Social Innovations
Kiva.org: Made to Stick
What if there was a way to trigger a $150 billion influx of new money into the social sector? Recently, in my public speaking, I’ve been talking about Kiva.org and why Kiva is like a “gateway drug to social investing”. The fact is, most people are not sitting around wishing that they could make high impact social investments... (continue reading this blog post)
What if there was a way to trigger a $150 billion influx of new money into the social sector?
Recently, in my public speaking, I’ve been talking about Kiva.org and why Kiva is like a “gateway drug to social investing”. The fact is, most people are not sitting around wishing that they could make high impact social investments. When Kiva was formed, it was not designed in reaction to a large group of everyday people who were looking for a simple way to make small loans to impoverished people in the developed world. Instead, Kiva built a model that was incredibly compelling and hooked everyday donors into the world of microfinance, which until Kiva was a social investing practice reserved for institutional grantmakers.
How did Kiva do it?
Well one model of what makes ideas spread is outlined in the book Made to Stick, by Chip & Dan Heath. The model is called SUCCESs and it lays out six principals of what makes an idea “sticky”. It is amazing how perfectly Kiva, which is one of the “stickiest” ideas in social investing, follows the SUCCESs model.
Simple: Simplicity isn’t about doing little things. It is about focusing on a core message. Kiva offers the simple premise that you can lend money to aspiring entrepreneurs in impoverished countries and help them improve their lives.
Unexpected: To get attention, you need to do something unexpected. Kiva’s pitch is that you can lend (not give) your money, get it all back and still make the world a better place.
Concrete: While the Red Cross says that they “help prepare communities for emergencies and keep people safe every day”, the home page of Kiva asks you to make a $25 loan to a specific person with their photo and bio.
Credible: According to the SUCCESs model, credibility comes from “human-scale statistics and vivid details”. Kiva’s website is overflowing with information about all their historical loans so that a first time visitor can quickly see specific borrowers and lenders and reams of fully paid back loans.
Emotional: People care about people, not numbers. The Chip brothers argue that people care more about self-identity than self-interest. Again, the home page of Kiva features a constantly updating profile of Kiva lenders, with short bios and their answer to the question “I loan because…”. After a few minutes clicking around their website, potential lenders will run across an existing Kiva lender whom they identify with.
Stories: Kiva borrowers keep a journal that explains to the lender how they’ve used the loan and how things are going. A lender is first presented a story about the individual requesting the loan and then given story updates as the borrower deploys the loan.
Kiva isn’t a freak accident. It is a masterfully executed, “sticky” idea.
We tend to spend a lot of time talking about what sort of giving is effective. But there is another issue facing philanthropy. During the last 100 years, charitable giving has run at about 2% of gross domestic product. Making philanthropy and nonprofits more effective isn’t going to change that number. Making philanthropy and nonprofits “stickier” is the key. Bumping giving from 2% to 3% would trigger a $150 billion influx of money into the social sector. That’s real money. That’s the kind of number that is thrown around when wars are started, banks are bailed out, health care is reformed. What if that kind of number was channeled towards effective philanthropy? What if giving went to 4%?
If you care about effective philanthropy, then you need to care about making effective philanthropy “sticky.”
Sean Stannard-Stockton is CEO of Tactical Philanthropy Advisors, a philanthropy advisory firm that serves individual and family philanthropists. Sean is the author of the Tactical Philanthropy blog and writes a monthly column for the Chronicle of Philanthropy. He is a member of the World Economic Forum’s Council on Philanthropy & Social Investing and has been quoted or referenced in The New York Times, Wall Street Journal, Washington Post, Financial Times and many other media outlets.
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COMMENTS
BY Tina Crouse
ON March 24, 2010 11:23 AM
You are right that people care more about people than numbers but $150 billion dollars can also get people’s attention. To move towards pushing up the percentage of charitable giving, maybe corporations could take their social responsbilility activities towards something like kiva by setting-up automatic deductions (similar to pensions) which allows employees to designate a constant stream of revenue to charities. The “ol’ automatic way to save” game being used with a large dedicated workforce contributing with intent but without the ‘hurt’ of finding money for charities when they come calling. In this way, that $150 billion not only becomes do-able but also easily surpassable.
BY Milford Bateman
ON March 25, 2010 04:50 PM
You claim that “Kiva built a model that was incredibly compelling and hooked everyday donors into the world of microfinance”. You say this without mentioning even in passing, still less condemning, the P2P deception that was used to successfully float Kiva and to give it huge impetus in its first few years of operation. Even though once exposed (all credit to David Roodman at the Centre for Global Development for this) and even though the top managers at Kiva quickly scrambled to change some things once they realised they had been caught out, the bare fact remains that Kiva knowingly used an old fashioned financial sector-style ‘pump and dump’ strategy to get started. Technically this deception was probably an illegal act, as a number of legal observers working in the philanthropic industry have confirmed. Surely misrepresenting how Kiva became a high-profile institution in this way is a cynical disservice to the many individuals and institutions that might want to be of genuine service to their community and to the poor, and who choose not to engage in such underhand practices.
BY sstannardstockton
ON March 26, 2010 08:51 AM
Milford, I was part of the group of bloggers who helped highlight the misleading marketing of Kiva last year and drove the story enough that the New York Times picked it up. You can read one my posts on the topic here:
http://tacticalphilanthropy.com/2009/10/is-kiva-misleading-the-public
But that doesn’t change the stickiness of Kiva’s model. They quickly responded to criticism and as far as I know, their much more transparent and accurate marketing has not slowed their growth.
BY Milford Bateman
ON March 26, 2010 12:04 PM
Stannard, I take your point, and, sorry, I was unaware that you were also one of those raising the alarm about Kiva’s deception. But surely the fact remains that Kiva made its initial – and always the most difficult - breakthrough in the social market thanks to this deception, and no matter what fine and upstanding things you say they did after that, we cannot get away from the fact that they achieved their current strong financial position and high-profile by abusing the law and conventional business ethics. I don’t think we should sanction such behaviour by studying and categorizing Kiva as if it is a legitimate example of philanthropic business; it is actually an example of how philanthropy and charity can be abused by savvy individuals.
BY Milford Bateman
ON March 26, 2010 12:08 PM
Sorry, I meant to say Sean, not Stannard!
BY Perla Ni
ON March 31, 2010 10:27 AM
Sean,
Great post! You are right about the potential impact the sector could have if we got a 1% increase in donations.
How can we make supporting nonprofits a more engaging and rewarding experience? Converse shoes has 2.4million fans on its Facebook page and over 3000 people who posted photos of their Converse sneakers. How can we channel energy and passion like that into nonprofits?
I’d love to see more examples of nonprofits using social media and finding sticky ways to engage and reward their supporters.
BY sstannardstockton
ON April 1, 2010 02:51 PM
Perla, it seems to me that this is THE shift in philanthropy, a move from “giving back” because it is “the right thing to do” to “giving or investing” in social impact because it is fantastically satisfying and meaningful.