Charity Seeks to Move Beyond Making Loans to Entrepreneurs

Kiva first made its mark by allowing people to make online loans to entrepreneurs in developing countries, but the organization has ambitious plans to move beyond its initial mission.

The organizational structure that Kiva has developed—its technology systems, pool of supporters, and relationships with charities in more than 50 countries—could be deployed easily and efficiently to tackle other social problems, says Premal Shah, the organization’s president.

“You would have the same one accountant, the same one lawyer, the same general and administrative expenses for a platform that has multiple interventions and millions of dollars flowing through it as you do with a platform that has one intervention and maybe $100,000 flowing through it,” he says.

In time, the organization could mobilize its supporters on behalf of environmental and water innovations designed for developing countries, says Mr. Shah. One example, he says, might be promoting solar-powered cook stoves to replace unhealthful wood or kerosene stoves.

If Kiva could make the cost of an environmentally friendly stove roughly the same as other stoves “through creative financing—which I think the Internet community is willing to do—you can open up massive new markets,” says Mr. Shah.

No Track Record

Kiva has already taken the first step in expanding its offerings, working with microfinance groups in Bolivia, Lebanon, and Paraguay to add student loans.

Student loans are not readily available in many parts of the world, largely because there’s no track record and lenders don’t know how much risk is involved, says Mr. Shah. He hopes that what the organization learns from the student loans it offers will encourage banks to make them on their own.

“We may find that students in Peru who get an accounting degree have a high repayment rate, but Lebanese students who get a Microsoft certificate do not,” he says. “That kind of data is so valuable for the local finance sector.”

Kiva isn’t the first charity to use the Internet to tackle the problem. Last year a Seattle charity called Vittana started a site that allows people to make smalls loans to help students in emerging countries pay for college or vocational training.

Mr. Shah says that Kiva is open to working with other organizations but that there’s also an argument to be made for having multiple players. “There’s a lot of best practices that get sent back and forth when you do have a couple actors at least trying different things,” he says.

Over the last year and a half, the amount of money donors on the Vittana site have lent to students has grown by 30 percent a month, says Kushal Chakrabarti, co-founder of Vittana.

He says Kiva’s decision to add student loans is a welcome development.

“We’re going to look back several years from now,” says Mr. Chakrabarti, “and we’re going to think, Whoa, 2010 was the year that education microcredit really started taking off.”