofit will launch a blog
    that quickly becomes the most widely read philanthropy blog. Fund
    raising at the nonprofit will exceed expectations on the back of a huge
    number of small, online donations.
  2. A foundation will decide to start publishing online the rationale
    for why it makes each of its grants. Its grantees will see increased
    donations from individuals who tell them they first heard of their
    organizations on the foundation’s Web site.
  3. Network for Good will partner with a national bank to enable the
    bank’s customers to make donations from their online bill-pay account.
  4. Google will bring its mission to “organize the world’s information”
    to the nonprofit sector. Working in conjunction with Google.org, Google
    will engineer the acquisition of a recognizable nonprofit data
    provider. The “buyout” target will be a nonprofit.
  5. A billionaire philanthropist with non-U.S. citizenship will
    establish a U.S.-based private foundation. Using the foundation to
    establish a global philanthropy brand, the donor will join Bill Gates
    and Bono on the celebrity-philanthropist list.
  6. Two large private foundations will merge. Citing the advantage of
    combining the expertise of their program staff and lowering operating
    expenses, the merger will create the second-largest private foundation
    in the country.
  7. A United Way-authored outcome-measurement template will be adopted
    by the sector as the standard format for nonprofit organizations to
    report on their effectiveness. The narrative-driven form will soon be
    available for download from the home pages of many nonprofits.
  8. A no-minimum national donor-advised-fund will be launched in partnership with a bank.
  9. After a major retailer’s cause-related-marketing promotion receives
    bad press for misleading advertising, a significant backlash against
    “embedded giving” occurs with young consumers.
  10. After Facebook’s Causes application is believed to have played a
    significant role in the increased voter turnout for the 2008
    presidential election among 18- to 24-year-olds, charities recognize
    the potential of social-media tools and finally get serious about
    integrated online strategies.

The Big Give

The Big Give (not to be confused with Oprah’s Big Give television show) is an interesting UK based website that allows donors to search for projects to fund. Much like a stock screening tool (which lets you look for stocks to buy that fit your criteria), The Big Give lets donors “screen” projects based on size of gift, charitable “sector”, geographic location and beneficiaries. The site is a good example of the type of tool that I think will become the leading way that donors of all size will find the nonprofits they support. See the column I wrote for the Financial Times that looked at philanthropy in the year 2033 for more details.

Tactical Philanthropy reader Jon Brooks is Managing Director of The Big Give. Rather than explain the site myself, I thought I’d let Jon take the floor. (FYI: Jon sent me a note about The Big Give after I suggested that most foundations should stop accepting most grant requests and instead proactively seek out grantees. At the time, I said that being deluged by grant requested “sounds like spam to me.” So one way to think of The Big Give is as anti-spam software for your foundation!)

In 2007 the UK-based Reed Foundation was struggling to find quality funding proposals for its £1m/year grants. Unsolicited requests were never appropriate and seemed a waste of valuable charity resources.

With no paid members of staff, processing requests also used valuable foundation resources. Promoting the foundation’s need for quality proposals (e.g. through a website/marketing) would have only led to more administration work for both charities and the foundation.

We felt the most suitable solution was an online database of charity projects, and so developed The Big Give. UK charities upload and categorize their own projects - remaining responsible for all content - which allows the Reed Foundation to filter by various factors. Once we have a short-list of projects, we can contact the charity to discuss their proposal in more detail.

The beauty of the web is that we can share The Big Give with other donors looking for new projects. The site is free, and users remain anonymous until they decide to contact the charity. With over 4,500 charities registered, we do not carry out in-depth due diligence. Instead, we provide links to third party websites - such as the Charity Commission - to make it easy for donors to research potential charities to a level that suits their needs.

An example:

In 2007, the Reed Foundation trustees wanted to consider a £100k donation to rainforests. Other websites provided limited information on the work each rainforest charity did, and the charities’ own websites concentrated on the £5/month donors. The only way to find out if a charity could provide us with an interesting project was to ask - and that led to face-to-face meetings, offers to tailor projects to our needs, and so on.

With The Big Give, we are able to search for rainforest projects at £100k and have a short-list of concrete proposals within seconds. Only when we have selected the best ideas and checked the accounts of the charity behind the project do we meet with the charity.

My personal story:

As happens at many small foundations, I worked on the Reed Foundation alongside a full-time job within the Reed recruitment company. As the idea for The Big Give developed, I spent more time on the project and went full-time with The Big Give in August 2007. The website launched to charities in October 2008, and we are now looking at how to make The Big Give relevant to all charity donors.

