The Confusion of Microlending The Confusion of Microlending

The Confusion of Microlending

by Morgan Clendaniel

November 11, 2009
The Times has an interesting story on a small imbroglio that has broken out in the microlending world, specifically concerning GOOD friends Kiva and Global Giving. Namely, do you know where your money is going?Luckily, it's nothing insidious. The money all gets loaned out to people who need money. Rather, it's a question of perception and transparency. When you go to Kiva to donate money, you are not giving your $25 money to a specific entrepreneur, which is the idea that the company promulgated. But in reality, you're giving money to institutions that then give money; that goatherder whose picture you clicked on and your money aren't necessarily going to meet up. The blog post that made this clear (here) used only information from Kiva's site, but information that wasn't quite forward facing. Kiva has since changed the tagline on its website from "Kiva lets you lend to a specific entrepreneur, empowering them to lift themselves out of poverty," to  "Kiva connects people through lending to alleviate poverty."Global Giving's problems are a little tamer, stemming from the fact that some of the projects you can fund (which you can do by subscribing to GOOD), are not nonprofits, but the nonprofit projects of for-profit companies. There is nothing wrong with this, it's just that no one was told. The CEO, Dennis Whittle, has written an interesting post at Huffington Post talking about the whole issue and GG's attempts at transparency.What's the lesson here? It's not that there is anything wrong with these two great, incredibly important companies, but rather about total transparency in the internet age. Everyone is going to find out the truth despite any misleading or obfuscation, and then someone else on the internet will care that you misled them. You might as well just be totally honest in the first place.
Recently on GOOD
Sign up to receive the best of GOOD delivered to your inbox each and every weekday
The Confusion of Microlending