UPDATE: The criminals at Kiva have written an unofficial response to this entry. Their basic excuse is that there are inherent costs in the administration of small loans- as if that excuses their crimes, as well as the rest of the data discussed in this entry… Either way, we have the capitalist perspective on the subject now: it’s okay to charge as much as you want because lending money is very, very hard work.

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If you’re thinking of spending a few dollars to help some people in the third-world this Christmas season, please do not support Kiva Microfunds (Kiva.org). All Anarchists need to be warned that Kiva is a loan shark operation, a fact which is advertised nowhere on their site for obvious reasons.

The way Kiva works is, they have contracts with “Field Partners,” that is to say loan shark operations, in various third-world areas and send them the money to be loaned. These operations then loan the money to destitute people for interest rates anywhere from 10% (!) to 40% (!!!), and in the past even 60% (!!!!!). According to the Kiva site (if you look carefully at the statistics page for each loan shark, there is a Kiva average shown for “average interest rate”), the average interest rate is 35.25%. The loan sharks then split these criminal profits with Kiva. So even if Kiva is technically doing nothing “wrong,” their profits come from criminal operations¹.

Wikipedia lists their current “Field Partners” with their stated interest rates. The only outlier, REDC Bulgaria (with a stated 1% interest), has ceased their partnership in 2006. I will not speculate as to why.

Kiva’s goal is to “alleviate poverty.” And yet they and their “Field Partners” have made more than 17 million dollars so far, a figure calculated by “Portland,” an interested party who did some investigating. For “Portland,” the main issue here is not that Kiva is reaping profits on the backs of the destitute, but that Kiva presents a false front of being charitable while burying the interest rate data.

I have no such qualms. In my mind, what Kiva does is wrong on both counts. They are a fraud and a criminal enterprise, and perhaps more.

When I say “perhaps more,” it’s because of the self-reported figure of 98+% repayments. This figure worries me. With the criminal interest rates they impose on these poor people, one expects more defaulting. What do these unscrupulous loan sharks, with the law on their side, do to those who try to default? Since I have no evidence either way, I won’t make any positive statement, but there is definitely a danger here that anyone who participates to Kiva is encouraging violence as well.

This is my clarion call to all Anarchists and all people who have any compassion whatsoever: please do not support Kiva, expose them instead. Put your money where the heart is. And be wary of any “non-profit” which selflessly claims to help the poor. Check them out first.

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¹ Some people may argue with me that the laws in those “countries” are different, and that therefore what the “Field Partners” are doing is not criminal in nature. But this is addle-headed. If there was no law in a “country” against murder, and someone was going around killing people, I would still call it criminal. The principles of justice are innate, and does not depend on anyone writing it down or shooting people for it. What they are doing is criminal: I know it, you know it, and Kiva knows it.

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