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(*don’t know your customer)
Truth in advertising has never been very highly valued in the microfinance sector. Know-your-customer (KYC) sadly is also a much-espoused but rarely-heeded principle. The current promotional video for on-line lending platform Kiva shows that Kiva cares about neither.
This most widely known online microlending platform once claimed it facilitated person-to-person (P2P) microending. After the New York Times debunked that as a deceptive illusion in 2009, Kiva had to retract the claim, now fielding the (far clearer?) promise to “connect people through lending to alleviate poverty”. In fact, what Kiva does is merely lend your money for free to microfinance institutions (MFIs), which can then on-lend the money in whichever way they see fit, at interest rates somewhere between 20% and 100% APR. The joyful little cartoon video about “Pedro, a farmer who gets a loan through Kiva.org and transforms his business” doesn’t exactly make this clear.
But the main problem with Kiva’s video How Kiva Works is that the claimed impact of microloans is so absurd, it prompts serious questions about who at Kiva actually knows anything about what microfinance does. Let’s briefly look behind the cutesy imagery.
This post is provided by guest blogger Domen Bajde of the University of Southern Denmark.
As evidenced by inventive movements and campaigns (for a future example see Half the Sky Movement: The Game), the field of charity is undergoing considerable dynamics. As a skeptically-optimistic observer, I am happy to see research that explores such developments against the backdrop of broader material and social change, appreciating their innovativeness and critically questioning the suppositions, mechanics and stakes at play.
I recently stumbled upon a book sharing my skeptical optimism. Surveying historical change in Amnesty International and Oxfam advertising, Chouliaraki argues that poverty is increasingly instrumentalized, setting the focus on the “self” (of the Western donor), turning charity into an ironic spectacle largely shaped by “compassion fatigue” (a.k.a. avoiding stuff that is unpleasant). Rather than amplifying the voice of those in need, many charities end up prioritizing the interests/pleasures of donors.
This post is provided by guest blogger Domen Bajde, Assistant Professor of Marketing at Faculty of Economics (FELU) at the University of Ljubljana/Slovenia. He is also running a personal blog at bajde.net.
In one of his depressingly amusing anecdotes Ronald Reagan suggests that in the US ‘War on poverty’ (declared by Lyndon B. Johnson two decades earlier) ‘poverty won.’ In the decades that followed, Reagan’s smug conclusion has resonated with many who have either lost faith in organized political/governmental action against poverty or have altogether refused to conceive of poverty as an issue of governance. Similar qualms have been raised in regard to nonprofits’ and charitable organizations’ ability to effectively besiege poverty. Not surprisingly, the ‘foot soldiers’ of the anti-poverty regiment (i.e., regular citizens/donors) are often overwhelmed by the endless charity appeals and a profound sense of hopelessness.
In our collective efforts to discover (create?) ‘fresh’ champions in the ongoing war on poverty, many heads have turned to business. Philanthropy-business hybrids, such as venture philanthropy, philanthrocapitalism or social entrepreneurship, have become central to contemporary pursuits of poverty alleviation. These hybrid alternatives are often depicted as an unproblematic marriage of economy (self-interest, resource management) and philanthropy (social values, charitable giving). Due to their supposedly apolitical and non-ideological nature they appeal to individuals of varied political convictions and domiciles (globally, so to speak). Read the rest of this entry »
governancexborders.com 