Q: Why is there a special Q&A about Kiva’s partnership with Strathmore University?
 
A: In late June 2013, our Field Partner, Strathmore University, posted a number of loans to cover full tuition for students from low-income regions of Kenya who could not otherwise afford higher education. Soon thereafter, many lenders raised concerns about Strathmore’s affiliation with Opus Dei, an institution of the Catholic Church. Strathmore describes itself as being founded with “inspiration and encouragement from Saint Josemaria Escriva” -- the founder of Opus Dei -- and notes on its website that it is a "Corporate Undertaking of Opus Dei.”
 
Many lenders have been concerned due to Opus Dei’s reputation for being very conservative, and a staunch opponent of LGBT and women’s rights. As evidence, several community members shared an editorial and guest lecture by Strathmore’s chaplain, Father Joe Babendreier, in which he condemns homosexuality. One of the biggest concerns is that these views are being actively promoted in the school’s curricula and/or student life, and that by partnering with Strathmore, Kiva is supporting the views held by Opus Dei.
 
Kiva does not in any way support views that could be described as anti-LGBT or anti-women, and has conducted a thorough investigation of Strathmore University to ensure that students supported by Kiva loans are not being indoctrinated with these ideas at the school. We have assembled this Q&A from questions we’ve seen on team message boards, in survey responses and elsewhere to address the concerns that have been raised.
 
Q: Why does Kiva support student loans?
 
A: We believe that education sits at the crux of poverty and economic empowerment. So often, education is the missing resource that enables people to make sustainable incomes, so they can invest more in their families and send their children to school.
 
Consider:
 
Higher education makes a difference: Unemployment is 18% lower for college graduates than for high school graduates. The gap between male and female employment also narrows at every level of education from 21% to just 9% between high school and college.
 
It pays to invest in education: The average increase in revenue for college-educated men is US$91,000 and US$55,000 for women. Educated people give back to their communities and societies in the form of increased taxes and decreased use of social services. They generally require less health care and tend to spend more on goods and services over their lifetimes. This might sound a little cut-and-dry, and even cynical, but this is where development starts, and how communities work to pull themselves out of poverty.
 
The ticket to a better life: Education doesn't only improve people's lives in terms of income and employment. There are a lot of intangible benefits. Educated individuals report higher levels of happiness and fulfillment. They're also more socially and civically engaged in improving life for their neighbors. For example, 87% of college graduates vote in elections while only 74% of high school graduates do. Notably, this also impacts gender relations, with perception of equality increasing at every level of education.
 
While Kiva loans have historically been smaller, shorter-term loans for mainly business purposes, we also believe that there are other great opportunities to make change that don’t fit this more traditional microfinance model. The Strathmore loans are a great example of this. Without loans from Kiva, these students won't have the opportunity to attend university. While different, we believe these loans still provide an opportunity for lenders to make a huge impact in someone’s life and community, and that’s what Kiva is all about.
 
Q: Why did Kiva partner with Strathmore University?
 
A: Strathmore University is one of the leading private chartered universities in Kenya, and is a privately-owned, not-for-profit institution. In addition to offering top-notch classes, curricula and programming, Strathmore is one of the only schools in the region interested in expanding opportunity for low-income students. In a country where demand for education far outweighs supply, it’s unusual to find a school interested in getting creative to help poorer students -- especially when their wealthy peers are willing and eager to pay. Kiva funding reserves spots for lower-income students to attend Strathmore. And once they’re there, they have an even greater chance to break the cycle of poverty for their families and communities.
 
For more information about why we formed this partnership and why we support higher education student loans, check out this blog post.
 
Q: What was the due diligence process for bringing on Strathmore University as a Field Partner? 
 
A: Strathmore underwent Kiva’s full due diligence process before becoming a Field Partner. We carefully studied factors like audited financial information, governance policies, liquidity and transparency. We also determined that the school fit our requirement to have a strong social mission and demonstrated commitment to serving the needs of the poor and excluded. 
 
