Swipes at a sacred cow

It used to be said–may still be said on the fringes of the Right–that foreign aid was a matter of having poor people in rich countries send money to rich people in poor countries. This was a particularly crude way of raising the question whether desperately needed aid actually reached those in desperate need, which was precisely the question that occurred to the Nonprofiteer when she examined the Kivab4b Web page. Kivab4b is a project sponsored by credit-card issuer Advanta and microfinancier Kiva.org, through which American small business owners can:

Select an aspiring business owner through Kiva and make a grant using your Advanta business card. Advanta matches the amount of your grant, dollar for dollar. Kiva distributes the funds. As the funds are repaid, the money is deposited into your Kiva account. You will be able to withdraw those funds or use them to fund another business owner.

A “typical” beneficiary is shown, a Haitian woman with her own cosmetics business–from which one can infer that this foreign aid is a matter of having petty-bourgeois in rich countries send money to petty-bourgeois in poor countries. Is this really the best way to fight global poverty?

Among the reasons why the answer might be ‘no’:

  1. The site’s language to the contrary notwithstanding, these are not grants; they’re loans. Telling people they can eradicate poverty without actually giving anything to charity is false, and only increases the impatience with which they regard perfectly legitimate claims on their generosity (such as taxation to support foreign aid). Giving people in the developing world a decent life will require some sacrifice on the part of people in the developed world, and the longer we try to conceal that truth from our fellow citizens the harder it’s going to be to separate the said citizens from the necessary money.
  2. In a country where there are food riots, is a person who starts a business selling luxuries–even small luxuries, like cosmetics–really going to be better off? Is the country as a whole really going to be better off for having an indigenous cosmetics mogul?

If the point is to rally the energy and commitment of American small business in support of its counterparts worldwide, Rotary (among other fraternal organizations) has a range of programs for just this purpose. Simply swiping your credit card isn’t really a substitute for that.


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4 Responses to “Swipes at a sacred cow”

  1. loan » Blog Archive » Swipes at a sacred cow Says:

    […] Psychotic1 wrote an interesting post today onHere’s a quick excerptIf the point is to rally the energy and commitment of American small business in support of its counterparts worldwide, Rotary (among other fraternal organizations) has a range of programs for just this purpose. … […]

  2. D Bentley Says:

    I’m pretty amazed that someone of your caliber would totally dismiss the benefits of microfinance and the creative efforts of these two companies. Do you really contend that the $27 million that Kiva has delivered to entrepreneurs in developing countries has done nothing to alleviate global poverty?

    I looked at the Kiva and KivaB4B sites. Neither one claims that their project is “the best way to fight global poverty.” It seems that they are just trying to use their resources to make a difference a difference in the world.

    While I am not presumptuous enough to declare the best way to fight global poverty, I would suggest that it begins with encouraging as many people to get involved to find a solution, not criticizing their good intentions.

  3. duckling Says:

    Sadly, I’m forced to take the middle ground. There is no answer to global poverty, at least none that I’ve heard of. Is the answer pure charity with no ownership and responsibility? Or, is the answer loans that carry the potential to be predatory?

    No one knows, and therein lies the rub. But I believe that some money is better than no money.

    But, I’ve been wrong before.

  4. Nonprofiteer Says:

    You’ve articulated the argument that troubles me the most: that “pure charity” means “no ownership and responsibility.” There’s really no basis for suggesting that needing charity is the same as lacking responsibility, and the capitalist rhetoric arguing that strikes me as merely a cover for claiming that both rich and poor deserve what they get. Or, to borrow an expression from cycling, “If you think there’s no wind, that means you have a tailwind.”

    Loans do indeed “have the potential to be predatory,” which is why an international consensus developed in 2000 to secure forgiveness of international loans, the repayment of which was crippling developing nations’ ability to enhance the lives of their people. Lending (rather than giving) money to people who have thousands of times less access to resources than you do strikes me as pointlessly greedy. That doesn’t mean micro-lending has no role in building economies–just that it’s not to be confused with, or substituted for, equally necessary charity.

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