Kiva Shifts Strategy to Help Build Economic Resilience

Wednesday, April 8, 2020

By Kendall Fisher, executive producer

 

 

Kiva is an international nonprofit expanding financial access to help underserved communities thrive. The organization’s focus is serving small businesses and entrepreneurs all over the world that don’t have access to financial services or qualify for loans from a bank.

As businesses work through challenging times, Kiva has seen a 10x spike in demand for its capital in the United States alone. As a global organization working in over 80 countries, Kiva understands how economic changes can impact international communities. Thus, the organization has expanded its loan services beyond the normal scope. Currently, more U.S. businesses are eligible for its zero-interest loan offering, the maximum of which is now $15,000 vs. the usual $10,000. 

“We see ourselves as in a position where we can really help build economic resiliency during a time when it will be needed,” said Kiva’s head of strategic partnerships, Diane Pham

Watch the video above to hear how Kiva is managing its growing borrower base and find out how to apply for a loan if you are in need of assistance during this time. 

 

Here’s the full transcript of the conversation: 

Kendall Fisher: Hi everyone. We are here with Diane Pham. She is Head of Strategic Partnerships with Kiva. Diane, thank you so much for joining us today.

Diane Pham: Of course. Thanks for having me.

Kendall Fisher: How are you hanging in there?

Diane Pham: We are hanging in there, I'm sure like everyone else.

Kendall Fisher: Yeah, right, exactly. I mean, the good thing about this, if there is a good thing we can pull out, is we're definitely all in this together, and I definitely feel a sense of unity more than I have in a very long time.

Diane Pham: Yeah, that's well said and well put. We feel the same way.

Kendall Fisher: Yeah. Well, and you guys are doing a lot right now to help businesses and people that are going through a tough time, and we're going to get into that in a bit. But first, can you just tell me what is Kiva for our audience who may not know? What does the organization do?

Diane Pham: Yeah, Kiva is an international nonprofit with a mission to expand financial access to help underserved communities thrive. That takes form in a lot of ways. Most people know us through our crowd-funding platform, but the population that we aim to serve are small businesses and entrepreneurs that don't typically have access to financial services.

Kendall Fisher: And so like what type of people or what groups would that be?

Diane Pham: Yeah, so in the United States, it's individuals that may not qualify for a loan at a bank and may not be able to have capital to even fuel their small business. Internationally. It's in remote and vulnerable communities and emerging markets, most likely. And those are individuals that are running businesses and just because of how the global economy has been structured, have not been included in the economic fold. And so our tool is really to unlock capital from everyday lenders like you and I to get into the hands of these people so that they can have the opportunity to power their business and grow and thrive.

CoffeKiva's peer-to-peer loans are especially helpful to U.S. entrepreneurs in a challenging climate. (credit: Kiva)

Kendall Fisher: Yeah. Wow. Super inspirational. I know we've talked before, and I've gotten the chance to learn more and more about Kiva. And what you guys do inspires me and I know inspires our entire organization. So, really proud to work with you. Now, in the climate that we're in right now, what has been the biggest impact on your organization?

Diane Pham: Yeah, I would say that we've broken it down to short term impact and what we will see as long term impact. And the short term, what we're seeing is a huge spiking demand for the U.S. loan product, because small businesses, as you know, have been forced to shut their doors for the foreseeable future. So what that means is even though business has stopped, these expenses like rent and payroll may not have, right? And so within the U.S. market, we're seeing a 10x spike in the need for capital from Kiva, because it comes at zero interest and with very flexible repayment terms. And so at least for the short term, that's what we're seeing.

Long term, what we know is going to happen is that when what is happening in the U.S. spreads internationally into these markets that have even less of an infrastructure they can support, those communities will be hit very, very hard. And we see ourselves as a player in which ... We are in over 80 countries, Kiva, and we see ourselves as in a position where we can really help build economic resiliency during a time where it'll be really needed. What that looks like is still to be determined as we learn more from our field partners, but we know that there's going to be a lot of work to be done.

Kendall Fisher: Yeah, definitely. How are you guys even going about giving these loans, being able to provide these loans? I mean you guys are a nonprofit that's just as impacted as every other company, small business. So how are you doing that? How are you managing cash flow, or what are you seeing in terms of donations?