Online Grant Applications

Flaw #9 from the Project Streamline report:

More than 80 percent of the grantmakers who responded to our survey reported that they have taken steps to make their information gathering practices “more efficient and streamlined for nonprofit applicants.”

…Many streamlining strategies have turned out to be useful to foundations and their grantees. Yet others, notably online applications and common grant applications, have produced mixed results, creating new issues for grantmakers and grantseekers alike.

…Common grantmaking forms for application and reporting (here, generically referred to as CGAs), which provide a single set of application and/or reporting questions that a substantial number of funders in a region (or funding area) will accept, have seemed like a logical time and resource saving tool for philanthropy. Yet our research found surprisingly little support for common grantmaking forms as a strategy for effective streamlining. CGAs are accepted (or, much less frequently, required) by 34 percent of foundations that responded to our survey.

Common grant applications is one of those ideas that make so much sense on the surface. But then I think about how any investment manager would reject the concept of having a standard template of information on which to base their decisions. Every person has at least slightly different criteria for making an investment or grantmaking decision.

But investors do have a very important infrastructure in place that philanthropy lacks. Investors in publicly traded markets know that every company will file their financials with the SEC. Unlike nonprofits’ 990s, SEC filings are not documents focused on compliance and IRS driven issues. SEC documents are designed to inform investors (the recent changes to the 990 did move them in this direction). In addition, companies host quarterly conference calls to discuss their business. While every investor has their own criteria for investing, they have a common set of information they can obtain about any company.

But here’s the critical difference. A common grant application means that there is a standard set of information that nonprofits can send to funders. In the stock market, the common set of information is available for investors to go get. This switch from passive receiving of information to proactively going out to find what you want is one of the core changes that the internet (and especially web 2.0) bring to the world. A common grant application misses the whole value of the internet. Instead of having nonprofits fill out and submit lots of grant applications, why don’t they just post a single set of common information for any funder to download? The 990 could serve this purpose, but why should funders let the IRS dictate what information is important? Why can’t the philanthropic community design their own “impact report” template that every nonprofit could complete and keep updated? (I asked Brian Gallagher, CEO of United Way of American, this question in a recent podcast.)

Personally I think that most funders should do away with even accepting most grant requests. I think it would be boring to be deluged with requests, most of which I wasn’t interested in. Sounds like spam to me. I’m much more interested in proactively identifying and researching the investments (for-profit or nonprofit) that I am interested in. It sure would help if I could pull up good information about nonprofits on Google Finance the same way I can pull up good information on stocks!

Update: I should be more clear when I say foundations should not accept grant applications. What I believe is that the system of philanthropy should switch from a system of where nonprofits ask for money to one where funders proactively seek out grantees. I layed this thesis out in a Financial Times column earlier this year. But within the current context, I realize there are ramifications if a single foundation stops accepting requests.

connec+ipedia

For some time now I’ve been talking about the need for large foundations to share their knowledge base with the general public. While some people have made this argument from the standpoint of obligations that foundations have to the public, I’ve thought that foundations will find that they are able to more effectively further their own mission by sharing their knowledge base. Since individuals give seven time more money each year than all the foundations in the country combined, it stands to reason that foundations who share their knowledge with the public might influence some of these vast flows of funding to support the mission of the foundations.

Recently the Meyer Memorial Trust, a $700 million+ foundation that has proven innovative in a number of ways, launched an attempt to share their knowledge base with anyone who is interested. The project is called connect+ipedia. Rather than explain the project myself, I asked Amy Sample Ward - Communications and Learning Associate at MMT and author of the foundation’s New Media Blog - to share her thoughts with Tactical Philanthropy.

By Amy Sample Ward

If you are looking for some introductory information about after school programs, for example, and you do a Google search for that term, you would get 40,200,000 results. But, if you use connec+ipedia, you get 111, all of which are cards on the topic or organizations involved in such work. So, what is connec+ipedia?

Let’s start at the beginning: A few years ago, Meyer Memorial Trust (a private, regional foundation based in Portland, OR) recognized the need to explore the world of knowledge management. A full program staff turn over in a short amount of time (with program officers retiring after decades of service) meant an irrevocable loss of institutional knowledge, and the adoption of a knowledge management tool could ensure that such loss did not happen again. Marie Deatherage, Director of Communications & Learning, was tasked with the investigation and discovered that foundations around the country were investing a lot of dollars (millions, even) to develop tools that only the organization could use and that often faced little-to-no staff buy-in.

