What happened to the microfinance company Kiva? | Hacker News Reader

What happened to the microfinance company Kiva?

technologyreview.com

128 pointsimpish920893 comments

Utterly bewildering statement by the VP Guis in here:

> she found it odd that an American would be offered 0% interest while borrowers in poorer parts of the world were being charged up to 70%, according to the estimates posted on Kiva’s website. “I don’t see why poor people in Guatemala should basically be subsidizing relatively rich people here in Minnesota,” she told me. Guis disagreed, telling me, “I take issue with the idea that systematically marginalized communities in the US are less deserving.” She said that in 2022, nearly 80% of the businesses that received US loans were “owned by Black, Indigenous, and people of color.”

Do Black Americans really put themselves on par with Guatemalan subsistence farmers?

Seems like such an egregious thing to say. Not trying to handwave away real issues but these two groups couldn't be further apart.

Is it the case that black Americans are putting themselves on par with Guatemalan subsistence farmers, or that the VP is doing so?

It's just corporate wokewashing. Make a profit-oriented decision, then offer a post-hoc rationalization of why it's good for racial minorities and hope to get some good press out of it. Nothing new or surprising here. Guis, it bears pointing out, is a white woman, not Black, and it's silly to attribute her shoddy ideas to Black people en masse.

Why does the current incarnation of Silicon Valley have to always be shady? Why can't it say 'our service is X' and then deliver service X, not some who knows what other agenda? A car parts store just sells car parts, they don't change and offer refrigerator parts since they already have a distribution system for parts and then tell their customers 'we have to do this in order to keep selling car parts'. Also, 'we are shifting our required by law in store oil recycling to 'contractors' and if they happen to just be dumping it into the river not our problem, wasn't us, we tried' (narrator: they didn't try).

Silicon Valley deserves the hate and bad reputation they now have. They've acted in bad faith for too long while fostering an air of 'trying to make the world better'. I'm so glad they've lost their sales tax exemption and I hope they get kneecapped on every other 'advantage' they have (i.e. 'we don't have employees, we are empowering independent contractors who happen to look just like employees').

America had so much optimism for tech and now they hate it, maybe reflect for a bit on why.

Information asymmetry is how capital extracts maximum possible value from the consumer in whatever fields they can get their grubby hands on.

Information is power, as they say.

> Why can't it say 'our service is X' and then deliver service X

Anyone can do that. It takes a real businessman to know how to scam as many people as possible at once.

Well, it looks like Kiva got taken over by leadership who are aiming to maximize the return to themselves rather than driving the original vision. As a Kiva donor for about a decade, it is probably time to move on. Oh well, it was good while it lasted.

givewell has much better ideas, with give directly going in a similar vein of putting money in the hands of the global poor

I tend to agree, although the salaries and transparency in give directly also raise questions. https://twitter.com/carolinefiennes/status/16000677812269506...

> as Kiva began to launch new programs like Kiva Capital, as well as Protocol, a blockchain-enabled credit bureau launched in Sierra Leone in 2018 and then closed in 2022.

Uh oh.

Here's Kiva's own hype about that.[1] It's about identity verification with fingerprints and tying financial information to that.

[1] https://www.kiva.org/protocol/

Give small loans to your extended family and friends instead. You’ll be surprised how many will pay you back, even when you tell them they don’t have to pay it back ever, or can when they’re able to.

This is how financing worked for a long time. You’re the best judge of your network’s need for money, and if it’ll actually be helpful or be wasted on something wasteful or destructive like drugs.

Larger loans to help family buy a home or a small business can be transformative. You can even ask for equity or to be repaid with interest when the property is sold (this makes it a loan and not taxable income).

These human connections to your lending are incredibly fulfilling for everyone involved. Just be sure you can lose it entirely with no hurt feelings or holding it over them.

> Give small loans to your extended family and friends instead.

I feel like amongst the entire HN userbase that this will touch, somebody has to chime in and say the opposite on why you shouldn't do this?

ok, I'll bite. I've done this a fair amount - and while it feels good to help your friends and neighbors and family - its gets weird. old friends calling me up asking if I want to buy the bar they work at because they hate their boss. people who've I've helped a lot turned out not to really like me very much.

but I still think the sentiment stands

Never give loans to friends or family. Give gifts.

