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Kiva is a menace
Why copying the internet fundraising sensation may be dangerous for your (fundraising) soul
This entry is from Curtis Chang, CEO of Consulting Within Reach (CWR). CWR has recently agreed to provide pro bono services to FORGE. As part of this experiment in radical transparency, Social Edge and Kjerstin have invited Curtis to regularly share about the experience in this context.
The love affair with Kiva
Like just about everyone else, I love Kiva.
I first started following their story and Matthew Flannery’s blog here on the Social Edge at the end of December 2006.
Their approach of raising funds by connecting individual lenders to micro entrepreneurs seemed like a revelation to me at the time.
As I’ve described elsewhere, going to the Kiva site has even become a small family tradition. On Christmas, we peruse the site and my two young daughters get to choose entrepreneurs and the loans our family will make.
It was no surprise to me that they’ve become the toast of the town, so much that Time recently named it one of the 50 best sites in the world. It’s become one of the definitional social enterprises of our new online era.
That’s why Kiva has become so dangerous for so many young social enterprises like FORGE.
One program officer at a leading foundation for social entrepreneurs related to me how often she hears individuals enthuse about how adopting the KIVA model will radically improve their prospects. I also hear this constantly from clients and potential clients wanting to do the same and hop aboard the online fundraising train.
But copying success can be dangerous.
A brief cinematic digression on copying success
In 1977, I sat as a 9 year in the darkened movie theater of the Golf Mill shopping center in Niles, Illinois, watching the final flickering scenes of the triumphant victory celebration in the rebel hideout. I hung on to the final echoes of Chewbaca’s celebratory roar.
I thought the world had changed forever.
Coming from a Chinese immigrant family, I hadn’t seen very many movies at that point; I’d only been recently allowed to go to the theater without my parents. So after Star Wars, there was this tickling anticipation in me of the wonders to come. What fantastic stories of space adventures would be next?
Here’s what came next:
- Flash Gordon (1980)
- Battle Beyond the Stars (1980)
- Krull (1983)
- The Last Starfighter (1984)
- 2010 (1984)
Bombs. Not just bad movies, but budgetary disasters. Studios invested huge sums in cutting edge special effects technology, directors built exotic sets replicating all manner of space vehicles and extraterrestrial locales, and there was a run on midget actors who could fit into robotic outfits.
Yet I couldn’t understand why these movies all failed to capture for me (and for everyone else) the allure and magic that was Star Wars.
Everything about Star Wars seemed to be there. And wasn’t.
Channeling my inner Roger Ebert now in my middle age, I’ve now come to see that what those Star Wars wannabees had copied was the technological shell of Star Wars. But what couldn’t be captured was the soul of that landmark film.
Star Wars wasn’t just a special effects driven space adventure. As creator George Lucas has explained, the soul of the story lay in his deliberate borrowing of some ancient archetypes of the Western storytelling tradition, especially as depicted in writings of the theorist Joseph Campbell.
Moreover, in its cinematic nature, Star Wars brilliantly fused the soul of several classic genres. It mixed in motifs like the American Western (and Japanese samurai) theme of disparate individuals coming together for a mission – and threw in elements of the classic romantic triangle. It played out Neil Simon’s Odd Couple relationship between the neurotic and the practical: the fact that Felix Unger shuffled about in gold colored metal and Oscar Madison only beeped and whistled was secondary. Most of all, in the cynical and shrunken spirit of the post-Watergate era, it reignited our sense of the grand epic of good versus evil.
The technological shell of Star Wars was important and even necessary for its blockbuster status. But it wasn’t sufficient. The high tech shell wasn’t a recipe for success, as those subsequent movies proved.
The Soul of Kiva
My point in this digression is that when you look at Kiva, you have to look at the soul behind the technological shell.