MMT had shown a commitment to both supporting open source software and to supporting the broader philanthropic and nonprofit sector through grantmaking and other projects, so, when Marie met the two great minds behind Grass Commons who were working on an open source wiki tool that incorporated database functionality, the choice seemed clear. What was also clear to the Trust, was that this wouldn’t be a tool for internal use only, but would be completely open. Other foundations, nonprofit organizations and state agencies were often all working on the same kinds of programatic work, so it would make sense that they should be able to collaborate online, in a way that allowed for sharing of best practices, data, standards, and other information—that these parties should all have access to the same information when working to make informed decisions about work that effected the field.

Wagn is the free, open source software that connec+ipedia runs on, combining the editable functionality of a wiki (like Wikipedia) with ‘tagging’ or referencing functionality of a database. Anyone (with Intern access) can view, search, and read the site. Users (request an invitation!) can edit, create and contribute content, all organized through people, places and things, as well as the intersections between them. Back to the initial example: If you wanted to find out about after school programs, searching Google may be too much information. Searching on connec+ipedia, instead, could mean a more easily digestible avenue to tailored information. Users from across MMT’s service area and beyond, in foundations, nonprofits, state agencies, as well as corporations and public citizens are already making connec+ipedia a resource. The Oregonian has even gotten behind it!

Philanthropy 2.0: A Video Q&A with DonorsChoose, Facebook Causes, Kiva, The Motley Fool, and The Case Foundation

(This is a guest post from Peter Deitz, Founder of Social Actions, who is covering the Council on Foundations Conference for Tactical Philanthropy)

By Peter Deitz

For micro-philanthropy groupies, including me, yesterday’s session on Philanthropy 2.0 at the Council on Foundation’s annual conference featured a star studded panel. The founders of DonorsChoose, Facebook Causes, and The Motley Fool were joined by the East Coast Development Manager of Kiva.org and the Director of Social Investment for The Case Foundation. Quite a crew!

Roughly one hundred and fifty people attended the session, choosing Philanthropy 2.0 over a host of other really awesome sessions. Session facilitator Sharna Goldseker, Vice President of the Andrea and Charles Bronfman Philanthropies, took a quick survey of the audience. The attendees consisted of 30% family foundations, 40% community foundations, 5% corporate foundations, 10% private foundations, and 15% foundation consultants and advisors.

For the first hour of the session, the presenters showcased what they have been doing with web 2.0 and philanthropy. For those who aren’t familiar with the platforms listed above:

DonorsChoose.org – A donation site that connects teachers who need supplies for classroom projects with citizen philanthropists interested in funding the projects. (67,400 donors, $1.2 million donated since 2000)

Facebook Causes – A popular application on Facebook that permits anyone to start a fundraiser on behalf of a registered 501c3 organization. (12 million users, $2.5 million raised since 2007)

Kiva.org – A community of advocates of micro-finance that permits individuals to make loans to small business owners in the developing world. (270,000 lenders, $28 million lent since 2004)

The Motley Fool – A web 2.0 financial investment community that also runs an annual program in which investors make donations to a select list of charities.

The Case Foundation – A family foundation started by AOL founder Steve Case that has invested heavily in the tools that make micro-philanthropy possible and has run several contests that encourage individuals to become citizen philanthropists.

After the presentations, the conversation gave way to a Q&A session, in which foundation representatives asked the panel about how philanthropy 2.0 could impact their own work.

Here is a video of the Philanthropy 2.0 Q&A:

Social Media Nonprofit Job

Some interesting jobs being posted on the Tactical Philanthropy Job Board recently. This one from from Change.org.

Change.org is seeking a Managing Editor for its forthcoming social action blog network, which will be launched in the summer of 2008.

Change.org’s Managing Editor will lead an effort to hire and oversee a team of several dozen expert bloggers who will be writing about the most important issues facing our world – ranging from global warming to hunger to health care.

In addition to managing a team of part-time writers, responsibilities will include establishing relationships with other media outlets, interacting with the hundreds of nonprofits active on Change.org, identifying and helping to promote activist campaigns, and part-time blogging. The position is full-time and pay is competitive.

If you’re looking for a job with significant responsibility, excited about the thrill of working at a start-up, and passionate about using the internet to advance social change, this might be the perfect opportunity for you.