Agreed. You give money to friends and family knowing it won't be paid back.

Less emotional pain when you realize this.

What about your divorce attorney? My divorce attorney asked me last week if she could borrow money 650 USD, and pay it back in about 3 months. Also, my divorce is not yet final. Talk about awkward. I said no.

My God, you're in trouble!

Wish me luck XD

I'll have go:

Duplicating debt systems with those closest to you by even calling it a loan is a way to persist a system of oppression in the places young people grow up in. An alternative would be to practice freely giving, especially to needs, never calling things loans or favors, and maybe include with the gifts some lighthearted & light reading material on how to culturally dismantle systems of oppression.

Well done, this was written in 100% the tone and attitude of a typical HN user.

Thanks! What would be a different approach to saying the same thing? This is a genuine question around how to communicate differently.

The comment uses a lot of thousand dollar words and empty phrases. Try less hard, in short.

> Duplicating debt systems with those closest to you by even calling it a loan is a way to persist a system of oppression in the places young people grow up in.

Giving money to friends and family is oppressive, is what this is saying. Which is just wild to claim. And kind of cheapens the phrase "system of oppression".

> An alternative would be to practice freely giving, especially to needs, never calling things loans or favors, and maybe include with the gifts some lighthearted & light reading material on how to culturally dismantle systems of oppression.

The first bit is fine, but the last thing is super patronizing. How would it look if your friend asked you for $500 and you gave them some woke manual on how to dismantle "systems of oppression", whatever that means?

This sounds "Hacker News"-y because there are a lot of smug programmers here who think they're borderline genius and can solve society's problems just because they read a couple philosophy books and have access to JSTOR.

I kinda left my comment sarcastically, but I'm trying to being serious with this bit of advice. Just try less with your writing. The more your try, the faker it sounds.

What I'm getting from this: use plainer language. Thanks for the reminder.

To be clear, I was trying to say with the first part that loaning money, instead of giving it, is oppressive. Also, myself and some friends would love the gift of a zine or funny comic about dismantling systems of oppression. It'd be pretty in-character for me to give or receive it. I also don't claim ownership over things, though, so shrug

And by "systems of oppression," I mean organizations/cultures that harm through keeping people from getting what they need or making it way harder for some than others. Debt is one such system. Same for nonvoluntary governments. Caste systems. Just as some examples.

> even when you tell them they don’t have to pay it back ever

This is really the key part. Because if you're going to be upset when they don't pay you back (totally understandable) you're going to be losing a friend because some of them will not pay you back.

Don’t loan money. It can break relationships if/when the borrower cannot pay back.

If you do loan money do it with the implicit assumption that it’s a gift you may never get back.

My wife and I have a pretty firm policy of not lending money (exception if someone just needs cash until they can get to an ATM/Venmo us back).

We've seen too many people who've had relationships ruined over it. In our view, the two primary cases simply don't have good outcomes:

* A situation where the borrower has made many, significant financial decisions. Lending them money isn't going to fix their problems.

* A loan that is far too large. While this is not the poor decisions of point 1, it's often a purchase that has more affordable options. E.g. they can afford a $10k car, but want to purchase a $20k car.

If neither of those situations applied (in a developed country) they would probably just go to a bank. Giving loans to people who banks pass on is usually a bad plan because they usually pass for a reason.

Unless you want a profit on your loans to friends and family you don't need do the same calculation as the banks. Also, you got way better character knowledge than they do. You know which friends are low and high risk and will do something stupid with a loan. Some are rock solid and some will use the money for 200USD cab rides between bars when they can't pay the gas bill.

> Also, you got way better character knowledge than they do. You know which friends are low and high risk and will do something stupid with a loan.

Maybe, but you are also blinded by your emotional attachment. I suspect for most people that would far outweigh any benefit from knowing your friend's character.

As far as profiting goes - well is it a gift or is it a loan? Even if you get the principle back exactly you are still losing money due to the time value of money. Maybe your ok with that. Maybe you are ok with not getting it back at all. In which case it is more a gift then a loan. Which is fine as long as you are honest with yourself about your expectations.