The soul of Kiva, in my view, lies in the fusing of four elements:
- the fact that it is asking for loans that get repaid (and potentially re-loaned), not for donations
- its model of regularly humanizing the need to the tale of a sympathetic (i.e. hardworking, enterprising) individual
- facilitating a one to one giver to recipient relationship
- a website that enables the giver to choose the recipient
Of those four elements, I would argue that the fourth technological factor was the least important. It wasn’t unimportant, but it served mainly as the shell for the first three truly revelatory elements.
FORGE very self consciously modeled its new funding model on KIVA. KIVA, along with other sites like Donors Choose and Global Giving, were their inspiration. And Kjerstin told me that the team carefully studied the best practices of these forerunners.
This year, it invested $30,000 dollars into building its current site that enables donors to choose a specific project to fund. Their hopes for the year was to recoup that investment, and to build on it as a cornerstone of their fundraising in the future. FORGE only launched the site mid year (it has so far raised a third of the targeted amount), so it is too early to pass even short term judgment on the site as a success, failure, or somewhere in between.
My concern here, however, is what FORGE can expect from the site going forward in its long term sustainability plans. For the long term, while FORGE didn't expect to be as equally successful from its online strategy as KIVA, it obviouslly did want to emulate some portion of the success. What is the likely size of that portion?
You can detect how much KIVA was on FORGE's mind by looking at their respective home pages as both were launched [sidenote: FORGE has been planning to change this shared graphic identity]:
Yet that borrowed graphic highlights precisely the aspects of KIVA’s soul that FORGE didn’t – and couldn’t – copy. KIVA’s arrows convey the loan aspect as it graphically depicts the return of those funds. It also conveys this sense that there is an individual on the other end. And it conveys the idea that there will be dynamism to this one to one relationship.
FORGE can’t replicate any of these aspects. A donation is different than a loan. A relationship to a project is different than to a person. And the dynamism of a project is different than the dynamism of an individual. FORGE was aware of these differences - it's not like they went into this endeavor as a mindless copycat - but as it plans for its future, it must appreciate just how fundamental these differences are.
The Soul of Funding Models
When I’ve described FORGE’s fundraising story, some critics have replied that the real lesson of FORGE is that you can’t just build a great site, but you also have to have a marketing strategy to drive people to the site. And that’s been the lesson that Kjerstin herself has voiced.
I don’t think that’s quite it, though. Sure, marketing to drive web traffic helps. But it’s not like Kiva consciously executed a saavy marketing campaign to drive their first burst of traffic. They got free marketing in the form of first, a Frontline news piece, and then later on in appearances like on Oprah.
Why was media attracted to them in the first place? I think it was because the media could tell a story that had winsome characters, relationships, and plot.
The archetypical story of KIVA has extrovert Jessica and introvert Matthew visiting micro-enterprises; Jessica especially wondering how they could connect their friends to these wonderful entrepreneurs; and then Matthew coming back to his job as a web developer. You can fill in the rest of the plot and how everything connected.
In almost every free marketing news exposure, that story got retold. And in many ways, their funding model served as a natural invitation to the audience to participate in the soul of that story. That convergence, I believe, is what made the funding model so brilliantly successful.
A nonprofit’s funding model is not just a purely tactical decision to maximize revenue. Its strengths or flaws can’t be just the product of marketing. And the coolest website can be soulless.
A fundraising model works best when it is a natural extension of the essential qualities of an organization: its founding characters, narrative, relationship to its audience – all that makes a great movie and story.
Recapturing FORGE’s fundraising soul
This doesn’t mean that it was a bad idea for FORGE to build its new site. It has the potential to be a useful tool. But all tools are only useful within their limitations. And a tool is not a soul.
Interestingly, FORGE’s original funding model did have a very distinctive soul. Its archetypical story is of Kjerstin Erickson as a 20 year old junior dropping out of Stanford to go work in refugee camps. She rallies other college students to the cause. Soon, FORGE is filled with other young, idealistic college students doing the same – and raising some key operational funds to keep FORGE growing.
