I know that I don't deposit near as much in Kiva anymore. It's not because of the economy, it's the fact that I receive my loan repayments monthly instead of at the end of the loan period. I just loan the money back out as quickly as I can.

Nah. When monthly repayments was introduced, my portfolio increased. If I recieved USD 15 one day, I would easily add another USD 10 in fresh funds, to make a new loan. And this is so for quite a lot of people I know.

Then the well dried up. The daily trickle of repayment stopped, without any warning. Quite a lot happends on kiva without any warning. So I stopped lending. I am waiting to see what's happening?

But please stop refering to recycled funds as "old money". It really shouldn't matter to kiva if the funding comes from a repayed loan, or a bankaccount. It is still new to the next entrepreneur.

As a non US lender, I sometimes get the feeling that kiva's mind and thoughts are in San Fransisco. And if it works there, and in the USA, then all is well and good. Well, perhaps you should take a closer look on how it is to be a lender in Tokyo, Moscow, Mumbay Dresden or a small Norwegian island. Follow the money. Are your promises holding up? DO I as a non-US-lender recieve all withdrawn from my bankaccount, back in to it? Does kiva.org tell me anything about that, upfront as i make a loan, or do I have to stumble upon obstructions in fine print, as I lend along?

This is not to smear. Just a fraction of what I experienced as a lender. If you let a huge potential marked feel like second class lenders, that potential money potentially goes elsewhere. Easy as that. - If USA experience a financial crisis, then get funds from other countries. But then make it easy to invest and recieve funds from our countries, communicate changes, so I do not have to wondere about what happend to my money? - And at least tell about all risks upfront and clear when we press "pay".

Today I recieved a newsletter about all that is well and good in kiva. But still I have no clue about the real issue. Why haven't any of the monthly repayments been payed out for allmost a month? When will I recieve any repayments next? Is there an unannounced change in routines, or is it a bug or a hacker? I dont know... That's why there is no fresh capital floating your way, for the time being...

I've actually wondered whether the kinds of people who lend through Kiva have been diverting resources to the Obama campaign recently. With that over, it will be interesting to see if there's some slight rebound. Although of course the downturn is bound to have an effect as well, as is the coming of the holiday season, as is the recent move to monthly repayments, which frees up more money faster...

Maybe you also need another media event. If you could get Barack Obama to say the word "Kiva" in front of a camera, you might see another explosive surge.

While the current economic situation could be having some impact on new Kiva deposits, I suspect there is more happening here. I know my deposits were down in September and October because there were not enough loans available, and I was using repayments to make the loans I was able to make. The change of policy to credit repayments immediately instead of at loan end created a large overhang of money available to lend without making new deposits. It's only been in the last couple of weeks that there have been enough loans available that I've started making deposits at my prior average rate. And yes, I agree with Antonio that the election season could have had some impact on new kiva deposits.

Kiva should evaluate the impact of its recent website enhancements on new loan deposits before attributing the decrease to the slowing global economy. Due to its “PA2” initiative to promote transparency (which appears to be the new buzzword), changes introduced to the Kiva site have inadvertently soured the lender experience.

As shown in Matt’s graph, deposits decreased sharply in September as lenders (including myself) invested the partial loan repayments into new loans. If Kiva management followed the discussion threads of their most loyal lenders (e.g. KivaFriends.org – which I follow, but do not participate), they would know the reasons why the flow of new money has not increased:

1. Kiva lenders were enthusiastic about the influx of available capital available to them to relend, withdraw, or donate. Lenders who had hundreds of dollars tied up in existing loans were receiving loan repayments on a daily basis throughout September and the early part of October. Now, those loan repayments have virtually dried up and so far the only responses have been a few customer service managers stating that payments should start posting again on the 15th or thereafter of each month.
2. Loan repayments that were posted for the month of October were subsequently removed from the borrower’s account history even though they have been credited to the lender. Lenders have either withdrawn these credits or re-loaned them to another borrower. Many lenders are concerned about the accounting for these credits and whether Kiva compromised itself financially by posting payments in which funds were never received?
3. New loans are now listed with a detailed loan repayment schedule. The problem is that the repayment schedule often does not match up with the stated term length. For example, a three month loan is listed with four monthly loan payments. Or 6 month loan disbursed in November shows a first payment date beginning in February, making it an 8 month loan. Conflicting information makes it difficult for a lender to make an informed decision.

