The Smiths and their fellow lenders learned that in 2019 the organization had begun charging fees to its lending partners. Kiva had long said it offered zero-interest funding to microfinance partners, but the Smiths learned that the recently instituted fees could reach 8%. They also learned about Kiva Capital, a new entity that allows large-scale investors—Google is one—to make big investments in microfinance companies and receive a financial return. The Smiths found this strange: thousands of everyday lenders like them had been offering loans return free for more than a decade. Why should Google now profit off a microfinance investment? The Kiva users noticed that the changes happened as compensation to Kiva’s top employees increased dramatically. In 2020, the CEO took home over $800,000. Combined, Kiva’s top 10 executives made nearly $3.5 million in 2020. In 2021, nearly half of Kiva’s revenue went to staff salaries.
Considering all the changes, and the eye-popping executive compensation, “the word that kept coming up was ‘shady,’” Bill Smith told me. “Maybe what they did was legal,” he said, “but it doesn’t seem fully transparent.” He and Janice felt that the organization, which relied mostly on grants and donations to stay afloat, now seemed more focused on how to make money than how to create change.
Kiva, on the other hand, says the changes are essential to reaching more borrowers. In an interview about these concerns, Kathy Guis, Kiva’s vice president of investments, told me, “All the decisions that Kiva has made and is now making are in support of our mission to expand financial access.”
In 2021, the Smiths and nearly 200 other lenders launched a “lenders’ strike.” More than a dozen concerned lenders (as well as half a dozen Kiva staff members) spoke to me for this article. They have refused to lend another cent through Kiva, or donate to the organization’s operations, until the changes are clarified—and ideally reversed.
― Elvis Telecom, Wednesday, 16 August 2023 08:23 (two years ago)