17 January 2008
Young Innovator Interview: Matt Flannery
Matt Flannery, 30, co-founded the nonprofit Kiva.org, a micro-lending Web site, in 2004. Kiva operates on a people-to-people model, allowing private individuals to make loans to borrowers seeking to establish small businesses in developing countries.
Question: How does Kiva work?
Flannery: Kiva connects individual lenders from the developed world to individual borrowers in the developing world. We work with local microfinance institutions that post the loan applications they get on the Internet. Kiva raises debt capital via the Internet from thousands of lenders in the United States and Europe. The partner institutions sort and administer loans, but our lenders actually fund them.
Q: How did you get this idea?
Flannery: My wife [Jessica, co-founder of Kiva] was consulting in microfinance in East Africa, and I went along on a trip with her. We had the idea together. I thought it would be interesting to give people the chance to participate as partners, not just donors, with [small] businesses in Africa. I’ve always been interested in ideas about poverty. I’ve been sponsoring children through my church my whole life. It was part of my upbringing. What we’re doing now is an extension of that personal history.
Q: Why loans rather than donations?
Flannery: Lending to somebody sends the message that you’re treating them as an equal, someone who can participate with you in a business relationship. It’s a really dignified way to interact with people.
Q: So far, Kiva has an excellent repayment record. How do you manage that?
Flannery: Repayment rates in the microfinance industry are much higher than for U.S. domestic loan lending. That’s because microfinance institutions are lending to people for whom getting a loan is their only shot at anything. If you’re given a $60 loan, your chance of getting another loan is contingent on you paying that back.
Q: You’re also a lender on Kiva. Who are some of the people you’ve lent to personally?
Flannery: I usually lend to Eastern Europeans — a food market in Azerbaijan, a clothing store in Ukraine. Most of my portfolio is people from Azerbaijan, Moldova, Tajikistan, Bulgaria, places like that, because they are the least popular borrowers on the site and they often get overlooked by our lenders.
This excerpted interview originally appeared in SMITHSONIAN, October 2007. The interviewer, Amy Crawford, is a student at Columbia University’s Graduate School of Journalism and a former editorial assistant at Smithsonian magazine.
The opinions expressed in this article do not necessarily reflect the views or policies of the U.S. government.
