Kiva and fungibility: A Blog by GiveWell
The GiveWell Blog is maintained and written by the staff at GiveWell. GiveWell is an independent, nonprofit charity evaluator. We perform in-depth research on charities to help people accomplish as much good as possible with their donations.
David Roodman, whom we previously interviewed, has a very interesting post up about a specific microfinance vehicle, Kiva.org.
Our existing report argues that donations through this sort of vehicle are likely “fungible,” and therefore better thought of (for impact purposes) as general support of organizations rather than as support of specific projects or people. Mr. Roodman demonstrates this issue in a very concrete way:
Less [than] 5% of Kiva loans are disbursed after they are listed and funded on Kiva’s site. Just today, for example, Kiva listed a loan for Phong Mut in Cambodia and at this writing only $25 of the needed $800 has been raised. But you needn’t worry about whether Phong Mut will get the loan because it was disbursed last month. And if she defaults, you might not hear about it: the intermediating microlender MAXIMA may cover for her in order to keep its Kiva-listed repayment rate high.
Click here to continue reading.
