"Kiva started out of relationships and love, ideally I would love for that to be present in every single transaction that happens. People connecting."
Jessica is the co-founder, with her husband, Matthew Flannery, of Kiva, a nonprofit that is using the Internet to allow everyday philanthropists, like you and me, to loan money to budding entrepreneurs all over the world. She has worked in rural Kenya, Tanzania, and Uganda with the Village Enterprise Fund, and Project Baobab on impact evaluation and program development. She is currently pursuing an MBA at the Stanford Graduate School of Business.
You can watch a 16-minute documentary about Kiva on the FRONTLINE World web site. When the documentary aired on Ocober 31st, the response from viewers was so great that it brought the Kiva site down.
Below is an edited transcript of my interview with Jessica, which you can also hear on the Big Vision Podcast.
What is Kiva?
Kiva's mission is to connect people, through lending, for the purpose of poverty alleviation. The way we do that is by providing opportunities for individuals from all over the world to lend money to specific, real people, in pretty much real time, through our web site; and we do that by working with a number of microfinance institutions all around the world--MFIs.
We find entrepreneurs through our partner MFIs. The entrepreneurs are posted up on our site with their profiles and a word about their lives, their families, and their plans for the business and the money they are requesting. Lenders come to the site and lend any amount from $25 up, in increments of $25.
What is an MFI?
There are 3500 or so MFIs on record, but estimates go up to 10,000. About 70 percent of MFIs, or lending institutions, loan to fewer than 2500 people. There are a few that are a lot larger. There are also nonprofit ones; a lot of them start out as nonprofits and then slowly move toward financial sustainability, and they might turn into a non-bank financial institution, or a number of other kinds of forms along the way.
Microfinance, as a whole, is a big category of financial services for the poor: microloans, microcredit, is just one offering, and that is what Kiva focuses on. It is kind of the most well-known and most talked about, and oftentimes it is confused--people say "microfinance" when they mean "microcredit" or vice-versa.
How did Kiva start?
In the very, very beginning, Matt and I had this idea like, "How neat would it be if we had individual, real people on our web site with their needs, and the amount of funding that they need? I'm sure we could get people to help them and to loan money to them, so let's just try it."
We didn't actually have a specific organization that would work with us besides Village Enterprise Fund, which is a great non-profit. Shout out to them! They do microenterprise grants, not loans; but we worked with some folks that had been given grants and used those successfully, and basically worked with our friend Moses, who listed the seven businesses in the very beginning, put them online, and helped post the information about them. We put them on the web site and within just a few days our friends and family indeed did step up and loaned the money that was needed.
So, fast-forward a whole year. We work with a little more than a dozen MFIs all around the world who... let's take Kenya: say there is a head office in Nairobi, and maybe some branch offices in Kakamega or Kisumu, towns all around Kenya. In those branch offices are loan officers. They are the people that get on the motorbike every day, or take the bus, or whatever they do, to get way out to villages where their borrowers may reside. So they are the people that go and actually do the vetting, accept loan applications, do training if there is any--most of our partners do that--and actually distribute the funds, collect the repayments every few weeks, that sort of thing. So they are the people on the ground.
In the very, very beginning we were working with people like that, like the loan officers. We just started to work with our buddy, Moses, who is a wonderful man, who was serving in that capacity. But to scale, we knew that it was going to be necessary to work at least a level or two up. So now we work with organizations that employ dozens, hundreds, of loan officers who then go out and find the businesses. Sometimes there will be a designated loan officer within an MFI in one region that is the "Kiva person" that is doing that. Sometimes there will be a few. All of their names are listed on the web site, because we really want it to be, again, a very real and transparent experience. So anything that is posted on Kiva, you will see a name of the loan officer that did that, that day.
If an individual wanted to make a loan to an entrepreneur, how would they do that?
Go to Kiva.org, and one of the main buttons at the top says "Lend." Click on that and you are able to see all of the businesses that day that are posted, that need funding. Some of them may be close to fully funded, some of them may have just been posted and may have no funding now, but basically you will probably see a number of different businesses, different individuals, who are entrepreneurs that need a loan of, who knows, anywhere from $200-300 all the way up to $1000, maybe. That's about the range that is typical.
You can click on them, read about them, and then there is a button that says "Lend," and you can basically, like I said, pick any range--$25, $50 and on up--and using your credit card or a PayPal account, you are walked through the payment process. Then you will get an email soon thereafter that says, "Thank you for your payment. Thank you for your loan. We will let you know when the business starts." Then maybe it still takes a few more days for the rest of the funding to come in for that person. When it does, and when the money is transferred, and that person actually begins their business from the loan that you have helped to fund, you get another email that says, "Great! Jane--the person that you funded, Jane the goat herder in Uganda--is starting her business."
