Jessica Flannery – Co-founder & director of Kiva

Micro Loans for Macro Change: The founder of Kiva tells how small donations add up to a whole new life for women entrepreneurs in developing countries.

By Cynthia Good

Thirty-year-old Jessica Flannery came up with the idea for Kiva four years ago, inspired by a Nobel Prize winner speaking at Stanford, where she was a student. To date, the nonprofit run by Flannery, her husband, Matt, and their team has raised more than $23 million in no-interest loans from 250,000 lenders to fund microbusinesses in 40 countries. About two-thirds of Kiva’s borrowers are women. I caught up with Flannery, co-founder and director of Kiva, at its headquarters in the Mission District of San Francisco this week to talk about connecting people through lending to alleviate poverty.

PINK: What’s your biggest success story?
Jessica Flannery: Any woman who takes a loan – despite the cultural poverty, despite not being seen as valuable outside the home – is brave in her own right. I met this one woman, Elizabeth, in Tanzania. She was humble but confident; she looks you in the eye and has a firm handshake. She tells me she started her charcoal business with $100 a few years ago. It turns out she also started five other businesses and employs her husband. She’s like a mogul in this Tanzanian village. I thought, “If you’d had half the opportunities I’ve had in my life, I’d be working for you.”

PINK: Which lender has most impacted Kiva?
J.F.: Every lender on the site is doing something heroic. For instance, a woman named Ann Brown, who has her own business in Seattle making leather purses, started her company with a small loan. So she wanted to give back to another woman.

PINK: What’s your ultimate goal for Kiva?
J.F.: It’s possible to hit $1 billion in five years. But more importantly: What if everyone in the world could be connected, and could either empower someone or be empowered? Or, better yet, both? I’d love to see everybody on the planet have the chance to either provide or access dollars.

PINK: You have 26 full-time employees and hope to have more than 40 by the end of the year. Is Kiva more than a job to your employees?
J.F.: Yes. Each person has a story about why he or she connected with Kiva. This year we had a staff retreat where everyone explained why they’re at Kiva. It was one of the coolest moments of my life. One day this married couple just showed up and said, “We want to help.” They’ve been here for two years. Everyone’s had an experience that opened their eyes to people who need so much. They are so passionate. One of those who manages our microfinance partnerships is 24 and a total rock star. He just got back from East and West Africa visiting borrowers, and he came straight to work from the airport. It’s not “just a job” for any one of us. We’re all able to use our gifts.

PINK: Unlike at other charities, 100 percent of donations to Kiva go to recipients. How are you able to keep the organization running?
J.F.: We’re able to pay our salaries and keep the lights on thanks to lenders who add an optional donation to Kiva when they lend to an individual on the site. Based on that, we’ve even been cash flow positive in the past, but we’re growing so quickly now that we’re fundraising quite aggressively again. It’s a nice thing, culturally, to know that the majority of our operational costs have been paid for by lenders who tack a few extra dollars onto their loans. We know they support us holistically.

We’ve set up Kiva like a business. We have other revenue streams, such as interest on the money in our accounts before it gets to borrowers and after it comes back. We also get additional donations from large foundations and wealthy individuals, and revenue for services. For example, instead of frequent flier miles or points for other stuff, we designed a system for one credit card company to turn their clients’ points into Kiva credits.

PINK: You’ve been on Today and Oprah, and Fortune called Kiva “the hottest nonprofit on the planet.” What’s your secret to great publicity?
J.F.: The Kiva story is just compelling, and our community of lenders and borrowers is so vibrant. Every person has a story, and there are thousands of these stories posted on our site. It’s endlessly interesting. And the connections that form are blurring the traditional donor/recipient lines that exist elsewhere. On Kiva, it’s not about the strong, in-control American giving a handout to a weak, needy poor person. It’s individuals in 72 countries lending to individuals all over the world, and it’s a relationship of equals – of business partners. Lenders kick things off by sharing resources and lending someone $100; but the borrower is the one who then has the power, and when she repays you, this virtuous circle can continue.

Also, the Kiva model is sustainable, which is somewhat rare in the nonprofit sector. Instead of a donation or a financially profitable investment, we created this new product, a charitable loan that you get back and can use again after the borrower has repaid, usually in six months to a year.

PINK: How do those who want to start businesses find you?
J.F.: We have microfinance institution partners who serve as our experts on the ground. There are 100 million potential borrowers, and only 20 percent of the need is currently met, so we believe in empowering these expert partners of ours to serve more people. Our partners need more cash. So Kiva offers them a platform to fundraise through a peer-to-peer lending connection on kiva.org.

PINK: How do you make sure they don’t take advantage of the goodwill and the cash?
J.F.: We do a ton of due diligence, find great partners who manage the entrepreneurs and administer the loans well, and keep information flowing by requiring partners to blog on our website about the business owners’ progress. It’s a lot of work to do all of the necessary audits and manage the relationships, but we have a program that deploys a large number of amazing volunteers in the field to check up on how things are going.

PINK: What surprises you the most in your work?
J.F.: We deal with human growth and human potential, and nurturing this can be a slow process, and then you hook that up to the rocket ship of the Internet. It’s interesting to be stretched between these two worlds. I feel like it made me realize everything is so possible. You don’t need to have 40 years of experience to have an idea that can make a difference.

PINK: What is your greatest hope?
J.F.: If we can blur the lines between rich lenders and the poor, and treat and think about each other as equal human beings – that would be the end game. The rich and the poor thinking about each other as people. That would be pretty cool.