Applicants should have experience in the nonprofit/activist space as well with blogging or journalism. Otherwise, we encourage anyone to apply – regardless of age or location. We’re more interested in someone who can take this position and run with it than someone who fits a particular mold.

You can find the details on this job here.

NetSquared Update

From the NetSquared Blog:

Google’s engineers, product and project managers want to help bring your NetSquared Mashup Challenge idea to life!

Next Friday, March 7th, NetSquared Mashup Challenge applicants have an incredible opportunity to participate in a Hackathon at the Googleplex in Mountain View, CA from Noon-5 PM.

A group of Google engineers, product and project managers will be available to help you think through your idea, answer questions, give advice and start building your mashup for social change!

Are you excited? We are!

To attend you need to submit your project idea to the NetSquared Mashup Challenge. The application process is just that, a process. Fill out what you know now, and begin soliciting feedback from others to move your idea to a completed mashup.

Once your project idea is submitted, you can register for the Hackathon by sending an email with the subject line: “Google Hackathon Registration” to net2@techsoup.org…

Click here for all the details.

A Hackathon at the Googleplex? 95% of my readers eyes just glazed over. 5% are in nirvana and just ran out the door to buy a case of Red Bull. 100% will be fascinated by results that show up at NetSquared in May.

Social Marketplace Architecture

Reader Simon Marsh, shares his thoughts on the “Social Marketplace Architecture”:

The idea

A dynamic user led and focused software platform/environment for grant givers and grant seekers to interact and compete could be developed wherebytheir real time objectives and organisational identities interact and compete for the best ideas and resources. A second generation internet platform whereby a Foundation’s (for example) publicly available governanceand philanthropic objectives are matched (automatically) with various university (for example) academic objectives, personnel and events bothproactively and reactively.

You can read his complete comments here.

Beth Kanter & Michele Martin

The America’s Giving Challenge Champions have been announced. This experiment/competition to see how web 2.0 tools can be used for fundraising has gotten a ton of national coverage. Here’s the thing: Beth Kanter and Michele Martin won. Beth, who I know from NetSquared events and from her blog, is someone I’ve always thought got web 2.0 and nonprofits better than anyone else. I’ve referred the media to her and called her the Queen of all things web 2.0 on this blog. Michele I only know from her blog, but she clearly knows her stuff.

If you are a nonprofit interested in how to use social media tools to fundraise or advance your mission, there’s no question who you hire. Go to their blogs (Beth’s is here, Michele’s is here), check them out, and hire them.

And if you work at a foundation, you might have noticed that nonprofits are way ahead of grantmakers in learning how to leverage social media tools. They’re generally way ahead of for-profit companies as well. So if you’re a grantmaker, check out Beth and Michele as well. Maybe you can talk them into helping you out.

NetSquared N2Y3

NetSquared, the community of technology/nonprofit collaborators hosted by CompuMentor/TechSoup is hosting their third annual conference in May. I attended the first two and they are amazing. While each conference has had a different focus, they seem to bring out some of the most innovative people I’ve ever met.

This year’s contest will focus on Mashups for Good:

This year’s NetSquared Conference will bring together a unique mix of people from the public and private sectors to develop and release Mashups designed to provide deeper insight into the social issues affecting communities around the globe.

Those “people” are you — members of the NetSquared universe working on behalf of communities everywhere and the technical experts who care about these issues.

If we’re successful, we’ll learn something about cross-sector collaboration, meet new and interesting people, and build a unique gallery of Mashups that citizens, schools, and community-based groups everywhere can learn from, replicate, and build upon.

For more about Mashups, see Wikipedia’s definition.

For a better sense of what we mean, let’s take a look at a few of our favorite Mashups.

Go ahead, click on the examples below. Read the “about” pages to get a better sense of the project’s goal/mission, and how the site works. (Yes, this is kind of technical, but we’re going to help make sense of that. Enjoy!)

    * Maplight.org, a winning NetSquared project from last year, displays the link between money and politics by bringing together information about campaign contributions and legislative votes.

    * ChicagoCrimes.org is a browsable database of crimes in Chicago that lets users see information displayed on a map.

    * ActiveTrails shows visitors a list of active hiking and biking trails across the United States. Users play a big role in supplying information.

    * Tunisian Prison Map pulls from a variety of sources to locate the prisons on a map and links to videos and other information relating to the prisons.