From then on out, you will have seen in the loan, the very, very simple, basic loan terms that are on the site next to each entrepreneur. They are each unique, so maybe for Jane's loan there is a nine-month term. Over the next nine months, you would get emails saying, "Hey, Jane made her payment today of $25.00 or $30.00," or whatever her schedule is. She made her payment and here's how her business is doing, and here's a picture of the new goat that she got. Or anecdotal things, like, her kids are in school now, and that's great because they weren't last year, but now she can afford uniforms. Or there's a big celebration because there's a holiday at this time of year in Uganda, and this is what happened.
So it's very personal. And at the end of the loan term, not only have you kind of seen the whole process unfold, but as that entrepreneur repays, you get your money back. A vast majority of lenders actually just reloan the money and say, "That was a great experience, I've seen that it works; let's use it again for another business," which is super exciting for us.
We get a lot of feedback that says, "I've never done anything like this before." So whether that means they've never gotten involved in a nonprofit operating internationally, whether that means any sort of online lending, whether it means getting involved in something related to microfinance, we're reaching a lot of people that have never gotten involved in something like this before. So that's exciting to us.
What is the path that brought you to this work?
I grew up in Pittsburgh, Pennsylvania. I have a wonderful family and had just the best childhood and the best growing up. I loved every day. I felt very blessed all the time and I was very thankful.
When I got an opportunity in high school to travel a little bit, I went to Haiti with a church group, and that was the first time that I really saw abject poverty. And it just spun my world around; I was blown away. And it was funny because I was a senior in high school, and I came back the week after I had gone to Haiti to see all of this, and experience, and volunteer and serve. I came back and it was prom. [laughter] And it was just like the height of all excess in my life. It was really quite a contrast for me. I grappled with that. It left a really big impression on me.
In college, I went on a study abroad program called, "Semester at Sea," and got to see 14 different countries in a period of three months. That also just added a lot of richness and color and depth to my understanding of my place in the world, and what else was out there.
I knew I wanted to get involved in something international, but that's not very focused. I started to hone in on international development of some sort, but again, wasn't exactly sure where I fit best.
Fast forward a few years, I ended up getting to work at the Stanford Business School. While I was there as staff, I heard Mohammad Yunus from the Grameen Bank. I heard him speak and a light bulb just went off, and I said, "OK, that's it. That's what I want to do."
I basically talked to anybody that would give me the time of day over the next year, and found a wonderful mentor and friend and encourager in Brian Lennon, the head of Village Enterprise Fund. Basically, we had lunch every few weeks for that year and I was able to pick his brain and ask questions. Meanwhile, I was talking to a lot of other people as well.
Eventually, after that year of research and learning and talking to anybody that I could, I decided I just wanted to go get experience in the field, and that was the best way to jump in. I was so excited to do that. So that's what I did.
At that time, I had only been married to Matt for six months, and then I quit my job and I left for three months to East Africa. Kind of a funny time for us. Matt came and visited me. While we were there together, I'm there just being totally compelled by these stories, and so was Matt. But Matt also has more of a technology background than I had at that point, and he really saw the potential for connecting people.
We would be out on a four-hour drive, way out in the middle of a village in rural East Africa, but our cell phone would work. It was just amazing to think, what if we left the cell phone here? What if we left a few hundred dollars here for some people that really had some great dreams of doing a business; what would happen? And what would that look like? And how fun would it be to keep in touch with them and watch their progress and encourage them along the way. So that was our vision. A very simple one.
Over the next year, we researched, and again, talked to anybody that would talk to us. We asked a lot of questions. We got a lot of positive, and a lot of negative feedback in terms of why what we wanted to do was efficient or not, or would work or not, or was even legal or not.
Eventually, we just started, we just tried it, like I described with Moses. That was a year ago, and now we are where we are today.
How do you keep inspired and motivated, and not get burned out?
Well, where we're sitting right now, I can look around and I can see our team who is absolutely amazing. Every person here is just here because of their desire to be a part of something they really believe in, and they believe is going to change the world.
Sometimes, I'll be sitting in class, and I'll know there are six people here every day working full-time to just make this happen, and they believe in it with all their hearts. That's one inspiring thing, but really, I guess there are just so many amazing people involved in this, like the lenders. They care about the businesses, and the comments they write to different entrepreneurs that they funded are ones of hope and encouragement and inspiration, and just support. That's inspiring.
There's a 12-year old girl who has been writing in over the past few weeks to encourage an entrepreneur that she funded. And that is just the coolest thing, to think this 12-year old girl cares about somebody she has never met around the world, and is excited for their development.