I'll share an example of a friend who can't open a bank account because their father apparently wrote too many bad checks by opening accounts on see friend's name while my friend was still a minor.

This is a person who works as a teacher at a public school so has a regular job and is a US citizen by birth. The only crime if you can call it that is they don't want to send their father back to jail just so they can have a bank account.

This is all very sad, but that is what happens if you take the fall for someone else's crime. If taking the fall for someone else's crimes was consequence free, then everyone would do it.

If the same thing happened to you, you probably would also blame your friend as well. E.g. if your friend's father pretended to be your friend, borrowed money, and then when you asked about it, the friend claimed that he himself did it because he didn't want you mad at the father, you would probably blame the friend not the father.

Had multiple situations where I've loaned people 10k or more and they acted like it was a gift. Well, I did that once and then made sure all future deals had contracts.

I think the secret to success in lending to family and friends is to not really expect to see the money again (and still be OK doing it).

This still doesn't solve all the kinds of drama and conflict that can come up (e.g. siblings can get annoyed with each other when 1 pays back a family loan and the other doesn't), but it helps a bit.

I limit lending amounts to what I can sensibly afford, and I still have to apply judgement. I also gently knock back requests for "more" loans where there's been a large amount unpaid in the past.

> I feel like amongst the entire HN userbase that this will touch, somebody has to chime in and say the opposite on why you shouldn't do this?

I mean, if your goal is financial equality, this is a terrible way to get there. People are usually friends and family with people of similar ecconomic class. Giving loans to people you know just continues the status quo of rich people having access to credit and poor people not.

My personal experience: all my close friends returned money without issues. Not close: smaller amounts, often not returned.

In my family its common to lend money. Amounts range from buying a car to downpayment for a house. We are financially a diverse group. From poor to middleclass. That enabled buying houses and escaping rent for a lot of people. Maybe the cultural and religios background is important in this context. I certainly would lend money and ask for many in my circle when in need.

I agree with this.

Those communities that are more homogenous and well-knit (think of their community as an extension of their family) tend to have better success stories in escaping poverty than those that aren't.

And I'd guess it's precisely that positive feedback loop where the rich informally help the poor, and when the poor get rich, the loop repeats.

> I feel like amongst the entire HN userbase that this will touch, somebody has to chime in and say the opposite on why you shouldn't do this?

Well, parent did qualify it with the word "small".

If a small[1] amount of money is liable to cause strained familial relationships, then the loan doesn't matter, because that relationship is already fragile.

The other side of the coin, especially with the qualifier "small", is that you can quickly figure out in your familial network is reliable and who is not. This knowledge is useful for more than just money.

As someone famous once said, "If I lend a friend $100 and never see them again, that was money well spent".

[1] Relative to the people involved, that is.

there used to be a service ( I think its was virgin money) where they would administer your personal loan so you could could lend money to a friend or family ember, but they third party would collect their payments etc. that way you have a third party reminding people to pay etc.

> Give small loans to your extended family and friends instead.

Middle ground - both are very valid and need this. So agreed but up to a point. This is an extension of the "save a large sinking boat of poor people or save a sinking boat of a few first-world college students". There's valid arguments for either so just do what you believe to be best.

I'm sorry, but this is really bad advice. There is a case to be made to make emergency loans, or even donations, for helping with healthcare needs or disasters. But small loans for family and close friends is something that you should absolutely avoid doing due to the high risk of destroying relationships forever.

Some interesting dark patterns here when I tried to pull my money after reading this. I had $30 or so.

1. Login, start withdrawal process. Get sent email verification link.

2. Click link, continue. Select which PayPal account to send to.

3. Site logs me out.

4. Log in again. Continue process. Get a 2nd verification email. It notes that Withdrawals are manual from the accounting team and take 1-2 weeks.

5. Click 2nd verification email. Dropped back into account with no confirmation.

6. Withdrawal information arrives.

Holy crap that is a huge CEO salary for a non profit

Nonprofit just means no shareholders. Direct employees and vendors can still get rich. In Kiva's case, the local partner banks do really well.

