I agree Kiva should have more results data. The article is fairly lame though.<p>In one quote is says "With interest rates often exceeding 100 percent," which I am pretty sure is completely false. I have made hundreds of loans and I worry about rates above 40%. I seek lower rates (often between 20-30%) and find them often. The article says Kiva doesn't discuss the rate - but it is shown on every lending page, as a lender you can select based on loan rate (I know, I do).<p>The article also doesn't provide data either on the failure of Kiva to help. Granted I think Kiva should provide more data on the impact of loans and whether it is helping or not - I like to believe it is but <a href="<a href="http://investing.curiouscatblog.net/2009/10/16/micro-credit-research/">I" rel="nofollow">http://investing.curiouscatblog.net/2009/10/16/micro-credit-...</a> do question how useful Kiva really is</a>.<p>I don't know about expenses for Kiva (though sites like Charity navigator rate it highly). But as a lender on Kiva it really doesn't matter. Kiva expenses are paid by donation. To lend using Kiva you can make donations but you don't have to. High expenses matter it seems to me if you are choosing who to donate to.<p>Kiva does take advantage of human psychology in a smart way it seems to me, connecting lenders to people that need loans. It is a bit of a fiction as the article points out but it is also real - your re-payments are based on that loan. I see the benefits of that human connection as worthwhile (people like that human connection - showing their photos adds to that) though agree if you want to find fault it is something you can question.<p>I like another site that provides charity to local groups directly <a href="http://www.globalgiving.org/" rel="nofollow">http://www.globalgiving.org/</a> I do figure there is more chance of fraud given the nature of having lots of little organizations that it is hard to monitor. But I like getting directly to small groups that are making an effort and being able to target what you like.<p>Some sites that have published research on micro lending<p><pre><code> http://microfinanceresearch.org/
http://www.microfinancegateway.org/p/site/m/
http://www.cgap.org/</code></pre>
If you're interested in this sort of thing, you might want to give to GiveDirectly instead. It gives grants instead of loans (so interest rates aren't an issue) and is one of the very few charity organizations to do randomized controlled trials to prove its effectiveness.<p>More detail than you probably want to know:
<a href="http://www.givewell.org/international/top-charities/give-directly" rel="nofollow">http://www.givewell.org/international/top-charities/give-dir...</a>
The article boils down to<p>1) Kiva spends to much money on marketing and is therefor inefficient.
2) Kiva gets to much media attention.
3) Kiva are attracting more than their share of micro-investors.
4) Kiva does not export Western cultural values.<p>Regarding number 4, I think individual investors should decided what and what not to fund. I find cock/dog-fighting to be inhumane, but I enjoy hunting, many people would say hunting is inhumane and immoral and a smaller group would go as far to say "eating meat is murder". What about businesses using malnourished horses to transport goods? Should Kiva not fund anything animal related?<p>As far as only funding legal organizations. I am sure Kiva does not fund narcotic production or gun running. But how can they possibly be sure all businesses they fund are 100% legal, complying with all health, zoning, retail, licensing etc. laws of the local county/state/country?
Another thing that's interesting is that it's really not all about enabling entrepreneurship. Increasingly, I have noticed loans for education [1], home-building [2], and other needs.<p>I point this out not to be a jerk. Certainly, these are worthwhile causes in themselves, but there is no lack of traditional charitable giving opportunities elsewhere. I suspect Kiva knows this and is really selling the more differentiated and compelling idea of helping people to stand on their own, as the article mentions.<p>To be fair, most of their loans are still around enterprise, but I cannot help but wonder if loan requests for such needs reveal that the very idea behind Kiva is unrealistic to some extent. That is, when you have people who don't have homes or basic subsistence wherewithal, is it realistic that they can launch or run a successful business? Is it also realistic to expect that a significant portion of their loans won't end up redirected to other needs? This concern is not helped by the fact that the only updates I've ever received are regarding loan repayment, and not how the recipient is actually faring. It's also not encouraging when I see people requesting loans to pay off other loans. [3]<p>Recent articles posted on HN have shown that just giving money to poor people with no pretense or payback requirement is surprisingly effective. Maybe Kiva is selling a dream that has greater marketing appeal, but less actual effectiveness.<p>[1] <a href="http://www.kiva.org/lend/667533" rel="nofollow">http://www.kiva.org/lend/667533</a><p>[2] <a href="http://www.kiva.org/lend/667257" rel="nofollow">http://www.kiva.org/lend/667257</a><p>[3] <a href="http://www.kiva.org/lend/652349" rel="nofollow">http://www.kiva.org/lend/652349</a>
- Interest rate : You should understand that these are people that no mainstream institute would be willing to lend money to, even at high interest rates. So Kiva's high interest rate is not really high.<p>- Marketing expense : I joined Kiva because they said they will make the first contribution on behalf of me. I chose the borrower and Kiva sent the money. I didn't spend anything. I'm sure this would come in as marketing expense. This was one of their largest marketing campaign.
Yay for pseudo-journalism! @mfheretic, fact checking your work wouldn't be hard.<p>Kiva's Response: <a href="http://www.nextbillion.net/blogpost.aspx?blogid=3731" rel="nofollow">http://www.nextbillion.net/blogpost.aspx?blogid=3731</a>