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Challenging Assumptions, Challenging Models

By Tom Watson on July 9, 2009No Comment

When you’re relatively transparent in your online social enterprise model, you can expect dissent to show up on the doorstep every time. And to me, public challenges to peer-to-peer funding models come with the territory.

In the last couple of weeks, two of my favorite platforms – one huge, the other quite small – came in for the kinds of public questioning that comes from trying to change the world in full view.

At Kiva, a coalition of lenders is angry at the microlending site’s decision to start offering loans to small businesses in the United States – and their “revolt” online had founder Matt Flannery admitting he’s lost sleep over the situation. Meanwhile,, the small microlending start-up created to fund treatment for autistic children, founder Tori Tuncan faced a challenge to her use of children’s faces and real-life stories online.

Both sites, I have to say, reacted well – and began the process of dealing with their issues publicly. Let’s take a look at each situation.


When Kiva announced last month that it was expanding microfinance services to the U.S. in a pilot program with or Accion USA, I thought it was a good idea, but a passionate group of Kiva fans disagreed – a loudly.

Led by Kiva user Tom Behan of Seattle, a group of more than 400 registered users protested the organization’s “shift from making loans exclusively where the needs are greatest to where they are the least,” calling it a “shameful, shameful deviation from Kiva’s core mission.”

The group’s “revolt” – organized on Kiva itself – brought about a quick response from the organization’s management. CEO Matt Flannery admitted in interviews that the reaction had surprised him. “It’s stronger than we thought,” he told MercuryNews. “A little more visceral and angry.” Kiva organized a poll on the U.S. lending program (currently running 48-43 in favor) and the nonprofit has slated a community conference call on the subject for next Wednesday.

Kiva has an incredibly passionate base of core users, and the comments on its poll page ran the gamut – from those angrily opposed to the American loans to those very much in favor, as well as plenty of users who suggested other variations on the idea. And in a blog post to the community, Flannery and Kiva president Premal Shah acknowledged the controversy and admitted the jury is still out on the U.S. program:

Thus, we are currently in “wait and see” mode with regard to this possible expansion into the U.S. and other developed countries. For the next few months, there are several things we will be monitoring. For instance, does the U.S. offer increase our lender base so that everyone benefits? Conversely, do the U.S. loans detract from the loans in developing countries? Are we lending to borrowers who can truly benefit from our help in the U.S.? Can we have a demonstrable positive impact for our Field Partners here?

As the summer progresses, we will be looking for answers to these questions and more in order to determine our strategy. We invite your feedback along the way.


The brouhaha started when Jeff Trexler, Wilson Professor of Social Entrepreneurship, Pace University, and a blogger at JustMeans, wrote a provocative post headlined “Lending for health or borrowing trouble” that accused Lend4Health of infringing on the “privacy of children.” His post keyed off several Tweets by public health consultant Alanna Shaikh, who writes about global health for, which said that Lend4Health “gives me the creeps” and accusing the site of funding a biomedical approach to autism that she believes is “quackery.”

But Trexler focused mainly on privacy – which in an interesting question for the CauseWired world, considering the success of ventures like Kiva and DonorsChoose, where recipients of loans or gifts are anything but private. Indeed, in large part the very point of peer-to-peer philanthropy and microlending is to break down the barriers between people providing aid and those receiving it. As for children’s privacy for the sake of fundraising causes, parents have long given permission from the days of the March of Dimes to present-day marketing for the Jimmy Fund and St. Jude’s Children’s Hospital, to name a few nonprofits where real stories sometimes figure in campaigns. And in the era of Jon & Kate, the amount of information on a typical Lend4Health profile is less than most Facebook profiles or five minutes of a reality show featuring minors.

Still, the emphasis should be on leaving the controls in the hands of families. No one recruits families to put their stories on Lend4Health – they do it willingly. And as founder Tori Tuncan said in response to Trexler’s post: “I hope that the options I have given families (photos, location, & names all up to the family to choose/decide) helps different families choose the level of privacy that they feel is comfortable and appropriate for them.”

And her own question is an important one for the CauseWired sector: “… as the person running the site, my question is, where does the site’s responsibility end and the parent’s begin? It’s an important question in this new era, and I wonder if Facebook, Twitter, Kiva, etc have come up with a solution for this sort of thing.”

The conversation in the comments section of Trexler’s blog post was quite spirited, with several L4H parents joining in to defend themselves, the treatment they seek for their children, and the site itself. And Trexler made several excellent points about the evolution of privacy for children below the age of consent in a socially wired world, arguing that stronger regulation may be on its way.

I’m not sure anyone either gave – or won – any ground in the discussion, but to me, the public conversation was in itself a real development.

The Kiva and Lend4Health disagreements – hashed out in public – are a welcome sign that as the CauseWired world grows up, it remains determined to adhere to one of its founding virtues: transparency.

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