- Article: Micro-franchise Against Malaria (by Jessica Flannery in Stanford Social Innovation Review
- Interview: Pontus Petterson, MBA '07, Kiva volunteer
- Public Management Program
- Center for Social Innovation
Questions for: Jessica Flannery
Jessica Flannery, MBA ’07, and her husband Matt have won recognition for founding Kiva (www.kiva.org), an organization designed to overcome poverty by linking lenders with entrepreneurs operating very small businesses in developing countries.
When did you first start forming the idea of what would become Kiva?
My husband Matt and I (at right) were inspired by the stories of success we heard over and over again from the hundreds of hard-working, poor entrepreneurs we met during our time in East Africa. So many of them had done incredible things with just a small amount of money, and it was striking, and beautiful, and deeply moving.
We wanted not just to know these individuals and hear their stories, but to share those stories and to participate in them.
We would meet people who needed a loan, and thought: "What if we could sponsor this business? What if we worked with our friends and family to lend them the money, and then follow their story throughout the course of the loan?" The idea grew from there.
What does Kiva mean?
Kiva means unity in Swahili.
What drew you to East Africa in the first place?
In 2004 I went to East Africa as an employee with Village Enterprise Fund (VEF), because I had the opportunity to do my dream job! I went there to do metrics work, evaluating the impact of VEF's small grants and loans on entrepreneurs' lives. What I saw, the way that so many entrepreneurs had lifted themselves (and their families) to a higher standard of living, was deeply inspiring.
Nicholas Kristof of the New York Times featured Kiva under a headline called “D.I.Y. Foreign Aid”. Later, when you appeared on her television show, Oprah Winfrey asked you about your inspiration. How do you describe what Kiva does?
Kiva's mission is to connect people through lending for the purpose of alleviating poverty. On our website, anyone can lend as little as $25 to an entrepreneur in a developing region of the world.
Lenders come to the site, browse profiles of entrepreneurs in need of a loan, choose an entrepreneur, and then lend money to that person using PayPal or their credit card. Over the course of the loan, lenders receive updates on the progress of the entrepreneur telling them - when repayments are made, how business is going, etc. Then, at the end of the loan term, lenders receive their money back and can re-lend to another entrepreneur (90% of lenders choose this), donate their money to Kiva, or withdraw it.
When thinking about business schools the first thought for people is not “social innovation”. You're a different kind of start-up, I suppose. What have been some of the hurdles you've had to face?
There have been several challenges. At first, it was difficult to communicate our idea because I think people wanted to put it in a box and compare it too closely to something they already knew or would have seen before. But our idea was different: a loan, not a donation; an investment, but a social one for the purpose of poverty alleviation.
Another common misconception, especially among business-minded folks, was that our goal was to raise the most money possible, as quickly as possible, for microfinance. That wasn't our main goal. Our vision was about connecting people, and lending was an effective way to do this and alleviate poverty at the same time.
In the beginning it was extremely challenging to figure out the legal issues and address those because no one had done peer-to-peer lending. It's taken quite a while to work those issues out, but we're doing it.
Lately, the biggest challenge has been responding to overwhelming demand out there from lenders. We're trying to grow at a healthy, responsible pace with our partners in the field while also doing our best to take advantage of the incredible wave of interest and support from lenders.
The service learning trips and Kiva seem to have something in common: both are transformative. People on the trips seem to come back changed, motivated.
Service learning trips offer GSBers a chance not just to learn about another area of the world, but to do something drastically different and more intimate, more engaging. They get to see, hear, and observe things up close.
More than this, though, they get to participate in what's happening in another community somewhere in the world that is new and different to them. They get to meet and connect with individuals they may never otherwise have gotten to meet. (See related interview with Pontus Pettersson, MBA '07)
Hopefully, they have the chance to develop a more genuine understanding of a particular place in the world and the issues that matter in that place and to the people who live there.
Lenders and borrowers also get a chance to see a difference.
I hope Kiva can connect people in a way that is real and meaningful for them. While the money that flows through the site is definitely significant, I think the information that flows between lender and borrower is just as, if not more, important.
Kiva creates connections that would otherwise be impossible. The information on our site is, above all, transparent. Our model thrives on genuine information, not marketing. The entrepreneurs on Kiva are not promotional material, they are real people who have real challenges and dreams. Ideally, lenders and borrowers can form connections that are genuine and based on dignity and partnership, not traditional donor-beneficiary roles.
What do you think the individual lenders get out of the transaction? At the end of the day profit isn't really the motive.
Kiva is the only way for someone to lend to a specific individual (that they choose) in the developing world. While our loans are currently an interest-free product and lenders don't make a financial profit, they do have a huge social return. They get to empower another human being in a very real, visible, direct way.
How do you work with your affiliates (those who find the people that eventually get the loans)?
Kiva partners with existing microfinance institutions. In doing so we gain access to outstanding entrepreneurs from impoverished communities world-wide. Our partners are experts in choosing qualified borrowers. That said, they are usually short on funds. Through Kiva.org, our partners upload their borrower profiles so anyone from around the world can come to the site and lend to those entrepreneurs.
Let's talk numbers: How many people get to act as lenders and how many people have received those loans?
As of October 2007, more than $13M in loans has been raised for over 20,000 entrepreneurs from over 130,000 lenders.
How has your experience at the GSB helped you in running Kiva?
The GSB has helped me in countless ways. Having never taken a business course before my first day at the GSB, I was of course blown away by the concepts and ideas I was exposed to there.
Additionally, I got to try out these new ideas in real-life contexts, giving me invaluable learning experiences. However, more than anything, I believe the greatest forces for change in the world are relationships. The GSB has given me some of the most incredible friends, mentors, and role models in my life, and I'm incredibly grateful for that.
Jessica Flannery is a 2007 graduate of the Graduate School of Business.
