The Kiva Code

Rob Walker's Times Magazine article on Kiva--too many users makes it necessary to limit loan amounts--raises a number of interesting issues.

Here are two.

First: the description of making loans as "charitable giving." It's an elision we shouldn't ignore, because understanding why folks speak this way re Kiva can help other organizations redirect attention away from relations of exchange. At the same time, it also highlights a cognitive shift that, inter alia, helped fuel the subprime mortgage meltdown: the perception of home loans to the less well-off as a social benefit, a la George Bailey in "It's a Wonderful Life." At what point the loan-as-charity model breaks down is a limit we have yet to define. In this context we should be aware that the IRS has recently revoked the tax-exemption of a few charities dedicated to helping otherwise unqualified people obtain loans, on the grounds that they too close resembled commercial businesses.

Another important issue: the exemplary value of scale-free success. Thanks to a perfect storm of favorable developments--the economy's apparent robustness, the Yunis Nobel Prize, the Clinton-Oprah publicity--Kiva emerged as a hub for microlending in the U.S., just as groups like the Acumen Fund, Greyston Bakery and Ethos Water have become dominant players in their respective domains. Hooray and amen, but it should not blind others trying to enter the social enterprise market to the harsh conditions facing the other ninety percent in the field. I'm well aware of the long tail hype, but as I've noted before targeting those markets is a doubly difficult strategy for social entrepreneurs--the margins are even lower than those for mainstream commercial business, and the environmental pressure to provide aid on a noncommercial basis is stronger. Hope for the best and plan for the worst may be a hoary bromide of small business advice, but there's a reason it's repeated so often--my sense is that one of the reasons Kiva itself has done so well is that it doesn't let itself get carried away with the hype.