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Case Study: Kiva

microfinancing websites

About Kiva

Kiva launched the first person-to-person microfinancing website in 2005 with the mission of alleviating poverty through lending. Since its inception, Kiva has made significant strides in actualizing their goal. As of October 2009, Kiva has distributed $100 million in loans from over 249,000 lenders in 185 countries.

How it Works:

Through strategic domestic partnerships, Kiva identifies those entrepreneurs in need and connects them with the Kiva lending community. The Kiva lending community then donates to the entrepreneurs that most interest them. Through journals and financial feedback, lenders can see the impact of their investment while the entrepreneur creates a sustainable business to support family and community members. After the typical 6-12 month lending period, the entrepreneurs then pay back the loan and the lenders receive their initial contribution.

Market Trends

Pay Forward — Passing on the chance for opportunity and prosperity through entrepreneurship and microfinancing, Kiva embodies many elements of the pay forward trend.

The Real Deal — From the average, real-time users delinquency rates to the average amount lost to the number of defaulting entrepreneurs, Kiva strives to create transparency and cultivate an honest, giving community.

Private Eye — Kiva speaks in numbers. Whether it’s an “impact scrollbar” or an entire Kiva data application, the microfinancing site aims to help users understand the real, tangible impact of the Kiva community.

Background on Microfiancing

Microfinancing shares many principles with crowdsourcing — a small amount of money is gathered from many contributors to create a large impact. Though the microfinancing movement was born in the 1970s, it is gaining momentum as online payments and banking become more pervasive, free online tools make community-building initiatives more accessible for webmasters and there is a renewed sense of innovation in philanthropy.

Key Statistics:

  • In total, the World Bank estimates microfinancing has helped an estimated 500 million people.
  • Among 704 microfinancing institutions in 2006, there were 52 million borrowers with a mere 0.9% delinquency rate after 30 days.
  • In 2007, there was $25 billion in microfinancing loans according to Deutsche Bank.
  • number of defaulting entrepreneurs, Kiva strives to create transparency and cultivate an honest, giving community.

Key Competitor

Grameen Foundation — The Grameen Foundation was founded by Nobel Prize recipient, Muhammad Yunus in 1997. The Grameen Foundation’s mission is to empower the world’s poorest people through information and microfinancing assistance. Since its inception, it has made over one million microloans.

Distinguishing Elements — Grameen’s website is very well-designed. The main distinguishing element between the two microfinancing websites are community development tools and tangible impact. In addition to images and stories of the people the support, Kiva takes it a step beyond Grameen by featuring community members (both lenders and entrepreneurs) and providing a developer API (that indexes all of Kiva’s data), and numerous blog promotion tools to spread the Kiva message. This tech-savvy approach has significantly increased Kiva’s digital influence to make it one of the most successful new entrants in the non-profit sector.

In 2005, when Kiva entered the non-profit microfinance market, Grameen Foundation was an established leader. Kiva’s approach was much different than that of the Grameen Foundation. The newcomer took a more creative approach while embracing social technology. Furthermore, Kiva adopted many of the core principles that define Web 2.0. Transparency, community involvement and tangible impact are central components of the Kiva web development strategy that have worked towards achieving significant milestones — such as raising $100 million in just over four years.

Transparency — “We are constantly working to make the system more transparent to show how money flows throughout the entire cycle, and what effect it has on the people and institutions lending it, borrowing it, and managing it along the way.” Kiva has developed a strong, loyal bond

with its lenders and entrepreneurs by creating an honest, transparent environment. By reporting refunded loans, real-time delinquency rates and many other aspects of the company, Kiva strives to build trust between the organization, entrepreneurs and lenders to develop meaningful, long-term relationships.

Community Involvement — Kiva takes digital community development a step beyond other organizations by incorporating and providing an array social media tools. Kiva does not just stop at automatic Kiva Tweet apps; they provide tools for bloggers to show their support for the microlending non-profit. Opening the door to bloggers has paid off: “We are big supporters of the microlending system. Many of us TreeHugger writers have invested funds in Kiva.” This support from the blogger community could reflect our findings that Kiva has more links to their site than any other charity.

Tangible Impact — Most non-profit organizations speak to the right brain. With images of the people they support — whether it’s a smiling Haitian carrying a bucket of water or an animal saved from an abusive environment — organization websites tap into the the audience’s emotional core. Kiva takes a right and left brain approach. The website features pictures of the entrepreneurs and lenders in addition to key statistics. The site speaks in numbers, whether it’s a scrollbar of key statistics (“910 Gift Certificates Purchased,” “1 Loan Every 14 Seconds”) or the average donation amount. This dual approach is much different than most other organizations that mostly use visuals to speak with their audience.

Kiva’s Digital Influence

As new entrant in the non-profit sector, Kiva has made significant progress since its inception in 2005. Kiva ranks #3 on Sparxoo’s Digital Influence in Social Cause Report. The microfinancing organization surpasses established leaders such as United Way (#28), WWF (#11) and The Salvation Army (#18) in addition much hyped social media superstars such as Charity Water (#20), TWOHLA (#22) and The LAMP (#37). The microfinancing organization places #1 in the digital engagement category. With more links to the website than any other non-profit and placing #2 on Twitter (approximately 78,000 followers), Kiva has grown its user-base through multiple community engagement initiatives.

Key Take Aways

Simplify your Message

The first visual touch point on the Kiva website is an image that illustrates how Kiva works. Kiva connects you, the lender to the entrepreneur to alleviate poverty. Through simple visuals, users immediately understand the microfinancing concept and might therefore be more likely to participate. By visualizing your process, you can add depth and purpose to your efforts — essential to connect with your audience.

Illustrate Impact

Illustrate your impact through emotionally-charged images to appeal to the right-brain, then use numbers and facts to target the left-brain. The “Impact This Week” is located on the homepage and scrolls through facts and figures to showcase Kiva’s tangible impact — whether it’s “910 Gift Certificates Purchased” or “1 Loan Every 14 Seconds.”

Set Tangible Goals

Setting tangible goals aligns your donor community with you objective. Often times, there is a macro objective — $10,000 by Feb. 1, or 1,000 turkeys this Thanksgiving. As macro goals are often very large, it’s difficult for donors to wrap their brains around it. Kiva avoids this pitfall by making micro goals for each of their entrepreneurs. Each entrepreneur needs X funds and they are X% away from reaching their goal.

Provide Sharing Tools

Beyond connecting through popular social networks like LinkedIn, Facebook, Twitter and MySpace, Kiva provides many tools for bloggers. Above is a banner ad that can be embedded into blogs just like a YouTube video. In addition, the Kiva WordPress plugin allows bloggers to embed their Kiva profile into their blog and Kiva Tweets automatically updates your Twitter account on a daily or weekly basis. These are only several of the many web-based applications for Kiva users.

Category: Payday loans

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