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Kiva and Its Field Partners
By Asbjorn Osland
Asbjorn Osland is a Professor of Business at San Jose State University.
I. Introduction
A. Case Synopsis: Kiva, a non-profit organization founded in 2005, facilitates loans as
small as $25 from individuals through its web site to entrepreneurs primarily in Third World
countries. Kiva has experienced rapid growth in loan funds received and loans made through
field partners. Matthew Flannery, Kiva’s co-founder, is questioning the way Kiva works with its
field partners abroad. How can Kiva improve its management systems so that field partners
continue to serve as a channel for lending money and also focus on the social aspects of
microfinance (i.e., the double bottom line – not just financial but social too)?
B. Case Objectives:
To analyze how to better collaborate with international field partners
To recommend how to make Kiva’s web site more viral
To question the wisdom of focusing micro-finance on women
To analyze Kiva as a social entrepreneur
To learn to measure the social aspects of microfinance (i.e., the double bottom line – not
just financial but social too)
II. Classroom Management
In a 1-hour class period, the instructor could do the following:
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A. Instructor brings Kiva.org’s web site up on the screen and ask for a student to use the
web site to explain how Kiva functions (10 minutes)
B. Ask a student to facilitate the case by using the following structure: situation analysis,
problem definition, solution identification and implementation plan. The instructor
sits down and observes the process after having instructed the facilitator to pose
questions and listen for responses. Facilitators need to learn to be silent rather than fill
voids with their chatter. (20 minutes)
C. Instructor summarizes key issues (10 minutes)
D. In the remaining 20 minutes, the instructor leads discussion of:
a. how to make Kiva’s web site more viral
b. the wisdom of focusing micro-finance on women
c. Kiva as a social entrepreneur
d. measuring the social aspects of microfinance (i.e., the double bottom line –
not just financial but social too)
E. Facilitating Questions and Answers – List of questions to ask students to guide them
through the case, with short descriptive answers
Situation analysis: Kiva has been highly successful in terms of its basic value
proposition: use the Internet to get lenders to help poor entrepreneurs. It has made $143 million
in loans, enlisted significant corporate support, benefitted from extensive press coverage (free
PR), and developed an extensive network of field partners but some have higher risk than others.
Problem analysis: Students identify the problem. Is it internal control, risk assessment, or
social performance measurement of field partners or all three?
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Solution: All three aspects mentioned are critical. Kiva has used auditors to ensure that
controls are present. Its risk assessment is clear but it’s not clear how it establishes a trusting
relationship with the field partners. The social performance measurement is something the
Implementation analysis: Internal control is handled by the auditors but how can the Kiva
Fellows be of assistance beyond verification of loans? Building a trusting relationship with the
field partner is essential. Risk assessment is fairly well explained in the Kiva site but the
instructor could ask how else Kiva reduces risk. For example, it spreads loans across field
partners. It limits lenders to $25 loans which forces the lender to invest in a portfolio of
F. Application Questions and Answers
1. Is it more ethical to donate money to the United Way which then distributes the money
raised locally, or to lend money internationally through Kiva to entrepreneurs in
underdeveloped and developing nations?
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This depends on personal preference. One could say local situations are more pressing because
2. MicroPlace pays interest to lenders. Kiva, on the other hand, decided not to pursue
interest payments to lenders because of SEC regulations. Do you think Kiva should pay
loan interest to lenders? Would doing so increase, or decrease, its lender base?
Kiva need not focus on paying interest to lenders because it continues to do well without it. It’s
apparent that lenders aren’t seeking this or they would have selected MicroPlace. The benefits to
3. Kiva’s web site is highly functional but Matt wants it to be more viral. What should
Kiva do to make its web site more viral?
The media became engaged with Kiva because it liked Kiva. Kiva attempts to get lenders to
interact more with one another by creating lender groups, organizing parties, asking lenders to
describe themselves on their lender page, and encouraging lenders or interested friends to
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4. Kiva and the Grameen Bank exhibit a strong preference to lend money to women
entrepreneurs. Is this discrimination against men unethical?
