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Erin: Welcome to T2A web chat for June 25th. We’re learning about micro lending and Kiva, the world's first person-to-person micro-lending website. Kiva.org empowers individuals to lend directly to unique entrepreneurs in the developing world. We’re talking with Kiva CEO and Co-Founder, Matt Flannery. He established Kiva in 2005 with a mission to help alleviate poverty. Let’s start with a question from Nigeria…
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Imma, Nigeria (email): Kindly let me know whether 'kiva' operates from Nigeria. If it does not, does it have any plans to in the future? I believe that anything that hasn't reached Nigeria hasn't touched the (quote) Third World (end quote). (Nigeria is third of the third world). Do you take collaterals? How has loan repayment been? How do you recover from recalcitrant debtors? How could one start such agencies if one wished to?
Matt: We do work in Nigeria, one of the early countries where we started working. We partner with an organization called Lift Above Poverty or LAPO is the acronym. We've loaned 1.2 million dollars to Nigeria through Kiva.org In order to work in a place, we find a partner that is a local micro finance organization, like LAPO, that has been giving small loans, mostly to women, to alleviate poverty there and they've been doing that for over ten years. Most micro finance organizations, including LAPO do not take collateral and instead rely on reputational collateral. So typically you have groups of women together who take a loan and they are putting their reputations on the line in front of each other. We've had a 98-percent repayment rate because we work through great groups that have high repayment rates and worldwide, microfinance repayment rates are above 95-percent most of the time.
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A C Rathinavel, India (email): I appreciate your great efforts towards blowing away poverty.
Matt: I've been completely amazed by the people we meet on the internet who are lending small amounts of money from all over the world and we should congratulate the 300-thousand plus people who are lending on our site from over 150 countries.
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Isaac (email): How did you become passionate about micro lending? Do you have any other dreams with similar impact on the developing world?
Matt: I became pass about micro finance because of a personal experience working with small business people in East Africa. There are lots of ways to connect the internet to poor people all over the world...providing education or health care or insurance, in addition to just micro credit over the internet one day.
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Wondwossen, Ethiopia (email): What is Kiva.org doing in Ethiopia, for example, with our spice industry?
Matt: We're trying to work in Ethiopia right and now and we'll likely be online there this summer...I would love to learn more about the spice industry. My only familiarization is from the menu on the local Ethiopian restaurant where I eat once a week.
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Erin: Where else is Kiva.org expanding?
Matt: We'll be working in the U.S.A. by the end of the year as well, which is exciting.

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Erin: Why not earlier in the U.S. and should it be surprising that Kiva.org would turn to help individuals in a very wealthy country like the U.S.?

Matt: Not earlier because of legal reasons. We finally have our own attorney to help us with projects like this. This idea can help people in wealthy countries as well as in developing countries, because it's about the people, not the country.
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Erin: What types of small businesses in the U.S. or elsewhere would seek assistance through Kiva.org?
Matt: We have many agriculture businesses on our website, people supporting themselves with farms and selling crops...sellers of fruit and seafood for example... tailors...most prominent on our website are retail and agriculture businesses.

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Erin: So must one be a resident of the country in which he or she resides in order to qualify for Kiva.org assistance?

Matt: No, because operations are in the informal, not formal economy. Typically micro loans go to informal businesses.
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Erin: How did you come up with the idea for Kiva?
Matt: I was volunteering in eastern Africa with my wife and together we had the idea. One thing that really hit us was the experience with poverty that was focused around people's hopes and dreams, to get out of poverty through starting a business...and we wanted to convey that to our family and friends through the internet, so we tracked these stories on the internet. It went from 7 people in eastern Uganda through many small steps to get to where we are today.
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Erin: People like EBay founder Pierre Omidyar are major supporters of micro finance initiatives. Why do you think micro finance is so appealing to these tech-savvy billionaires?
Matt: I imagine that a lot of people who become millionaires do so through business and they want to transfer their business savvy to solving some of the world's most difficult and challenging problems like poverty so micro finance is one area where you rely on business principles and you can scale and grow and become commercial, so this is why people like Pierre Omidyar are attracted.
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Erin: Kiva not only facilitates micro finance but also allows users to create personal online profiles to be browsed by other users. Why did you decide to make such features a part of your program?
Matt: Kiva is all about people and connecting people for the purpose of alleviating poverty. So it's important that not only those borrowing but those lending develop a presence on the site. It creates a sense of global community.
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Erin: Have you noticed any interesting patterns among Kiva lenders? What sorts of people generally make up the Kiva user population?
Matt: Right now it's very diverse. We have users from more than 150 countries lending money. About 80-percent are in the U.S. and a high percentage of those are probably Oprah Winfrey viewers and fans because we were on her program once and that created a big spike in business.
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Erin: How has this type of attention from famous people affected you in your work at Kiva?
Matt: The first word that comes to mind is jolting, but positive.

Erin: Did you see a drop in interest at some point after your Oprah appearance or has it stayed constant?
Matt: It spiked and then flattened. So traffic has settled into a new daily level, which is greater than before the spike. We've been given the chance to speak about Kiva.org all over the world and that's been a huge experience.
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Erin: The large majority of Kiva borrowers are women, as is the case throughout the micro finance world. Is this deliberate on the part of micro finance institutions such as Kiva, and if so, what is the rationale behind it?
Matt: We happen to just work with groups who already were lending to people and it turns out that most of those groups have chosen to lend to women because of the belief they could make a bigger impact on poverty.
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Erin: How exactly do Kiva-orchestrated loans make it, for example, from a college professor in Idaho to a goat herder in Kenya? How is your organization structured?
Matt: We have our website which helps connect people over the internet, but in order to make those connections we need to work with local micro finance organizations in over 40 countries. So one thing that will happen is that a loan officer in Nigeria will post the picture and business plan of an applicant to Kiva.org. The professor will choose to fund that person and we forward that money on to the local field partner in Nigeria. The borrower in Nigeria needs to physically meet the loan officer in order to get the loan.
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Erin: How does Kiva.org ensure that loan funds reach the recipient?
Matt: Kiva.org visits field partners and a sample of the borrowers on that site. We do this with auditors, so we hire auditing firms to do this and we send Kiva.org fellows, usually college graduates to the field...we've sent over 100 volunteers to visit poor people and write stories about them. But that said, it's not a perfect system. We've already had instances where the people on the website did not get the money

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Erin: How much money are we talking about, for example?
Matt: says it's hard to be specific. We had a partner in Uganda who borrowed 250-thousand dollars on our website and I believe maybe only half of that money reached the people...but that's a very rough guess. This doesn't happen a lot but it's hard to stop it from ever happening again.
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Erin: How would you compare Kiva.org to more traditional charity organizations? Can you compare Kiva to other, less interactive micro finance institutions?
Matt: One big difference from charity is that we make loans, not donations, so it's very likely you'll get the money back and you can lend and re-lend and re-lend. We're also different because more so than most organizations you can see where your money goes.
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Erin: Talk about some of the continuing relationships that come after a loan is re-paid.
Matt: We've had a seamstress in Seattle visit the counterpart in Ecuador that she lent money to...often you hear back a report about the status of the business of the borrower.
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Erin: Give an example of a particular success story.