Diane Pham: Yeah, the powerful thing about Kiva is that it is a tool to connect lenders to borrowers. And so the really inspiring thing that we haven't seen is that our lender community is still strong. We haven't seen a decrease in loan activity in terms of folks wanting to make loans yet. And the great thing from that is that that capital comes ... It's like risk-tolerant capital, right? Because it is you and me deciding that we want to help someone and we want to use Kiva to do it. And so from that perspective, that's how Kiva is able to feel this. It's because everyday people are really looking for a platform and a venue and an avenue to do something to support small businesses and entrepreneurs, from an internal perspective in terms of managing cash flows.

We're aligned there with all other nonprofits in terms of our fundraising efforts are really geared towards helping us see the spike in demand. We anticipate more costs because we need our operations to meet the demand that we're seeing. And we're depending on philanthropic capital and activity from the lender community to help fulfill that. So we're right along there with a lot of other nonprofits that are very much needed during times of crisis.

FuelCurrently, a broader range of U.S. businesses are eligible for Kiva loans. (credit: Kiva)

Kendall Fisher: Yeah, definitely. We have spoken with several nonprofits throughout this time, and many of them are saying that they have seen a dip in donations, but you're telling me that thankfully you have a lender base that has not given up just yet, continues to donate?

Diane Pham: Kiva is very unique in whereas it's loans, not donations, right?

Kendall Fisher: Right.

Diane Pham: So when these loans get repaid by our borrowers, you and I have the opportunity to take the funds back out or leave it with Kiva, which most of our lenders do and continue lending. And so that cycle is really unique and powerful as a way for impact. And written into that is usually like an optional donation to kind of fuel Kiva's operations, which most lenders do. So as long as you stay steady, we can keep the lights on, per se. But with the spike of demand, we are reaching out to our corporate partners, and having conversations with them about where they can support. And so those conversations are still happening.

Kendall Fisher: Good, good. Now on the other side of the spectrum, have you had to make any cuts, have you had to do anything to save a little bit of money on the operation side so that you can continue to provide these loans?

Diane Pham: Right. Thankfully Kiva has not had to do any layoffs, and we don't anticipate having to do any layoffs, but we had made the decision to pause on hiring for the time, to take a step back and think about which roles are essential and which roles can wait until we have a better understanding of the long term impact this will have.

Kendall Fisher: Yeah, definitely. So pretty much everyone's working from home right now?

Diane Pham: Everyone is remote, 100% remote. And we've had to pull some teams that have been working in countries like Sierra Leone out, due to borders closing. So yeah.

Kendall Fisher: Wow. And how was that going? How's it going managing a remote workforce? How have you seen Kiva as a whole react to this?

Diane Pham: Because we're such a global organization in terms of our footprint, we have been set up to be a really good remote working culture and we're really set up for it. A lot of us were working remote a few days a week, and some of us were completely remote already. So there are a lot of tools and communication tools and just things that were already in place to ensure that we're successful. The biggest thing is we don't have the in-person collaboration, which everyone knows is invaluable. But for the most part we're doing okay, I think, in terms of staying connected while being apart.

Kendall Fisher: Good, good. So were you used to these video conference calls?

Diane Pham: We were. We were very used to them. Every Friday our executive leadership team has always done a check-in call org wide. And we would probably say like 20 people were in person, but I would say at least 60 plus were remote. So, it's just ... yeah.

People with laptopsKiva's team is currently working from home, as many loan-backed entrepreneurs do. (credit: Kiva) 

Kendall Fisher: Yeah, I'm still getting used to it. Okay so I want to go back to the loan side of things. We know a lot of companies right now that are applying for loans. Is there any advice that you can give, and especially when it comes to the loans that Kiva is offering, how can somebody go about applying for that? What advice would you have for them? And maybe if Kiva isn't the right fit, what about any other type of federal, state, local loans that you've heard of that you could provide some assistance on?

Diane Pham: Sure. Borrowing with Kiva is relatively easy. You just go to kiva.orgborrow. And the application is about 30 minutes. The max loan size is $15,000, and so that like already will self-select folks that find that amount of capital useful. So our hope is that these really small businesses, where this amount of capital is very helpful, those are going to be the folks that choose Kiva as the option. There are also other options from CDFIs and other nonprofits such as Opportunity Fund that offer the capital at a slight interest that go into higher amounts like $250,000. And so those, if you look at the typical Kiva borrower, that is the capital access ladder that we envision them climbing, is that eventually at Kiva, they then are in a better position to qualify for a larger loan eventually all the way to perhaps a financial institution or a bank.

