Tag: heifer international

Kiva Customers Don’t Receive the Loans you Give

~ Sasha ~ 39 Comments

If I wanted to get your attention, that’s the headline I’d write.  Strictly speaking, it’s true.  And when you only have a minute to grab someone’s attention, isn’t it your job to grab their attention?

That in essence is what’s at the core of the conversation that’s swelled up over the last two weeks about Kiva.  David Roodman’s “Kiva Is Not Quite What It Seems” post kicked things off; Tim Ogden took things further in his post on the Philanthropy Action blog, and Sean Stannard-Stockton provided the definitive summary of the conversation, with his take on it, on the Tactical Philanthropy blog in a post titled “Is Kiva Misleading the Publc?”

Here’s the low-down: you can log on to Kiva, find a microfinance client in the developing world who needs a loan, and fund that person.  The catch is that that person has already received their loan.   In fact all the clients on the Kiva website have already received their loans.  The microfinance organizations that gets money from Kiva does receive those funds, but the funds don’t go to that individual client.   The GiveWell blog provides the picture that’s worth a thousand words by showing what the Kiva donor is told (graphically) and what the microfinance organization is told.

The thing is, what Kiva’s doing is nothing new.  Heifer International raises tens of millions of dollars a year by sending out millions of catalogs that are every bit as sophisticated as the LL Bean or J Crew catalogs, only instead of buying rugby shirts you buy a chicken or a cow for a family in the developing world.  But you’re not really buying that chicken or that cow.  On the bottom of every page for every cow or chicken or trio of rabbits you “give” to someone, there’s a small-print disclaimer:

Gifts made through this catalog represent a gift to the entire mission. To help the most number of families move toward self-reliance, Heifer does not use its limited resources to track gift animals from donation to distribution. We use your gifts where they can do the most good by pooling them with the gifts of others to help transform entire communities. And, because you are helping Heifer fight hunger and poverty, your gift is tax deductible.

So the gift of a cow isn’t buying a cow, just like the Kiva loan isn’t going to that actual Kiva borrower.

Before we get on our philanthropic high horse, let’s be clear about what is and isn’t true here.  To keep it as simple as possible, imagine you run a nonprofit that provides food aid to people struck by natural disaster.  The simplest story goes:

  1. People are suffering as a result of this natural disaster
  2. One can buy food for one person who is hungry for one week for $10
  3. We’re in the business of buying this food
  4. So give us $10 and we’ll buy the food.

And when you’re writing a catchy headline to get a high open rate for your emails, you’ll lead with “A $10 gift will buy someone food for a week.”  This is, strictly speaking, true.

So the question here isn’t really about truth, it’s about how big a sin of omission each nonprofit can and should commit as they play this game.  Is it the responsibility of the nonprofit sector and donors alike to break down the myth that each gift does or doesn’t buy a specific thing?  And will those who take the high road ever win out in the marketplace of ideas?  It’s an empirical fact that people give more to help one person than to help many (check out this excerpt from Made to Stick for the startling experimental data), and this is wired deep into our brains, it’s not something that was created by the nonprofit sector.

Which is why I think Nathanial Whitttemore has it right when he says that this “problem” is here to stay, namely that nonprofits will, by and large, tell almost-truths to their donors – focusing on a specific connection between their dollars and a given outcome – and that a major shift for the majority of the giving population won’t happen any time soon (if ever), even though as professionals our aspiration might be to change the narrative to investing in nonprofit organizations, as Sean suggests.  It’s a good aspiration, and we should keep at it, but it will never be the bread and butter for most nonprofits or for most donors.

It is true that philanthropists who makes major giving decisions and give considerable time and energy to these decisions have the opportunity to break this cycle; and the supporting infrastructure of philanthropic advising has an opportunity to push this conversation forward, aided by nonprofits who are willing and able to tell a different story.  But let’s not pretend that we will someday divide the world into two, with the masses being duped into emotional decisions that get them to dig into their wallets while major donors dig in deep analytically and primarily make educated, highly rational, institutional-building investments.  If it doesn’t happen in the stock market, why will it happen here?

