The other day on facebook I saw that a friend of mine loaned money to an El Salvadorean woman to help her buy spare parts for her bicycle repair shop. The woman and her husband started the shop when they were unable to find jobs. Their loan request, for $1200, constitutes approximately a quarter of their yearly income. They requested a similar loan last year and successfully paid it off.
The loan was made through Kiva, an online micro-lender that connects entrepreneurs from around the world with the capital they need to advance their businesses. Each owner creates a profile describing their operation, the improvements the loan will fund, and the target loan amount. Individual investors contribute some portion of the loan until the requested amount is matched. Repayment is generally due over the course of two years, with interest and fees in place.
Within the hour, the same person who made that loan noted that they'd contributed to a Kickstarter campaign for a friend's documentary and encouraged others to support the project.
For people who've been living under a rock or maybe just don't know a lot of hipsters, Kickstarter (and the very similar Indiegogo) is a platform wherein people create accounts describing a project -- movies, albums, and restaurants are pervasive, but ideas run the gamut -- what they need money to accomplish vis a vis the project, and an amount they hope to raise by a target date. Individual investors contribute some portion of the money until that end date. If they succeed in getting the full amount pledged, the project gets the money. If not, they get nothing. Incentives are offered at various levels of support, a la PBS. The rewards generally run from a warm thank you to a t-shirt to a copy of the product, official backer status, etc. These are not loans; the money is not repaid.
What's that you say? These things sound very similar? That's exactly what I was thinking! I'm a little embarrassed that I've been aware of both programs for some time now and never really realized this.
Here's what gets me in the juxtaposition of these two platforms:
One of them procures money primarily for people in poverty-stricken regions, where it's unlikely that any of the contributions come from friends or neighbors, because, well, the friends and neighbors are likewise in some dire financial straits. These entrepreneurs are being offered old-fashioned loans through the banking establishment and are subject to the terms and conditions of old-fashioned loans.
The other procures money primarily from the entrepreneur's friends and neighbors and their extended networks (there are, certainly, donations from strangers, but those are fewer and farther between than the others, celebrity Kickstarters notwithstanding). These are paid back in handshakes and tchochke.
The bottom line is that people for whom this money has very serious financial consequences are taking out business loans through Kiva and paying them back. The people whose friends and larger networks have disposable income to help them make, say, a $3500 monster costume or acquire $850 for the world's largest jock strap are gifted the money in exchange for a high five and a chuckle.
Anyone currently on Kiva would be better served setting up a Kickstarter, and obviously they could. But I'm guessing that very few of the rural entrepreneurs using Kiva have the internet access and savvy to compare their options and lack the social networks that make it a breeze for a millenial Stanford grad to raise $20,000 to fulfill his lifelong culinary-punk dream of owning a food truck called "Blintz-krieg Bop." So the former follows a traditional business model and builds their business the hard way and the latter has the assistance handed to them on a silver platter, no strings attached.
Don't get me wrong, Kiva is a really wonderful and important idea, one that ought to have a huge base of support and really, I'm okay with people helping each other out to accomplish their dream projects on a donation basis. And I think that people who give to either or both have their hearts in the right place, but it's really unfortunate that in tandem they reinforce the bright line in culture and class politics that separates how we as middle and upper-middle class westerners approach giving as patronage, as charity, or as business, to artists, to western businesses, to third world businesses, to NGOs.
It's not difficult to imagine that this formula puts a strain on the available resources. People with a limited amount of disposable income are more likely to fund projects by people they know over a third-world business start up despite the arguably more substantial social and economic return on the latter. Instant gratification is instantly gratifying. Playing that band's CD is a far more tangible outcome than the slightly ephemeral knowledge that somewhere in sub-Saharan Africa a farmer is able to meet the demand for amaranth in his village and provide security for his family.
This is all just a lot of spitballing, but as I've been thinking about it, I've thought of a pretty awesome Kickstarter campaign: A request for money to travel and film Kickstarter videos for people seeking loans on Kiva, effectively giving them both means and access to the more forgiving platform. I think they'd do well in the short-term while the glow of the initial filmmaker's Kickstarter allowed them accesss to his or her extended network, but would likely peter out once awareness fatigue set in. I'd give, as long as I got a high five.
