What Kiva’s Supply-and-Demand Problem Says about the Nonprofit World

The latest issue of The New York Times magazine noted that the group Kiva can’t keep up with the demand for new projects to support.

The article said that Kiva, which links online donors to small business owners in the developing world, faced an “extremely unusual challenge: maintaining adequate supply (people who need help) to meet demand (people who want to give it).”

But Caroline Heine writes on the Philanthromedia blog that the challenge facing Kiva isn’t unique at all. It’s “just one more example of the problems caused by the absence of a ‘true’ social capital marketplace,” she says. There are very few good ways to connect needy projects with sources of capital, Ms. Heine writes.

“That is why nearly half of all charitable giving goes to religious and educational institutions, while health, human-services, and public-benefit organizations combined receive only 24 percent of those charitable funds,” says Ms. Heine. “In the cases where tiny ‘marketplaces’ are created to connect sources and uses of capital in interesting and engaging ways, as in the case of Kiva, there is an immediate problem if that marketplace succeeds: the organizations creating these ‘marketplaces’ aren’t funded or prepared to scale.”

Sean Stannard-Stockton, an adviser to wealthy donors and founder of the Tactical Philanthropy blog weighs in on her post, saying that “Kiva’s problems are a great example of how strongly donors respond when social capital markets are created.” Finding ways to connect donors with projects will result in temporary “supply/demand imbalances,” he writes.

The founder of Kiva will participate in an online discussion with Chronicle readers next Tuesday.

How could the nonprofit world do a better job of connecting donors with worthy projects to support? What do you think?