And when those students were fundraising in their home communities or in their dorms, what kind of story were they telling? I bet that many of them at least mentioned Kjerstin’s story. I also bet that there were parents making donations to their kids (while worrying desperately about their safety), just like Kjerstin’s parents financed the organization for a number of years. And when these students returned from their overseas stint, they also repeated Kjerstin’s narrative as they told their college friends and recruited more to the cause.
And when you read the original free marketing news coverage of FORGE, the media repeated that narrative link from Kjerstin to FORGE’s current crop of students.
Now, as I’ve written already, I think from a social impact vantage point, FORGE made the right decision to stop using college students as primary staff in the camps and replace them with the refugees themselves. But I wish I could, with the benefit of hindsight and Obi Wan Kenobi like powers, go back to the point where Kjerstin is staring down the barrel of her funding decision and whisper, “Kjerstin, use the soul, use the soul.”
What would that have meant? Well, for starters, it would have meant moving more slowly and gradually. Organizational souls don’t change very quickly. An organization built on a culture of rallying and recruiting college students isn’t going to develop overnight the skills and instincts needed in the increasingly complex world of web marketing. FORGE certainly needs to expand its donor base beyond college students. But it has to be realistic about how fast it can move and how much it has to learn. A mixed funding model might have been a good way to experiment.
Even as organizations evolve and mature, the soul of an original funding model, like The Force, can still live on in other incarnations. It would have been wise to think if their student network could still have been given a meaningful role to play in fundraising. I’ve been advising Kjerstin to tap aggressively into that network these past few weeks. We’ll see if they can still come to the rescue. I’ll also examine some possible options in the final report.
For now, however, let me be clear: I’m not claiming that if I had been in Kjerstin’s shoes, in the rush and tumult that is the life of a social entrepreneur, I would certainly have had that wisdom. FORGE isn't alone in this: the rush to emulate KIVA is palpable in the nonprofit world these days. It may be that one of FORGE's biggest contributions to the sector in all this is its willingness to serve as a live case study exploring the limitations of that trend.
And who knows, maybe FORGE's site will turn out to be wildly successful beyond my expectations. To borrow from another favorite science fiction series, "Dammit Jim, I'm a consultant not a prophet!" I hope no reader will too glibly point fingers, especially if you haven’t done it yourself.
Even if you have done it successfully, there’s no guarantee that you’ll continue to do so. Even the blockbuster franchise who is raking in all the dough today could find one day that it has lost its soul.
And KIVA, if you don’t believe me and you're reading this, I have three words for you:
Jar Jar Binks
FORGE's approach
It's been a pleasure to read Forging Ahead on Social Edge. I've learned a lot from the situation FORGE is in and the transparent approach you have taken to solving the funding issue. My organization, Educate!, is in a similar position of trying to transition our support to a related (and hopefully much more scalable and effective) model.
Educate! began in 2002 by providing scholarships to students in Kyangwali Refugee Settlement Uganda. By creating partnerships between students in the US and the Educate! students in Uganda, Educate! developed a successful model that combines education with close mentoring and leadership experience. The results are clear. The work of the Educate! students in Kyangwali – from building an orphanage, to sending over thirty students to school, to starting an organization that unites the community and positively impacts over 1,000 people – is the best testament to our approach.
Inspired by the success of our sponsored students, Educate! (www.educateafrica.org) developed the Educate! Experience to take the model of combining an education with leadership experience and mentoring to a larger scale. In the two-year Experience students across Uganda are led by local Mentors through an innovative leadership curriculum and the creation of a social enterprise in their community. We've hired six mentors to lead 375 students through the Experience which begins in Feb 2009. Our mission is to educate and empower the next generation of socially responsible leaders in Africa.
I'm in the process of working to transition our supporters from our scholarship model to the new, and much more complex Educate! Experience. I fully support the approach FORGE is taking to handle the situation, and it has been very helpful to read about another organization going through a related experience.
Keep up all the great work. I wish you the best!
Eric