FYI you are shadowbanned and have been for quite some time, it seems. All of your comments show up "dead."

Edit: why the downvotes? Are we not supposed to tell an account it's been shadowbanned?

Campaigning is real vOv

> All of your comments show up "dead."

Not for me, they don't.

Do you have showdead on in your HN profile settings? This is what it looks like for me: https://i.imgur.com/ev5jvEt.png

They may not be shadowbanned. Many of those comments are just low quality and likely downvoted.

Every single one seems to be dead: https://i.imgur.com/ev5jvEt.png

I'm not sure why some of those comments would have been flagged normally, they don't seem to break any HN rules at all. Given the fact that they're all dead, I was leaning towards being shadowbanned.

Check further pages - some are up. They're not flagged - that would show up differently then just dead. They're just likely to be downvoted, because they're mostly low quality.

I run across dead comments occasionally that have nothing rule breaking about them. Offend too many of the snowflake brigade and you too can be killed. You're not supposed to be downvoting reflexively to suppress unpopular opinions. I always vouch for those that are worthwhile, substantive comments even if it's a statement I don't agree with.

FYI you are shadowbanned as well, this comment shows up as "dead".

Yeah looks like I was downvoted below -4.

Is there even such thing as shadowban on HN?

That doesn't even register on the grand scheme; https://nonprofitlight.com/

Example; Roger Goodell - National Football League - $30.3 million.

Gotta hand it to the #2, Holly Lang, adoption director of the Minnesota Companion Rabbit society for her $24 million salary though.

That's actually a glitch...her salary was $24,694, and ProPublica ‘s website somehow picked that up as $24,694,000, which that website cited.

https://projects.propublica.org/nonprofits/organizations/201...

Thanks for clarifying, I looked at the site from GP and I WTF’ed loud enough to wake my dog.

See you wouldn't have that problem if you had a companion Rabbit, for the low low price of all your money.

It shows $24,693,084 in the filings for 2018.

Definitely inaccurate data

Wow they didn’t even bother to fact check the top 2 data points? ProPublica is a useless joke.

The $24,693,084 figure accurately represents the original IRS filing[1], which is all ProPublica claims to be doing.

[1] https://apps.irs.gov/pub/epostcard/cor/201864550_201812_990E...

Sounds like Holly Lang and the Companion Rabbit Network should be talking to lawyers.

(Preferably a lawyer who cuddles companion rabbits only to counterbalance their apex predator shark side, which comes out when extracting every penny of compensation that is due to clients who have been defamed.)

NFL is not the same type of charity though as Kiva. The NFL doesn't actually aim to help people.

Many hospitals and public/private colleges on that list though.

health care in the US are notorious for high fees and poor outcomes in comparison to other western nations. It makes sense that their CEOs are making a killing.

https://www.commonwealthfund.org/publications/issue-briefs/2...

Also college costs in the US are also incredibly expensive:

https://www.theatlantic.com/education/archive/2018/09/why-is...

Which shows what a joke the "non-profit" label is. People are making substantial amounts of personal profit, just not corporate shareholders. Often the label is there just to benefit from tax exemptions.

Well, It’s just a legal definition for the organization. Many for-profit Silicon Valley startups don’t make profits either, but employees still get paid and executives cash out hundreds of millions of dollars.

Is it? I looked at another non-profit (the Sherman Fairchild Foundation, which manages the post-humous funds of the guy who made Fairchild Semiconductor) and the president makes $500k+ https://beta.candid.org/profile/6906786?keyword=Sherman+fair...

I do love IRS Form 990 in this way...

For people that didn't see article:

"In 2020, the CEO took home over $800,000. Combined, Kiva’s top 10 executives made nearly $3.5 million in 2020. In 2021, nearly half of Kiva’s revenue went to staff salaries."

Also interestingly I spoke to someone about running AdWords campaigns for them as a volunteer and got ghosted. Always felt that was a bit rude. Say if they found another preferred or decided to not run the ads. But from this I wonder how much additional staff not in the salary stats is voluntary if they used volunteers for various kinds of internal activities.