Kendall Fisher: Right. So you guys give them that foundation, that first step to work off of.

Diane Pham: Absolutely.

Kendall Fisher: Yeah. How many loans have people reached out about? Can you count them? What are you seeing right now?

Diane Pham: The biggest shift for Kiva is that most of our portfolio, if you look at it, has been global, international and other countries outside of the U.S. And now we're seeing the shift where there's the great demand. I don't know the count per se, but I know the demand has risen by 10x, which just for us is a lot, because at least in the U.S. it's a slightly different process. It's very manual and direct to the individual, whereas internationally we're working through field partners. And so it's just a lot of people power to really review these loan applications, get them on the site and then get them started fundraising.

Kendall Fisher: Especially when you're not hiring any more right now. That's a lot of work. I'm sure you guys have had some long days, but that we're all very grateful for, because as you said, we need this right now. Businesses need this right now. What kind of small businesses are applying for these loans? Is there a trend or is it across the board?

Diane Pham: Yeah, we don't have enough data to know what the new trend is. But historically it's been a lot of service sector businesses, a lot of food services, a lot of restaurants and those small business owners that you see in your community. And so that has typically been the portfolio for the domestic Kiva program. And I anticipate it to be the same, but I also anticipate it to be a lot more businesses that traditionally maybe have been in business longer. A lot of businesses that we see at Kiva are maybe in their first few years, and they're still in their rebuilding. But now we're going to see businesses that have been in operations for much longer, but just because business has to stop, they don't have capital. And they need kind of really cheap capital to keep their lights on.

BeeeesA broader range of business sizes are now applying for Kiva loans. (credit: Kiva)

Kendall Fisher: So then does that mean that you've kind of expanded your typical demographic of business owners that you described at the very beginning that Kiva typically reaches out to, so it doesn't really matter, it's anyone and everyone that needs it?

Diane Pham: Right. Exactly. So one of the biggest changes we made in our loan product was expanded eligibility. So meaning that if you feel like you have the need for Kiva capital to fill your business, please apply.

Kendall Fisher: Yeah. Great. Now, you walked us through about how you guys are able to offer these loans, but have you actually had to look into any federal, local or state aid or any other type of relief? Have you guys thought about that or looked into it?

Diane Pham: Oh, absolutely. Yeah. We're looking at this Senate bill and what that means for organizations like Kiva. Is there any capital we can get to help even distribute the capital. And we're working with our corporate partners that have strong government arms  that can help us navigate that. And so we're seeing as we go, like everyone else. I think it's still a little unclear what the plan is to distribute the funding that's coming from the federal government and from the state. But we are definitely keeping abreast of all of that and seeing which way we can be valuable.

Kendall Fisher: Yeah. So you think you would be helped by the relief package, should you meet the criteria for it and apply and get approved. It would benefit Kiva?

Diane Pham: I think it would benefit Kiva's borrowers, I think the medium in which we are distributing funding to these small businesses. Because it is going to have to be through entities that already exist. So for small businesses, I think Kiva can be a very powerful mechanism to get the funding that has been approved out to the hands of these small businesses.

Kendall Fisher: Yeah, definitely. And then what about KPIs? Are you measuring KPIs right now, or is it more just moving as fast as possible to help the businesses that need Kiva capital?

Diane Pham: Yeah, our main KPI is the amount of people that we're able to serve. And the amount of loan volume that we're able to generate and get fully funded. So those are our main parameters that we're judging success on. And as we learn more, we'll kind of build off of that, but for us, how quickly can we help the people that need immediate assistance?

Kendall Fisher: Yeah. Now in terms of the nonprofit industry, if you will, as a whole, nonprofit sector as a whole, what do you see being the biggest impact of this entire crisis on the sector? Do you think that this will change nonprofits forever, or what do you think?

Diane Pham: It's such a loaded question, and this is just a lot of my personal thoughts based on my experience with nonprofits. I think that for the short term, we're going to see a lot of demand from nonprofits. So from food banks, from shelters, from economic players like Kiva, we're going to see a lot of demand and quite possibly philanthropic capital from individuals.

Peer donations are probably going to dip because people just don't have that additional money that they may be looking to make donations. What I think we're seeing a shift of is a great need for unrestricted philanthropic capital, whereas a lot of nonprofits don't know what the long term impacts are going to be of what's going on. And so in order for us to be agile enough to address those, we need unrestricted capital to be able to then pull the levers once we learn more about what our particular populations need. And so that's going to be kind of the meta shift that I see.

