Do you know what your lender biases are?
5 April 2010 at 08:12 Meg 12 comments
By Meg Gray, KF10 Costa Rica
My portfolio distribution
How do you decide what business to lend to on Kiva? And do you know what your biases are?
Besides being a Kiva Fellow, I am also an active lender on Kiva. Since I started lending in 2007, I’ve always had a few criteria that I’ve been aware of. I mainly lend to women with kids. They get an extra point in my mind if helping with the children’s education is mentioned as a priority.
But last month when I looked at the breakdown of my loans, I was surprised to see some other biases appear. I tend to loan in the Agriculture and Food sectors. A heavy majority of my loans are in Latin America.
Looking at my portfolio distribution provided food for thought. Without really thinking about it I made almost 50% of my loans are in Latin America. I’m guessing this bias happened because I speak Spanish and am currently working as a Kiva Fellow in Latin America. I think my bias towards the Agriculture and Food Sectors is a result of growing up on a farm.
Regardless of what caused my biases, when I received my “Your Kiva Credit is now available for use” email last month, I felt like I was much more deliberate about who I lent to. So I encourage you all to take a look at your portfolio. Do you have some hidden biases or does your portfolio reflect your lending priorities? To see your portfolio distribution, go to your lender profile and scroll down to the very bottom.
Looking at my portfolio with this in mind has me redistributing to other sectors and regions little by little. My experience as a Kiva Fellow has me leaning more towards housing loans. Though housing loans often sound like frivolous remodels in the client profile, I’ve learned that the addition of a small wall or patio can often make a huge difference in a family’s quality of life. I also think I’ll make another loan to Eastern Europe with my next credit since I’ve learned that these loans generally fund slower (for no apparent good reason). I would love to hear what you might change about your lending priorities after looking at your portfolio distribution.
Meg Gray is currently a Kiva Fellow with Fundación Mujer in Costa Rica. Make a loan to an entrepreneur on Kiva.org today. Or join Fundación Mujer’s Lending Team to get more updates from the Field.
Entry filed under: Costa Rica, Fundacion Mujer, KF10 (Kiva Fellows 10th Class). Tags: Costa Rica, Fundacion Mujer, KF10 (Kiva Fellows 10th Class), Kiva, Kiva Fellows, Kiva Lenders, Kiva Lending, kiva.org, lending bias, Meg Gray, microfinance in Costa Rica.
1. Emmanuel Ekwaru | 5 May 2010 at 02:02
Hi Meg! I also want to appreciate the work you do, especially choosing to base on women and children I would just wish you Gods protection and blessing.
It is great
Emmanuel Ekwaru
2. Emmanuel Ekwaru | 5 May 2010 at 01:57
I need help for education, but I would love to know whether there are some opportunities from you or Kiva for help people like me.
Thank you so much
Emmanuel Kampala Uganda.
3. Julia | 12 April 2010 at 09:31
Hi Meg!
Your article made me think about a test I once took to help me choose a profession. The computer told me that my interest for agriculture was “above average”. I had chosen “not interested very much” but obviously everyone else had chosen “not at all”. So there can really be surprises
As far as Kiva is concerned I really thought that it made no difference if I was biased or not because all loans seemed to be funded. That was until I read this article about Nicaraguan loan requests failing to get funding on kiva:
http://fellowsblog.kiva.org/2010/01/12/the-case-for-nicaragua/#more-9871
So I guess it is a good thing you lent to Nicaraguan entrepreneurs. As far as I am concerned I did not lend much up to now but I rather support women because they often are in the disadvantage.