Students can be asked to research this question by referring to development literature. Women
tend to care more for the well being of their families by using family resources for the benefit of
children. They are often marginalized due to sexism so when micro-finance institutions offer
5. How can Kiva improve its systems so field partners continue to serve as a channel for
lending and also focus on the social aspects of microfinance (i.e., the double bottom line
– not just financial but social too)?
Historically, the primary purpose of lending was to encourage an entrepreneur to be successful
CERISE (http://cerise-microfinance.org/spip.php?page=article&id_article=263) and its
partners developed the Social Performance Indicators, a social audit tool. Its “goal is to help
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Some hope that boosting social performance will improve financial performance. Analyzing the
MFIs’ internal processes helps observers determine if the MFI is meeting its social goals.
6. How did the Silicon Valley context influence the development of Kiva?
Relationships were central to Kiva in that the leaders had Silicon Valley connections. This focus
on treating Kiva like a Silicon Valley start-up was due to the backgrounds of the founders and
management team. Matt Flannery previously worked for TiVo, Inc. Premal Shah, not mentioned
in the case but prominent in the Kiva web site, served as President and previously worked at
PayPal, a Kiva partner that processed the lenders’ loans via credit card. Both Matt and Premal
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1. What made Kiva’s leaders social entrepreneurs?
According to Ashoka (http://www.ashoka.org), a leading organization in promoting social
entrepreneurship, “Social entrepreneurs are individuals with innovative solutions to society’s
most pressing social problems. They are ambitious and persistent, tackling major social issues
and offering new ideas for wide-scale change.” Social entrepreneurs offer systemic solutions that
they promote. They attack problems with commitment, fulfilling both a visionary role and also
implementing it. They mobilize people to embrace their vision. Specifically, Kiva’s founders and
2. Read Weerardena and Mort (2006) and analyze whether or not the definition they
used for social entrepreneurship applies to Kiva.
Weerardena and Mort (2006) define social entrepreneurship “as a behavioral phenomenon
expressed in a NFP organizational context aimed at delivering social value through the
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exploitation of perceived opportunities” (p. 25). NFP refers to not-for-profit organizations.
Kiva’s orientation towards innovation in terms of using the Internet as a platform, selecting a
board more reflective of Silicon Valley start-ups, and its emphasis on economic development
rather than charity distinguish it from other charities working in assistance to developing
3. Apply Weerardena and Mort’s (2006) formula for social entrepreneurship to Kiva.
The formula follows: Social entrepreneurship could be conceptualized as Social
Value Creation = function of (Innovativeness, Proactiveness, Risk Management)
subject to Sustainability, Social Mission, and Environment (p. 32).
Kiva created social value through its loans. It was innovative in its use of the Internet, proactive
in that it was the first such Internet-based microfinance institution, and it managed risk through
its use and evaluation of Field Partners. Sustainability was demonstrated through its very high
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4. Have students refer to the Multidimensional Social Entrepreneurship Construct
(Mort, Weerawardena & Carnegie, 2003). Three criteria determine if one is
entrepreneurially virtuous: 1. the agent is aware of what he or she is doing; the
virtuous act is not accidental or coincidental, 2. the agent performs the virtuous act
for its own sake, not an ulterior motive, 3. the agent follows through until the
virtuous act is established; it’s not merely an idea or concept. Are Kiva’s leaders
virtuous?
They are conscious of what they are doing; their focus is clearly to assist developing world
entrepreneurs. They appear motivated by providing opportunities to lenders to assist developing
5. Social entrepreneurs form balanced judgments displaying “a coherent unity of
purpose and action in the face of complexity…” (p. 83). Is this true of Kiva?
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6. Social opportunity recognition requires that social entrepreneurs recognize that
their fundamental value proposition fulfills the intended need. Discuss this
dimension in the case of Kiva.
Kiva’s fundamental value proposition is that the Internet can be used to link lenders with
developing world entrepreneurs. It has been successful in that loans have grown steadily with
7. Social entrepreneurs are to demonstrate tolerance for risk, proactiveness, and
innovativeness in their decision making. Is this true of Kiva?
