DonorsChoose vs. Kiva

So there's been quite the debate going on in the NPIN (Nonprofit / Philanthropy / Internet Nexus, a term I just invented) about Kiva. Kiva is a microlending site where you can pick an entrepreneur and make them a loan. (Sort of a P2P Grameen Foundation.) Poor people get to start their own businesses, you actually get your money back (to re-loan or cash out), what's not to like?

Well, the problem is in that "pick an entrepreneur" part. Apparently all the entrepreneurs on the site have already received their loans. Their stories are real, and the funds you gave will actually help them, but the idea that you are choosing where your funds are going is an illusion.

Lots of debate is going on, from an opening salvo (Kiva Is Not Quite What It Seems) to the CEO's response. You can read more over on the Tactical Philanthropy blog, whose author was kind enough to put my comment into its own post. I'll reproduce here for those of you who won't read any other site than Ishbadiddle:

The central issue, to me, isn't that the pool of money is fungible (i.e., my donation goes into a large pool, out of which the partners are funded, out of which individual loans are made). Nor is the question of microphilanthropy vs. the need to fund overhead. The issue is that Kiva implies that the lender's choice helps determine who gets a loan.

Kiva gives the impression that if lenders do not fund a project, that project will not happen. Right now there's a project with $250 left to go, and it "expires" in 8 hours, 15 minutes. That gives me a sense of urgency. I might even give the whole amount. But if the loan has already been made, then the "expiration" isn't true. There is no real choice.

I worked for a number of years at DonorsChoose.org, and I can tell you that giving donors an actual choice is hard. Good projects will go unfunded. You have to return credits to donors who have partially funded a project that never happened, and convince them to reapply those funds to a new project, which itself might not be fully funded, etc. Tracking it all is no piece of cake, either. But if you don't do all of this, you're not being transparent, and you're not giving your donors real choice.

I don't believe that microphilanthropy (or microfinance, peer-to-peer giving, etc.) is a good solution for most problems. DonorsChoose.org has an advantage, in that they are funding discrete classroom projects within public schools, but do not have to fund the infrastructure of the schools themselves. Most problems just couldn't be solved in this way. ("I'd like to fund only the violas in the orchestra, please.") But if you're going to advertise yourself as giving choice to the donor, you'd better do it.

I must say that I'm disappointed in Kiva. Time to switch to GlobalGiving?