Via Tactical Philanthropy)

David Roodman wrote a post on his Microfinance Open Book Blog titled “Kiva Is Not Quite What It Seems“:

the person-to-person donor-to-borrower connections created by Kiva are partly fictional. I suspect that most Kiva users do not realize this. Yet Kiva prides itself on transparency.

Roodman argues that while Kiva is misleading donors, the process they are using is good:

I hasten to temper this criticism. What Kiva does behind the scenes is what it should do. Imagine if Kiva actually worked the way people think it does. Phong Mut approaches a MAXIMA loan officer and clears all the approval hurdles, making the case that she has a good plan for the loan, has good references, etc. The MAXIMA officer says, “I think you deserve a loan, and MAXIMA has the capital to make it. But instead of giving you one, I’m going to take your picture, write down your story, get it translated and posted on an American web site, and then we’ll see over the next month whether the Americans think you should get a loan. Check back with me from time to time.” That would be inefficient, which is to say, immorally wasteful of charitable dollars. And it would be demeaning for Phong Mut. So instead MAXIMA took her picture and story, gave her the loan, and then uploaded the information to Kiva. MAXIMA will lend the money it gets from Kiva to someone else, who may never appear on kiva.org.

Read more details about this controversy via the Tactical Philanthropy commentary, which links to the source material.

The main explanation given is that donors demand the illusion of personal giving, even if professional organizations know it is not an efficient aid mechanism, so they feel compelled to ‘cheat’ for the ‘greater good’.