The Gong Show

Direct Giving

The drama over Kiva’s slightly misleading social stance has boiled over onto the NYTimes.  To summarize, Kiva has been marketing itself as a model to loan money directly to third world entrepreneurs.  But, the truth is that most entrepreneurs on the site already have an outstanding loan with a local micro-finance institution (MFI), and Kiva appearance of direct giving is really just a layer of marketing to enable people to give small loans to web-enabled MFIs around the world.

This layer of abstraction is fine by me… Kiva rocks. But for most of Kiva’s lenders, the idea that a lender’s choice of project is irrelevant on Kiva is surprising and disillusioning to most lenders.

The NYTimes piece gives the impression that the web is too nascent to enable direct Peer-to-Peer giving. That’s why I’m so impressed by DonorsChoose, who actually does enable direct giving to a specific classroom.  100% of the funds from a DonorsChoose donation goes to purchase the materials for the project you choose, and they implemented an e-procurement solution in order significantly reduce the opportunity for fraud.

Similarly, in the for-profit space, I’m excited by the prospects of Kickstarter, which is the new form of patronage online.  There’s no layer of abstraction in Kickstarter, the project you select to sponsor is the project that receives your funds, the giving is direct.

In areas where there is already an infrastructure in place and widespread internet connectivity penetration, direct giving online is possible and is already happening today.  It takes a ton of legwork to pull off and is not the easiest path to sponsorship.  But, it’s worth clearing the hurdles to enable direct giving because the resulting transparency and lender empowerment is worth the effort.