I would like to respond to Bjornar’s response by stating that frustration is being felt by US lenders in addition to our international brethren. Kiva has done a poor job of both communicating site changes to the lenders and managing expectations of how these changes would impact them and the overall lending experience. As a result, many lenders have expressed that they are putting their lending relationship on hold (in other words, no new money) until they find out how repayments should “truly” work. Some have even said that they are ill-equipped to answer questions about Kiva to new lenders and have stopped promoting Kiva to friends and family until they get more information.

Kiva is still a young organization and will continue to go through a learning curve as it becomes the “brand” in P2P microfinance. However, it needs to make the most of the goodwill of its current lending base before bad publicity (especially word-of-mouth) can ruin one of the best ideas that have come along in quite some time.

Hello Friends,

As you mentioned, we recently re-architected our repayment system. Specifically:

1) We modified the system so that funds do not get returned to lenders until the money actually arrives in Kiva's bank account. We needed to make this change because of the possibility that Kiva fronts money to lenders that we never receive. In fact, we had lost money in the past because of this. No more.

2) We made our system flexible enough so that MFIs now can upload the exact repayment schedules of borrowers. This is opposed to the past system whereby Kiva's repayments were just approximations of the ground reality. This change makes Kiva more transparent and educational.

3) We allowed lenders to receive money throughout the loan term, instead of at the end of a loan. This increases liquidity in the system, allowing money to flow more freely.

I thoroughly believe these were the right changes to make. However, we made mistakes in rolling them out. Most prominently, we made three key mistakes:

1) We chose to roll these changes out one at a time, therefore carrying our lenders on a rollercoaster. 2) We didn't preempt each change with enough communication to our lenders. 3) There were a bunch of bugs in the process that resulted in a chaotic user experience as we fixed them.

We certainly learned from this experience and are making efforts to do better next time we make such drastic changes.

There is a very detailed discussion of all of this on KF. Here: http://www.kivafriends.org/index.php/topic,2948.0.html

For those interested in detail, that is the thread to follow. Gerard and Liz at Kiva are working overtime to address concerns.

Thanks,

Matt

Matt,

Thank you for taking time to reply to this post.

I have reviewed Gerard's responses on KivaFriends.org and now have a better understanding of how the new repayment system works and when to anticipate credits appearing in my Kiva account.

Hopefully, within the next month, all will return to normal. I look forward to seeing more MFI's in 2009!

Cheers, MainStMicro

Hi Matt,

Thanks you for making these points outlining the communications challenges of the past. Discussion continues, as it always does, over at Kiva Friends. However, I think the communications issues go much deeper than you may realize. I would urge you to take a look at this thread at Kiva Friends.

http://www.kivafriends.org/index.php/topic,2944.0.html

When you have lenders of long-standing commitment feeling like they are unable or unwilling to recommend Kiva to friends, you are at risk of losing an important client base. Please consider doing a lot more than simply addressing the questions as they arise, but instead being pro-active in informing your lenders about a range of issues. Admitting that mistakes were made is a step in the right direction, but the words "we apologize" can also go a long way toward smoothing ruffled feathers.

-Kerry-

One more metric to watch: how many people actually pull money out of their Kiva accounts? If you start seeing that, one of two things is going on: either they're sour on Kiva, or... they're really short on cash. (I remember in the last downturn I used to change long distance companies every couple of months, because I could buy a couple of months' worth of ramen noodles with the $100 rebate check AT&T or MCI offered to win my business back... If I'd had money in Kiva back then, I'd have probably pulled it out, with regrets, to pay some other bill.)