This is the first post in a series. Stay tuned for Megan Bond (KF15)’s post tomorrow: “New Partnerships in the Middle of the World, Part II.”
Of the seven-step process to becoming a Kiva Field Partner, the last step is easily the most exciting. It signifies a new opportunity for Kiva lenders and borrowers, a meaningful development for Kiva, and a promising culmination of work for a potential partner. Before I arrived in Quito, Ecuador two weeks ago, my in-country partner Fundación Alternativa had completed steps one through six of the process. And as I stepped off the plane at Mariscal Sucre International Airport on May 30th, Fundación Alternativa imperceptibly passed from step six to step seven: when Field Partners enter the Pilot Phase, and Kiva sends you a frighteningly enthusiastic Kiva Fellow to get you started.
But let’s pause, and rewind for a minute. You’re likely asking questions like “Who’s Fundación Alternativa?”, “What’s the rest of this ‘Seven Step Process’?”, or for the essentialists among us, “What’s a Field Partner?” Let’s start from square one: Kiva’s Field Partners are the indispensable and behind-the-scenes operators of Kiva Loans. Without the Field Partners’ existing relationship with borrowers and ability to administer and oversee loans, Kiva’s work would not be possible.
As you may know already, Kiva currently works with 133 Field Partners distributed among sixty countries all over the world. True, they are widespread and varying, from a women’s-focused microlending institution in Costa Rica to a globally-renowned microcredit powerhouse in Sierra Leone. But they all share a common goal: to supply credit and savings services to thousands or millions of poor people in a sustainable way.
Part of Kiva’s core mission is maximize its outreach to organizations within the “long tail” of microlending- the hundreds, if not thousands, of small microfinance institutions that are yet untested and unproven, but with the potential to reach entrepreneurs not reached by more established microlending institutions.
So why the ‘seven-step process?’ Kiva receives an incredible number of applications from microlending organizations seeking partnerships every year; this is an inspiring signal of Kiva’s promise to spark meaningful change in the world. But Kiva can’t collaborate with every microfinance organization we hear from, not merely because of the staggering costs of administrative needs and due diligence.
Frankly, not every microlending organization fits comfortably within Kiva’s model, and concurrently Kiva’s model cannot be comfortably incorporated into every microfinance institution’s existing structure. Kiva has a set of specific quantitative parameters for partners, all clearly enumerated on “How to Become a Field Partner” page on the Kiva Website: an organization must serve at least 1,000 active borrowers with microfinance services. It must register as a legal entity in its country of operation. It must have a minimum two to three year history of lending, and at least one year of verified third-party financial audits.
But most importantly, Kiva’s Field Partners must have a cause. They must be more than just a microlending institution. Our Partners do not lend merely to gain money or exploit a market lacking reliable financial services; each Partner has a mission of lending to the poor, vulnerable, or those traditionally excluded from credit markets for the purpose of alleviating poverty or increasing the agency of its borrowers.
In addition to these basic qualifications (step 1), after submitting an initial profile to Kiva (step 2), Kiva reviews an MFI’s profile and will ask for a more in-depth application (steps 3 and 4). Following Kiva’s due diligence and approval process (step 5), Kiva reaches a final decision (step 6); that’s when a partner is approved to begin posting loans, and gets a Kiva Fellow of their very own (step 7). After a successful pilot phase, a partner becomes active.
Of the many microlending organizations that became Kiva Field Partners this year, two partners that show incredible promise (in my heartily biased opinion) are in Ecuador: The Microenterprise Development Fund (FODEMI), headquartered in Ibarra, and Fundación Alternativa, headquartered in Quito. In a scant ten days of work with Fundación Alternativa, I have been humbled, encouraged, and awed by their commitment to poverty alleviation and their promise as a potential active Field Partner.
Unlike some of Kiva’s Field Partners, Fundación Alternativa isn’t new to the microfinance world. They have been active in Ecuador for some 20 years (making them 15 years old than Kiva!), and as of 2009 boasted a gross loan portfolio of US$3.1 million and over 3,000 active borrowers. Fundación Alternativa is a registered non-profit organization in Ecuador, and has six branches throughout the country and an incredible commitment to employees and borrowers alike.
Fundación Alternativa’s target market for microloans is essentially the entire market for microloans: they work with very poor clients, poor clients, low-income clients, clients in rural areas, and clients in urban or semi-urban areas. They offer thirteen different microlending products- fourteen, with the addition of the Kiva loan- in order to accommodate their diverse clientele and enable Ecuadorians of any background access to affordable microcredit. Fundación Alternativa even offers microlending products to entrepreneurial immigrants, who make up continuously growing population in Ecuador, through a recently launched and government-sponsored program. Recall Kiva’s quantitative requirements for Field Partners- 1,000 borrowers; two to three year history; legally registered microlender. Check, check, and check. But what of their ethical undertakings?
Fundación Alternativa has not one cause, but many. They offer a number of different trainings and support to their clients including a financial literacy education, basic health and nutrition education, leadership training for women, and enterprise skills development and business development services. This past Saturday morning I was privileged enough to attend such a training, or as it was put, a charla (a chat), with a community-owned flour mill in Cayambe, Ecuador. Through recommendations for meeting national standards of quality, conducting market studies, and investment in organizational infrastructure, Fundación Alternativa hopes to maximize its Cayambe clients’ potential and their businesses’ capacity for expansion.
As though that weren’t enough, Fundación Alternativa also works to raise clients’ awareness about environmental impacts. Part of their training educates clients regarding environmental improvements and analyzes micro-enterprises’ environmental impacts. Not to mention, the office cafeteria has waste bins for paper, organic materials, and all plastics; step aside, Whole Foods! Granted, what else do you expect in a country that gives constitutional rights to plants and animals!
Reaching the end of the ‘seven-step process’ is an exciting development for any group connected through Kiva.org- borrowers, lenders, and Field Partners alike. But as Fundación Alternativa takes its first steps as a pilot partner, it’s a source of pride for Kiva itself to be collaborating with a microlending institution whose work has already impacted thousands.
Kate Bennett (KF15) is thrilled to be working for the next four months in Quito, Ecuador with new Kiva field partner Fundación Alternativa. To support Fundación Alternativa in its pilot phase, check out its partner page or its recently created lending team. While Fundación Alternativa is not posting loans at this time, we hope to have them up within two weeks’ time, so stay tuned! For more on Kate’s experiences with Fundación Alternativa or life in Ecuador, follow her work here.