Julia
4. Jan & John, KivaFriends | 11 April 2010 at 18:28
I certainly have biases when loaning as I am sure most lenders have. I choose women, women with children, groups with children, couples with children etc etc
But these days I have to be more and more careful because I can jump on tempting loans without checking my distribution. I am waiting for Kiva to give me a better view of my portfolio distribution because half of the loans Kiva has listed have already been paid back. example, my portfolio shows Peru at 7% and Cambodia at 6% which actually means nothing as most of the Peru loans are of shorter duration and paid back and the Cambodian ones still have much time left. If I used Kiva’s figures I could be out of balance because I really like those Cambodian loans. For those lenders whose portfolios are getting a little unweildy, you should try out one of the tools from http://www.kiva.org/apps/all ( Kiva Folio is very quick and easy http://kivafolio.appspot.com/ ). Of course the one I love and use the most is still in development but you can find it at http://www.kivabank.org .
happy lending folks… -jan-
5. Meg | 7 April 2010 at 08:56
@Mark I agree that there is nothing wrong with having some biases. For me the important thing is that people are “choosing” their bias as you put it. I was trying to make the point that it is interesting to think about what those biases are and if they are unintentional biases, do they really reflect what you want.
6. Ed | 6 April 2010 at 09:03
Meg,
Great write. I am glad that you are brining up this relevant issue.
I hope that all is well
Ed Coambs
KF9
7. Vonny | 5 April 2010 at 23:02
I am only a beginner Kiva user as I have only made two loans so my lending biases can’t be analysed due to lack of data. I have to say that I prefer to lend to loans with shorter repayment times so that I can lend to more people. Also, I don’t like lending to groups, mainly because it becomes less personal. I like to hear the stories behind each Kiva borrower.
8. Dan | 5 April 2010 at 20:49
“To see your portfolio distribution, go to your lender profile and scroll down to the very bottom.”
Actually, that is the way you can see all the other lenders’ portfolio distribution. To see your own, Kiva for some reason makes us go first to “My Portfolio” then to “My Lender Page” and then to “Preview My Lender Page”. And THEN you can scroll down to the very bottom.
I personally find that “Retail” covers a very broad range of businesses, so that this ends up being the largest percentage in my portfolio.
9. Don | 5 April 2010 at 19:22
Hola Meg,
Thanks for posting this interesting article. Yes, I suppose we all have some biases about who we lend to. I have made more loans to countries like Nicaragua, Bolivia and Cambodia because I’ve been to these countries and know first hand that a large percentage of the population lives below the poverty line. There are many countries that I haven’t been to and I’m sure there are plenty of people in those countries that can use a little help as well. But having been to certain areas of the world and knowing first hand what the situation is like makes it that much easier to loan to them.
Mr. Zugman made two very good points in my opinion.
Another valid criteria might be looking at the annual average wage earned for citizens of the countries that you are interested in helping out. Recently I have been paying closer attention to that figure and it is quite clear that some people are getting by on much less than others.
10. mark | 5 April 2010 at 17:46
What is wrong with a loan bias? There is nothing wrong with chosing a bias, such as loaning to women with children. If this is where you wish to contribute your money, more power to you!
11. Howard Zugman | 5 April 2010 at 08:39
Hi Meg, Of course we all have biases. With regard to Kiva loans, here are my two biases (criteria?) in order of execution:
1. to distribute as evenly as possible among all partner countrys (regardless of the country’s population).
2. to strongly favor shortest term loans (so that when recycled maximum possible number of individuals get to “touch” the loan money).
So far to date 17 countries each account for 4-5% of loans and 26 other countries each account for 0.1-3.5% of the remaining loans.
12. Martina | 5 April 2010 at 12:12
This is something I’ve thought a lot about too, Meg. My loan decision process mirrors the way I make most choices–it ends up being far more intuitive than empirical. Even though I’ve become more knowledgeable about the kinds of factors you mentioned, I find myself gravitating towards the clients who evoke some sort of personal response; oftentimes because I feel connected the region or the individual because of past experiences. My first loan on Kiva was to man in Nicaragua for housing. Despite all I’d heard about the higher repayment rate from women and the seemingly frivolous nature of home improvement vs. business purposes, this particular man reminded me of a friend I made while living in Guatemala, which was ultimately a far more compelling factor than all the logical arguments.