And then, of course, it's really easy to just spend 30 seconds on the site and read the story of one of these entrepreneurs, and just feel so filled with excitement for what you know is going to happen in their lives. Because it's going to be something transformational, it's going to be something that will give them an opportunity to improve their standard of living, and for their kids. That never gets old for me. I spend a lot of time on the site reading those stories and being pretty happy about that.
Is there one Kiva success story, even though there are a lot of them, is there one that you can share?
There is one woman in the "original seven," in the very beginning that we started off with. Her name is Rose. My Mom (because, of course, at the beginning, it's friends and family doing this with us to just do this experiment, and see what happens and see if it works) my Mom was one of the people who loaned money to Rose and her business. Throughout the course of the loan, Rose had a lot of updates because it was just this really small set, and my mother and others would write in and say Rose, how's it going?
I had met Rose before, when I worked there, and I knew Rose had a daughter named Doreen who was paralyzed from the waist down. In rural Uganda, you know, it's mud huts, grass-thatched roofs, and no roads really back where Rose and Doreen and their family lived. I knew that her situation was a tough one, and I also knew that Doreen had never been to school. She was 12 years old and still had never been to school because she couldn't get there very easily at all. There are only a few bikes in the village, and it's really hard even to get her on the bike to get to school.
My mom learned about this, and my mom is a school teacher and thought no way, there's no way that this little girl should not go to school. I mean, she's right there. It's just her disability that's keeping her from actually physically getting to school. So my mom was able to send money for Doreen to have a wheelchair, and just a few weeks ago I was back in Uganda and I saw her, and she was in her wheelchair, and she was going to school, and it was a really, really a special thing.
So that is one that stands out to me. I should also say this, when I saw Doreen and Rose they looked very healthy. Doreen had grown and was bigger and Rose also was very plump and healthy, which was a good sign. So because of the loan, and because of my mom's gift to Doreen I felt really good about the improvements that they had made in their lives.
What else do you want listeners to know about Kiva?
OK, one thing is not a touchy-feely thing, and one is. First, three really important groups are served through Kiva, and we really care about all three of these groups. On the one hand, are the lenders. I personally get super excited about the lenders because I love seeing people get really excited about other individual's lives around the world. So that's one group that's being served. It's a sustainable, really high impact, high engagement way to get involved with just a little amount of money.
I love that and it's just real. It's connecting with a real person - I guess maybe that's one of my main messages. Kiva is real. It allows you to connect with a real person, and it's specific, and I love that so much. Kiva started out of relationships and love, ideally I would love for that to be present in every single transaction that happens. People connecting.
Obviously the borrowers are served because they're getting funded. In the middle, are the microfinance institutions. A lot of them out there are great organizations, but their barrier to growth is capital. There are many things that are in the way, but that is a really significant one, and lenders, by providing zero interest, flexible, debt capital, really empower a lot of the smaller MFIs to grow, and to more quickly reach a level where eventually they'll be able to get commercial capital, and access commercial markets.
So that's very exciting, because microfinance institutions are a great investment, but unless you're a really rich person, an accredited investor, or a big institution, you can't really invest in them. Even when you can, they are really only the top few, like the top tier that can absorb your investment, especially at that level.
So it's a lot of money going to organizations that already have a lot of money, and sure could use more, but there are thousands and thousands of smaller organizations out there that are working hard to serve their communities and to loan money to people and do this wonderful sustainable development, but they don't have funding.
So Kiva also serves the MFIs, and I think is really going to change the whole system because Kiva increases the transparency and accountability and gives an MFI an opportunity to earn a great reputation on our site with the public. We are an organization that is doing this work well, and we are repaying our loans, and really paying attention to the development of our borrowers.
One other thing - microfinance is not perfect; microcredit is not perfect. There have been borrowers who have not been model citizens. We had an intern go to Cambodia and visit one of the businesses that was supposed to have started a fruit stand. She and the loan officer were surprised to find that the money had actually been used, part of it had been used, to pay for a wedding - the daughter's wedding, and they were slowly going to try to pay off the loan, but they were honest, they said, look, we used some of this money for the wedding, and we're sorry. We're going to do our best, but that's what happened, it's the real deal. We didn't have any other money and this was an important thing for us.
So that was written about on the blog for the Kiva lenders to see and it started a really interesting dialogue. It was disappointing, but real, and we love that because we want to encourage transparency and accountability.
What advice would you give to someone who has an idea for a nonprofit or socially responsible business that they want to start?
My advice, loud and clear, would be just start and try and iterate and there is always a next step you can take. Even if it's a really small one, and it's not the full thing, just start doing it.
For more information about Kiva, go to kiva.org