Kiva was innovative and proactive in its venture of using the Internet for the first time to couple
lenders with developing world entrepreneurs channeled through Field Partners. There were
8. Peredo and McLean (2006) state “that social entrepreneurship is exercised where
some person or group: (1) aim(s) at creating social value …; (2) show(s) a capacity
to recognize and take advantage of opportunities to create that value …; (3)
employ(s) innovation … in creating and/or distributing social value; (4) is/are
willing to accept an above-average degree of risk in creating and disseminating
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social value; and (5) is/are unusually resourceful in being relatively undaunted by
scarce assets in pursuing their social venture” (p. 64). Apply these concepts to Kiva.
Kiva aimed at creating social value and did so through matching lenders with developing world
entrepreneurs via the Internet. Since this was the first time it had been done via the Internet, Kiva
9. Dees (1998, 2001), in one of the more cited papers on the topic (147 times according
to Google Scholar on August 6, 2008), defined social entrepreneurship using the
following attributes: “Social entrepreneurs play the role of change agents in the
social section, by:
Adopting a mission to create and sustain social value …,
Recognizing and relentlessly pursuing new opportunities to serve that mission,
Engaging in a process of continuous innovation, adaptation, and learning,
Acting boldly without being limited by resources currently in hand, and
Exhibiting a heightened sense of accountability to the constituencies served and
for the outcomes created
Apply this definition to Kiva.
From the website, “Kiva’s mission is to connect people through lending for the sake of
alleviating poverty,” which is clearly focused on creating and sustaining social value. Kiva
initially pursued new opportunities by creating the first Internet platform for microfinance. It has
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remained focused on that opportunity, but has created new opportunities by opening its services
to additional countries. It has been innovative, and adapted and learned along the way; for
G. What did you learn from this case?
Students should be asked to reflect on the case and point out what was significant to
them. Many will relate to the youthful and visionary leadership of Kiva. Others might find that
Social entrepreneurship: Ashoka’s website (www.ashoka.org) goes on to list examples of
historical social entrepreneurs:
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Dr. Maria Montessori (Italy): Developed the Montessori approach to early childhood
education.
Jean Monnet (France): Responsible for the reconstruction of the French economy following
World War II, including the establishment of the European Coal and Steel Community (ECSC).
The ECSC and the European Common Market were direct precursors of the European Union.”
An additional list of social entrepreneurs includes many that won the Nobel Peace Prize
Other sources for information on social entrepreneurship include:
http://www.socialedge.org/
http://www.fuqua.duke.edu/centers/case/
http://www.socialent.org/
http://www.gsb.stanford.edu/csi/
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Microfinance links: Some microfinance links follow, taken from the Kiva website, should the
instructor wish to cover this area more thoroughly:
http://www.cgap.org/portal/site/cgap/
http://www.villagebanking.org/site/c.erKPI2PCIoE/b.2394109/k.BEA3/Home.htm
http://www.grameen-info.org/
http://www.microcreditsummit.org/
http://www.microfinancegateway.org/
http://www.mixmarket.org/
http://www.uncdf.org/english/microfinance/index.php
http://www.yearofmicrocredit.org/
http://www.gdrc.org/icm/index.html
Dees, J. G. First presented on October 31, 1998, then reformatted and revised May 30,
2001. “The Meaning of ‘Social Entrepreneurship.” Unpublished paper. Kauffman Center for
Entrepreneurial Leadership. Available online (August 6, 2008) at
http://www.fuqua.duke.edu/centers/case/documents/dees_SE.pdf .
Mort, G. S., J. Weerawardena, and K. Carnegie. 2003. International Journal of Nonprofit
and Voluntary Sector Marketing, 8, no. 1, pp. 76-88.
Peredo, A. M. & McLean, M. 2006. “Social Entrepreneurship: A Critical Review of the
Concept”. Journal of World Business, 41, pp. 56-65.
Weerawardena, J. and G.S. Mort. 2006.”Investigating Social Entrepreneurship: A
Multidimensional Model.” Journal of World Business, 41, pp. 21-35.
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