All givers are essentially the same, essentially human, making rational and emotional decision based on the information they have and the amount of time they have to give to their giving decisions.  The emotional connection is the starting (and often ending) point for everyone, and what matters is the ability of every individual donor (whether they give $20 or $20 million) to insert themselves into the narrative of a particular nonprofit organization, the problem they’re addressing, and the role that the philanthropist and their gift have in addressing that problem.

The “your money buys this” message isn’t going anywhere soon. If anything, what Kiva and Charity:Water and DonorsChoose have shown is that there’s a way to take this approach and adapt it to 21st century tools – so that you can see an online photo of the microloan recipient or the well that was dug or the classroom that was helped — if not directly by your money, at least by that same amount of money as the amount you gave.  It’s interesting that making this association more visible and tangible is calling into question the veracity of these claims (no one’s writing about Heifer, right?), when in fact all Kiva et al are doing is strengthening a tried-and-true narrative.  The mechanics of gift -> organization -> recipient haven’t changed one bit.

If you think about it, it’s nearly impossible to change these mechanics and run an efficient, global nonprofit.  So why are we all acting so surprised?

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Donations that make a difference

~ Sasha ~ 1 Comment

Imagine this: you’re walking down the street and stumble across an envelope with a cashier’s check for $25 that can only be endorsed by a charitable organization (I don’t know if such a check exists, but bear with me). To whom do you donate the check?

My friend Ross, in his thoughtful and eloquent comment about Maimonides and the 8 levels of tzedakah touched on this question implicitly. He said:

“I like learning about new charitable organizations and initiatives, and I balance my giving among local, national and global organizations. It’s not always the biggest foundations that need my money the most – I can perhaps make a bigger difference with my contribution to a small local effort.” [emphasis added]

This sense that “big = probably less in need of a donation” is appealing. Put another way, wouldn’t a gift matter more to a small, struggling organization than to a big, established one?

At the extremes, I suppose this is true. A brand new organization with a $50,000 annual budget really does need a $100 donation more than UNICEF, with a $1 billion annual budget. But unless we want to create tens of thousands of little non-for-profits, this logic falls apart pretty quickly. (In some sense, it seems like that’s exactly what we want, since there are now nearly 1.5 million not-for-profits in the United States). Scale does matter, and while big definitely doesn’t necessarily equal effective, we can agree that a certain minimal size is required to achieve some basic efficiencies. And if gets harder, not easier, to raise money as a non profit as you grow, then as a society we are erecting barriers to creating new, innovative organizations that make a large-scale impact.

The way many not-for-profits have addressed this question is to break down what they do into bite-size pieces. For example, Heifer International’s donation page breaks out donations into the cost of a heifer, a water buffalo, a goat, a sheep… you get the idea. You can match the amount you want to give to the cost of one of these animals, and get the sense of something tangible coming from your donation.

Of course, in reality it doesn’t work quite like this, and then there’s the inevitable backlash when someone discovers that your dollars don’t buy an actual heifer, or a water buffalo; they just go into a general fund.

To me, the problem with this approach has nothing to do with whether Heifer literally gives a cow or puts the money in a fund that purchases livestock for families, which in turn improves their ability to earn a steady income. The problem comes from the expectation that funding is an on/off switch for creating something out of nothing in the world. Fighting poverty is just more complicated and more important than that.

Here’s another approach: think about your giving like you think about voting, as an expression of who you are and what you believe in. Think to yourself, “This non-profit does great things. I want to support an organization that does great things, so I’m donating. Here are 10 great things this non-profit did last year, which I helped to support. I’m proud to be a part of that.”

It’s really not a question of who’s big and who’s small, and where a gift will “make the most difference.” If you want to give, find an organization whose people, values, mission, and approach align with your own. Evaluate the organization, make sure they are efficient and responsible stewards of your money. And then give. If you trust the people and the organization, don’t feel obliged to take that extra step to say, “this is how they used the money.”