I, Lender

Software engineer Matt Flannery pioneers Internet microloans to the world’s poor

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Matt Flannery, 30, co-founded the non-profit Kiva.org, a microlending 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.

How does Kiva work?

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.

How did you get this idea?

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.

Why loans rather than donations?

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.

What challenges did you have to overcome as you were setting up Kiva?

We started Kiva without any funding, and whenever you do something like that, it's hard to prepare for growth. Without a lot of start-up capital, you have to bootstrap your way at every step. At one point, we were getting thousands of users, and we had a $20 Web-hosting plan on a shared server, so our Web site was crashing. We had to figure out in one weekend how to transfer the site from that commercial hosting plan.

How do you make sure the loans are not misused?

About Amy Crawford
Amy Crawford

Amy Crawford is a Michigan-based freelance journalist writing about cities, science, the environment, art and education. A longtime Smithsonian contributor, her work also appears in CityLab and the Boston Globe.

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