Seattle lender leads Kiva revolt

Kiva.org, the Web site that ignited the online micro-lending phenomenon, took a bold new direction last month when it decided to offer loans to borrowers in the United States.

It was a significant step for an organization started to help the poorest borrowers in the world gain access to credit. Kiva CEO Matt Flannery talked a bit about his reasoning here, saying that poverty has become borderless, especially in light of the global recession.

The decision has come under fire from some long-time Kiva supporters, including Tom Behan, a retired advertising executive from Seattle who has made dozens of loans to people in more than 20 countries through the site.

Behan is spearheading an effort to get Kiva to stop lending to people in the U.S. and "return its original mission; that of making loans where needs are the greatest, not the least."

So far 421 people have joined the group of Kiva lenders opposed to what they call "a shameful deviation from Kiva's core mission." The unhappy Kiva lenders expressed their frustration with the illustration at right.

"Kiva built its reputation on alleviating poverty in the Third World," Behan said. "It started out with a pure intention of helping a different segment of the population: the bottom of the bottom."

Of 1,645 people who have responded to a poll on the issue, 48 percent said they support Kiva's decision to allow loan requests in the U.S., while 43 percent oppose it, and about 10 percent are undecided.

"I'm not denying the need in the United States for assistance," Behan said. "I've started small businesses myself, and I've got family members right now that are out of work."

But he cited a recent loan request from a San Francisco man with a degree in architecture who wanted to try his hand at Web design and needed $7,000 to do it.

"That's $7,000 which previously would have been available to perhaps 7-10 other borrowers in developing countries," Behan said.

Other Kiva users say the decision doesn't harm anyone, since lenders can vote with their wallets and choose to fund loans in poor countries instead.

With the recession tightening credit, Kiva spokeswoman Fiona Ramsey said the U.S. loans are a way to "give opportunities to entrepreneurs who really need it right now, and give lenders a chance to help those in their backyard, not just those in other parts of the world."

Have an opinion? Kiva has scheduled a community conference call July 15 at 2 p.m. Pacific, when anyone can call in and offer feedback on the issue. Details are here under the July 8 entry.