On February 1, the Mashup Project Submission process for the NetSquared Mashup Challenge opens. Nonprofits and other social-change agents will be expressing their visions of how data can be recombined to advance social missions. NetSquared’s team will make sure that everyone gets the appropriate help they need to define their vision in a way that will be accessible and attractive to technical volunteers.

On March 14 at 5 PM, PST, the ability to publish a Project Submission will close.

03/17/08 - 03/21/08: Voting for the Mashup Project Challenge. Like last year, registered NetSquared users will be able to vote for their favorite Projects.

03/24/08: The top 20 Mashup Projects will be announced on March 24 and the winners will be invited to attend this year’s NetSquared conference in San Jose, CA, scheduled for 5/27 and 5/28. Each of the top 20 projects gets an allowance for travel (including airfare to and from the conference, along with a hotel room for two nights).

05/27/08 & 05/28/08: At the conference, Project Teams will have an opportunity to display and discuss their Mashups and attendees will vote to select the top three. All 20 projects at the conference will receive a share of $100,000 in prize money. The share will be determined by voting at the conference. Of course, there will be more legalese regarding the prize and its allocation after we open the application process on February 1, 2008.

Google, Information & Philanthropy

Google.com lets users create custom search engines. Here’s an interesting example of how Google technology can be used to create more efficient information distribution in philanthropy.

Developed by E-Democracy.org, the custom search tool is described this way by the creator:

To assist E-Democracy.Org’s grant prospecting efforts I put together a little (big actually) Google Custom Search covering foundations, some government funding sites, and sites with fund raising advice for non-profits.

You can use E-Democracy’s custom search engine here and create your own here.

(hat tip: Lucy Bernholz)

Kiva.org Responds

Fiona Ramsey, Kiva’s director of public relations responds to my post speculating on the implications of Kiva turning donor/investors away for lack of available borrowers to fund. Tomorrow at noon eastern, Kiva co-founder Matt Flannery will be in a live discussion on the Chronicle of Philanthropy website. I’ll post a follow up to Fiona’s comments after participating in Matt’s discussion. Just to be clear, I think Kiva is a fascinating, innovative model. I think the issue they currently face does not speak poorly of them in anyway, but I do think that the issue brings up complicated new issues that the social capital markets will have to deal with over time.

Sean:

It’s exciting for me, as Kiva.org Public Relations Director, to read your comments about one of the most intriguing parts of Kiva’s model. I agree with your comment that “Kiva?s problems are a great example of how strongly donors respond when social capital markets are created” - which is an exciting indication of how far lenders/investors will take this!

A couple points of clarification:

Kiva.org does not consider DonorsChoose.org or GlobalGiving.org to be competitors. While these models are similar in that individuals can choose the specific project they would like to contribute to, they are donations, not loans, and Kiva only facilitates loans at this time.

One element of the Kiva model that is often under appreciated is that the platform operates 24/7, so a “shortage” that exists at one time, may not exist a matter of hours later. Kiva’s Field Partners update loans for funding from the developing world as they are received, they are translated and submitted to the live site as quickly as possible. So, we can literally have a site with no funding needs one minute, and thousands of dollars with of funding needed minutes later. This is the beauty of the Kiva platform - needs being delivered from the developing world. Real-time, real people and real needs.

Of course the flip side is that a potential lender can come to the site and not find any lending opportunities at that time. However, that’s what makes the site so “addictive” for many lenders. Because you don’t know what needs will be listed an hour later, and find yourself checking back hours later to get an update.

One additional comment: there is not a shortage of people in need of a loan. What there is, is a bottle-neck. Kiva.org undertakes a significant due diligence before partnering with any microfinance institution, and it takes time to both satisfy Kiva.org’s due diligence and train MFI staff on the Kiva system. As such, the Kiva.org partner portfolio is not growing at the rate of our lender community. The other solution to building our partner portfolio is to increase the amount of funding each partner can raise (each partner has a monthly fundraising limit), but that simply wouldn’t be responsible. Kiva.org is committed to creating an online microlending platform that helps MFIs to scale only at a rate that is healthy for both the MFI and Kiva.org.

On a personal note, watching these “shortages” occur excites me because it sends a strong message to our Field Partners, that Kiva Lenders believe in their work and wish to support their programs, and to developing world entrepreneurs, that Kiva Lenders are supporting them from over 70 countries in the world, and want to give them a chance to be successful entrepreneurs.
As you said, Sean, this is a “great example of how strongly donors respond when social capital markets are created.”

Fiona Ramsey
Public Relations Director
Kiva.org