kiva Posts

Transparency on Trial?

[Reposted from the Huffington Post, 10/22/09]

A number of commenters have asked me to weigh in on the lively debate that emerged from David Roodman’s Microfinance Open Book Blog about transparency–not only on Kiva, but really about all attempts to make philanthropy more direct, starting with the pioneering efforts of Save the Children in 1940.

I’ve hesitated about weighing in–mostly because we have shared war stories, best practices, and worst moments with our friends at Kiva. We know that they are classy folks who know how to work constructively with feedback. And no one has written more openly than Matt Flannery has about the ups and downs of starting a new organization. So I have wondered what we could add to the debate.

Upon reflection, though, I do want to add a couple of things. It’s partly because, as I reflect on this nascent space of direct philanthropy enabled by technology–including GlobalGiving, DonorsChoose, GiveIndia, and others–I think we have a collective responsibility to keep pushing the envelope on transparency and authenticity of the experience.

Let’s face it: since the space is so new, we don’t always know what works. So we keep trying things, based on what we think will work. Sometimes we get it right, and often we find we can improve.

Overall, we provide an enormous amount of information and transparency to our users about the organizations and projects on the site. We try to put the salient information on project home pages and provide links to more detailed information. At the beginning, we provided far too much information on the home pages. Users told us they couldn’t see the forest for the trees – they felt overwhelmed and were paralyzed into inaction. Over time, we have gotten better in achieving a balance, and users tell us that they like our presentation much better now. Most of them feel we are giving them what they want.

But we can always do better.

For example, though the overwhelming majority of projects on the site are run by the equivalent of US 501(c)3 non profits, a few are run by self-help groups and community coops, which are sort of a hybrid type legal form. We even work with a handful of socially oriented for-profit companies that represent a new wave of entrepreneurs trying to leverage business principles to promote the common good. According to IRS guidelines, all of these different organizations are eligible to receive donations as long as they are carrying out a charitable purpose that is not possible under normal market conditions. Regardless of their structure, all are subject to our rigorous due diligence process. When these organizations list projects on GlobalGiving, we monitor their expenditures to make sure they are not making a profit from the donations.

We’ve received feedback that we should make this information more prominent on the project pages to make it clear to potential donors. That is a fair point, and we have in fact been considering making these categorizations visible, including a “for-benefit” category for these organizations that aren’t equivalent to US 501(c)3s. My guess is that we will find that some donors are specifically attracted to this type of organization.

One of the positive things about the web is that we can get feedback – and respond to it – much faster than we could imagine back in the 20th century. Case in point: we recently piloted getting beneficiary feedback (via text message) in Kenya. We ended up with an incredibly rich dialogue between beneficiaries and donors that ultimately led to the beneficiaries moving on to work with another organization, and the original organization closing up shop.

We’re constantly looking for more ways to get that feedback more quickly, and from more people. We even put in place what may be the first-ever philanthropic guarantee – the GlobalGiving Guarantee. This give donors a powerful way to tell us if they are unhappy in any way, and signals to them that we are serious about listening. And it gives us a chance to address the issue not only for that donor, but for all donors.

I admire how Matt and Premal have responded to the debate over at Kiva. Their response sets an admirable standard for speed and transparency. (And in that context, if you have any ideas about how we could get more feedback from more people faster, please let us know…!)

Women’s Funding Network – Compatriots in Delivering “The Real Deal”

This past week I received a newsletter from our friends at the Women’s Funding Network. Here’s what the lead story said:

Looking for the Real Deal this holiday season? Most of us are. We want something real, something valuable, beautiful, and we want the money we spend and the gifts we give to matter. Women’s Funding Network delivers the Real Deal.

Women’s funds democratize philanthropy. In the U.S., philanthropy was created as a tax incentive so those with means could receive tax deductions for helping those in need. Despite that ideal, 70-90% of tax-deductible gifts in the U.S. end up helping the middle class and the wealthy. Women’s Funding Network is the exact opposite because 80% of our members’ grants go to women living in poverty and those most affected by homelessness, violence and human rights abuses.

These investments result in empowerment for women who build out that progress in stronger families, better communities and hope for the world. That’s genuine philanthropy. We deliver the Real Deal.

It reminded me of a piece published by former Secretary of Labor, Robert Reich, a couple of months ago. In his blog post (which appeared also as an article in the LA Times, on NPR Marketplace, etc), he pretty much said that it would be more appropriate if only those charitable donations that address the issues connected to poverty received tax-deductibility benefits from the US government. He also goes on to discuss the importance of government funding for programs that give tools to lift people out of poverty…If you read the comments on the blog post you’ll see that he inspired quiet a lot of response – for and against.

Seems most realistic to work under the assumption that the issues that perpetuate poverty – in the US or anywhere in the world – can truly only be addressed with investment both from the “top down” (aka government, multi-lateral organizations, et. al) and from the “bottom up” (e.g., GlobalGiving, DonorsChoose, Kiva, Women’s Funding Network). Neither approach can do it alone, neither is unequivocally better or worse as far as efficacy. Here at GlobalGiving we’ve chosen to build a bottom-up tool, but the recent announcement that funding to the World Bank has increased substantially this round is great news too. (shout out to my former colleague Bob Zoellick!)

Sometimes it’s those art programs that lift a child out of poverty. They could be In NYC or in Rio. To quote a current candidate for whom Mr. Reich worked indirectly, “It takes a village.”

Regardless… Hats off to our partners at WFN, and other GlobalGiving partners around the world, who are “keepin it real.”