How do you know Maria in Peru is really buying a sewing machine with her loan?

5 July 2009 at 07:34 6 comments

by Rob Mittelman, KF8 Peru

A Kiva Fellow has many jobs. I have well over a dozen different tasks on my workplan.

Some of them bring us great joy and inspiration like interviewing Kiva Borrowers and getting to know new cultures and new people.

Some let us be creative like this blog and all the Flip Camera videos you see.

Some make us feel like management consultants or professors preparing PowerPoint decks and going through trainings with our MFIs on new Kiva policies or web tools.

We write about these experiences because of how fun it is to be a Kiva Fellow and how lucky we are to do these things (not blowing smoke here, it really is cool, check it out for yourself). However, one of the more unpleasant but important jobs we have is borrower verification.

Borrower verification is making sure that what you see on the website is what is really happening in the field.  It’s all a part of Kiva’s commitment to transparency. It is checking that the entrepreneur you are supporting is actually receiving the correct amount of funds and for the purposes listed on their profile page. I think for the overwhelmingly vast majority of cases, there’s a match. However, sometimes there isn’t that match and we need to investigate. It can highlight the existence of fraud, misunderstandings of Kiva policies, or just good faith mistakes.

Kiva, as a web based organization, is based on trust.  Kiva lenders loan their funds at 0% interest, with the possibility of loss and, deservedly, want to know that their loans reach the intended beneficiary. This is Kiva’s promise. But, this is the Internet after all. There have been (and will continue to be) some less than honest emails, web pages, and businesses online.

Kiva builds its brand name based on the transparency and integrity of the information on the website. Without this transparency, our beloved Kiva model won’t work.

What happens? We’re basically checking for three things – 1) Borrower knowledge that their photo and information is on the Internet, 2) That the amount of their loan on Kiva coincides with what they received from their MFI, and 3) That the picture, story and loan purpose listed on their profile page is an accurate representation of the borrower’s reality at the time.

Does what's on the website equal what's on the ground?

Does what's on the website equal what's on the ground?

It is an unpleasant job because when you find something that doesn’t match, it’s disheartening. The first thing that crossed my mind was the F-word. In this case, the F-word is Fraud (hey, this a PG rated blog, get your minds out the gutter).  But, that’s a big leap so we systematically check it out. There are a lot of temptations that can come along with a 0% interest loan from an organization half a world or more away and individual financiers scattered around the globe.  There are also more than a few misunderstandings that can go along with implementing new technologies at an MFI or having to explain the Internet, in a foreign language, to a 70 year old woman who lives with no electricity (let alone a laptop with WiFi).

Kiva is working hard to make sure this kind of thing doesn’t happen.  But if it does, that we catch it, investigate it, and take appropriate steps (That’s right, I said ‘we’ when referring to Kiva. That also comes with being a Kiva Fellow. Still puts a smile on my face. Such a geek. I know.).

The first thing Kiva has implemented is a new and improved client waiver to be implemented by Field Partners that all Kiva Borrowers must sign. This waiver acknowledges that they have been made aware of what Kiva is, how it operates, and how their information and images will be used.  For group loans, it can be signed by the group leader. For those that can’t read, it has to be read to them and signed by both the borrower and the reader. It’s available in all the official local languages.

Next is a partnership with Ernst and Young. There’s no messing around. The pros are brought in for some external auditing help. E & Y will mobilize its skilled professionals around the world to assist Kiva in increasing transparency with a donation of $1,000,000 of in-kind resources over three years.

And then, of course, are the lowly Kiva Fellows. We do this kind of borrower verification both informally and formally.  Every time we meet with a Kiva Borrower we’re doubling checking the details from the website against the reality (or we should be).  Then, for some, there’s a formal process involving random sampling, spreadsheets, account speak procedures, etc… depending on the MFI we’re working with.

Each case would be dealt with slightly differently depending on the circumstances, so I can’t really go into what steps Kiva takes when there are discrepancies (and as a volunteer Kiva Fellow it’s a bit above my pay grade to speculate) but I can say that it is taken very seriously at every level of the organization.  I’m afraid to say it has happened before and may happen again.  There will always be temptations when money is involved. These steps will undoubtedly curb any kind of bad behavior and limit the damage it does. Kiva has been very open in the past about these incidents (there’s that transparency thing again) and Kiva Lenders have been and will be made aware when discrepancies arise.

So, that’s borrower verification, how and why we do it. It’s not as sexy as some of the other jobs we have but is central to Kiva’s growth and delivering on the promise we make to Kiva Lenders.

A belated Happy Canada Day to my compatriots and a Happy 4th of July to my neighbours to the south. Let’s not forget to wish a Happy Independence Day to our Kiva Borrowers in Mozambique (June 25th) and the Democratic Republic of Congo (June 30th), as well as in Rwanda for Liberation Day (July 4th).



Rob Mittelman is a member of KF8 and will be working with EDAPROSPO in Lima, Peru for 10 weeks. To check out EDAPROSPO on Kiva, click here.

Entry filed under: All, Americas, KF8 (Kiva Fellows 8th Class), Peru. Tags: , , , , .

The power of your loan Leap of faith


  • 1. Amy  |  18 January 2010 at 19:35

    I became a Kiva lender about 6 weeks ago, in Dec2009. Before making the first loan, I did some research, and I found some pages on this website that discussed Field Partner frauds that had occurred. I was at first taken aback at the thought of losing money in that way. But, ultimately I was impressed with the fact that Kiva had not taken down those pages — even though, of course, those field partners are no longer active with Kiva. A better example of “transparency” would be hard to find, I imagine. Good post, Rob —

  • 2. Thomas  |  17 August 2009 at 00:34

    Great post. Very interesting. Thank you for sharing.
    🙂 Thomas

  • 3. Sloane Berrent  |  6 July 2009 at 05:14

    I enjoyed your post Rob. Borrower Verifications have been hard for me too. We have to remember one bad apple doesn’t spoil the bunch.

  • 4. Laura B.  |  6 July 2009 at 02:39

    Thank you for this post, Rob. You’re very fair and earnest! It seems like you put a lot of thought into this post… 😉

  • 5. Guide Me Green  |  5 July 2009 at 10:01

    A good honest post. I would imagine that fraud is very very minimal and it is only due to the kiva fellows in the field and the checking which keeps it this way!

  • 6. Unilove  |  5 July 2009 at 10:00

    Hi Rob:

    Lotta truths in your post. Your post made me feel the disappointment (“It is an unpleasant job because when you find something that doesn’t match, it’s disheartening.”) and made me laugh (“The first thing that crossed my mind was the F-word. In this case, the F-word is Fraud (hey, this a PG rated blog, get your minds out the gutter)”.

    You make valid points and your earnestness shines through. KIVA WOULD NOT BE NEARLY AS SUCCESSFUL IF THEY DID NOT HAVE KIVA FELLOWS. I mean this sincerely. If we just looked at the loan paragrapgh and maybe the occasionally journal update, we would feel less engaged and certainly less informed, hence less involved.

    My personal opinion is this: Kiva espouses transparency, but the Fellows help me to believe it.

    Unilove aka Lisa
    Kiva lender

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