Guess Cory Doctorow's thesis continues to apply for all sorts of websites.

Enshittification spares no platform business.

It's disappointing that they only talked to one Kiva partner. If it is truly the case that the new model is widely preferable to the old model for the partner agencies, why is the evidence so weak? Instead, it just reads as if the example was just cherrypicked to allow the author to segue into a discussion about the Western lenders being out of touch with reality.

Some brand name not-for-profits pay surprisingly high salaries to their senior executives, some in the range of USD1M/year. It’s led me to believe that whilst not-for-“profit” in the technical definition of the meaning, they are certainly run as “for-the-benefit” of their management.

There are many which do not play this game - apparently not Kiva - and seem truer to their charitable purposes. Some will say: does it logically matter - if higher salaries win improved achievement of charitable purpose? The answer then is why not structure as a business rather than not-for-profit?

Edit [additional point]: microfinance is a high cost, high risk business. Organisations at the sharp end of loan management need to charge interest rates which cover costs, including defaults, currency hedging etc. I find that fair enough.

What irks me is a management hiding behind a not-for-profit status to enrich themselves without taking risk.

Kiva has been one of my main ways to give for many years. I've noticed that the pickings have been slimmer, and variety worse, for the past few. I'd chalked it up to effects of the pandemic, but damn. I've certainly noticed how much harder they push for donations to them when checking out.

This really bums me out.

First loan 2012. Last loan 2021. Now I wonder if those small amounts invested in those home countries would have had a better return over the 9 years in one lump sum to a few select lending cooperatives.

Kiva seems more focused on selling good feelings than truly caring for those on the other side.

That is case for 99% of non profits.

I do not know if this is a new trend in US or it was always like that.

My opinion is that this is a human nature. I grew up under communism, where, despite the prevalent notion of equality (or whatever), party leaders often enjoyed disproportionate wealth and luxuries like seaside homes.

Corruption or greed is human nature but so is fighting back against it when it gets way out of balance.

Greed happened, by the sound of it.

no surprises there, but it still makes me a little sad...

I've been using this for a while, according to the stats I've cycled about 4k through [0].

Since I'd rather not fund the CEO's 800k lifestyle I'll be closing it all down now. Parasites as ever.

0: https://imgur.com/a/eg4PpoH

Anyone got any tips for a Kiva alternative?

Lend with Care.

"he individual Kiva lenders earn no interest;" That's why I never bothered with Kiva. You want my money but you're not going to give me even a small cut? No thank you.

Not everything in life needs to make a profit. Kiva is not an investment instrument for making profits, it is to help people who are less fortunate than us.

I am now out of touch with Kiva (though I still make loans) but I have been to many of their events, met some of the employees, met some terrific lenders who are genuinely passionate about helping people. I am disappointed how Kiva has turned out these days, but they were doing good work. Their lender community is insanely passionate. There are lenders who are worth 8/9 figures and then there are people who can only spare 50$ a month and everyone in between. If you don't trust me, just go read their teams messages.

So yeah, if you are looking to make a quick profit, Kiva (and Kiva like orgs) is not for you

I agree that many things should not be subject to the profit motive. But I’m going to put my capital at risk for no return - in the best case scenario - while the CEO of a middleman takes home $850k? No thanks.

Are you aware of the human concept of a donation? What about a gift?

> Kiva is not an investment instrument for making profit

For sustainability it needs to have a return for the investor.

It seems odd that I would “loan” my money and not get a return. I donate to charities. That seems more efficient.

Wouldn’t it make more sense to just build in a return to investors to attract more people willing to learn. Kiva is making money. The CEO is making money, it seems odd not to pay people who lend money.

As it is now, I’d rather donate and get a tax deduction and be done with it and have the firm lend out my donation over and over.

I was ok with this aspect of lending via Kiva. Finding out someone else was making a profit off the interest of a loan that I funded is the hard pill to swallow.

I think of it as a less expensive gofundme. It's not really about (or at least shouldn't be about) getting rich but giving others am opportunity they might never had had otherwise because of the circumstances of their birth.

Jesus, so its a middle man company that earns all the profit and takes zero risk? That's absurd and beyond morally bankrupt.

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