I think more now than ever there's going to be a lot of collaboration across nonprofits because we know a single person is going to be impacted in so many ways. It's across the spectrum, and so it's going to be this coalition that needs to come together, and I think that's already happening and will continue to happen as we learn more.

Kendall Fisher: Yeah. Is Kiva partnering with any other organizations right now?

Diane Pham: Yeah, we're talking a lot to domestically work through hubs, which oftentimes are other nonprofits or other financial kind of players in the community. We're talking a lot to them and then just learning more and of course talking to any key partner that we need to talk to during this time.

FlowersTo continue helping U.S. entrepreneurs, Kiva calls upon its corporate partners. (credit: Kiva)

Kendall Fisher: Right. A lot of businesses have a crisis management plan in place, and some of them have a business continuity plan in place, all of which don't seem to help in a situation like this in a pandemic. Did Kiva have a crisis management plan in place before this or a business continuity plan of some sort? And if so, did that help at all in this time that we're in right now?

Diane Pham: Yeah. I wouldn't say we had a formal crisis plan in place, but we for the past few years have been very mindful of cash flow and spend and building a buffer for a time where we see a dip in just overall like lending activity or philanthropic capital coming in so that we can still continue and grow. And so I think that planning, whether it was for crisis or something else, has been very valuable. That has shown in us not having to lay anyone off or having to necessarily slow down, because that pre-planning in terms of just planning for any type of mishap that we can't foresee, is the reason why we're kind of going strong and now more than ever we need to even go faster.

Kendall Fisher: Right, right. What about planning for the future? Do you think Kiva will put in a plan in place just to cover the bases even more moving forward?

Diane Pham: Yeah. I think that this is going to spark a very interesting conversation in all organizations, nonprofit or corporate, of like how do we respond to this? Because I would imagine even the most sophisticated companies didn't think this whole thing would happen. So we're all going to change how we're thinking and planning. So I anticipate that's going to happen from the smallest organization to the largest corporation.

Kendall Fisher: Yeah. And how do you see Kiva moving forward from this? Is there a change you've made that you think will stick through even after all of this subsides?

Diane Pham: I think the biggest thing we've realized during this time was where were there inefficiencies in our processes and tools that allowed us to kind of meet this demand. And so that alone is going to drive a lot of our decision making as we determine where to invest into when we climb out of what's going on here. So finding those gaps and places for improvement and investment is the biggest thing that I think Kiva is going to take from this.

Kendall Fisher: Yeah. On the business processes and kind of tools side, what did you guys have in place that you either invest more in, or are there tools that you're looking into now that you didn't have before? What are you seeing in terms of collecting that data, making sure you have the right efficiencies in place that you need? What kind of stuff are you guys looking into, or do you already have it, you're investing more?

Diane Pham: Yeah, I think for the most part, because we're rooted in tech and everything is so data-driven with Kiva, that we have good processes in place. It's just about strengthening those. And then obviously during these times some of our databases either crashed or the loan application process was halted because of some type of error. And so learning from those things and finding ways to improve that, maybe it's investment into even like a more enterprise level of a certain tool we're already using. 

Kendall Fisher: Yeah. And what about NetSuite? How has NetSuite allowed you guys to kind of maintain some of those efficiencies, while also helping you shift during this time, not only for your remote workers, but in order to collect the data that you need to track your KPIs and to continue to offer these loans to your borrowers?

Diane Pham: Yeah. Like all the other tools we use, NetSuite has been in the background kind of feeling all of that. And so it's integrated in a lot of layers of how Kiva works. And I mean without tools like NetSuite, we aren't able to kind of have that scale, especially being remote. Like being able to depend on tools to continue working has been critical for Kiva.

Kendall Fisher: Yeah. Well, as we wrap up here, I want to ask, is there any other advice or insight, especially on the kind of loan and relief side that you would give any business leaders, nonprofits, you name it, that are watching right now?

Diane Pham: Yeah. Explore Kiva as an option, but know that there are a lot of options out there. I think that there are a lot of players trying to be helpful and do some good during this time. And I encourage folks to kind of look into all of the tools to support them throughout this time.

Kendall Fisher: Awesome. Well, Diane, thank you so much for joining us. We are so appreciative of all the work that Kiva is doing. So appreciative of you guys as a partner, and stay safe, stay healthy, and keep doing what you're doing.

Diane Pham: Likewise, thank you so much for having me.