Before loans were posted to the Kiva website, a trained Kiva analyst gave the greenlight to Strathmore as a great partner candidate. We then conducted on-site diligence with special attention paid to operational risks, past lending history, borrower selection and regulations. Our visit included a number of interviews with members of the university’s management team, middle management and even entry-level staff. All of this information, as well as an estimation of risk, were presented to Kiva’s Investment Committee for review. The committee is comprised of many people with years of experience in finance and global development, and ultimately, they voted in favor of bringing Strathmore University on as a Field Partner.
 
For more information Kiva’s due diligence process, please visit our Risk and Due Diligence overview.
 
Q: How does Strathmore University’s affiliation with Opus Dei affect student life and university teaching?
 
A: After a thorough, on-campus evaluation of these issues, all evidence indicates that Opus Dei’s connection with the school is distinct and separate from Strathmore’s daily operations as a university. It isn’t involved in curriculum development and the school’s core mission does not include anti-LGBT, anti-women or any other discriminatory rhetoric. Strathmore’s staff echoed our findings by firmly stating, “Opus Dei does not run the University.” 
 
The core of Strathmore’s education program is not religious. Its goal is to provide students with a strong, broad-base education to help them find good jobs and achieve their dreams. In fact, the school’s mission statement is “to provide all round quality education in an atmosphere of freedom and responsibility; excellence in teaching, research and scholarship; ethical and social development; and service to society.”
 
For those of you who haven’t had a chance to visit Strathmore’s campus, there are no mandatory academic religious requirements or activities -- the university also doesn’t consider religion in its admissions process -- and the closest thing we found to a social issues class is a business ethics course. Our staff member sat in on this class to see if it contained any religious content or propagation of hateful ideology and it did not.
 
In fact, the professor of the business ethics class encouraged everyone to make up their own minds with the aim of promoting divergent opinions and urging students to become independent, logical, critical thinkers. Logistically, we can't sit in on all of Strathmore’s classes, and we also understand that there may be things said sometimes that we don’t agree with, but the overall takeaway is that everything we’ve seen does not point to systematic indoctrination of students with any type of belief system or ideology. 
 
During our visit, we also found that there were many different religions represented in the student body. They have a chapel on campus, as well as a Muslim prayer room (the Community Outreach Programme leader happens to be a Muslim student too). There’s also no requirement to attend religious services, and if all students actually wanted to attend mass, they wouldn’t be able to, as the chapel seats about 100 people (with a student body of 5,000).  
 
Q: Does Strathmore University oppose gay rights? (There was an editorial and a guest lecture video by the school’s chaplain, in which he condemns homosexuality.)
 
A: Strathmore staff says it is firmly committed to the principle that “all persons have an inherent dignity, and that homosexuals should be accepted with respect and sensitivity.”
 
Additionally, Strathmore has a long history of fighting for civil rights. It was the first multiracial college in English-speaking Africa, and had to fight with the British colonial authorities before Kenya’s independence to be allowed to admit students of all races, tribes and religions.
 
On the issue of LGBT rights specifically, Strathmore's library contains books about LGBT freedoms including one about Bayard Rustin and a book authored by Andrew Sullivan, a notably uncensored resource given that homosexual acts are illegal in Kenya. Additionally, one of Strathmore's graduates, Kenya's Chief Justice Dr. Willy Mutunga is a supporter of gay rights and women's right to choose, and was a guest speaker at Strathmore
 
Having said all that, the unfortunate reality is that LGBT rights have a very long way to go in Africa. In seeking out a top-tier higher education partner in Kenya, we couldn’t find one that actively and vocally promoted LGBT rights. Sadly, that’s not surprising, since as recently as 2007, 96% of Kenyans polled said that "homosexuality is a way of life that should not be accepted by society." 
 
Given that Strathmore is located within this cultural context, it’s likely that some individuals on campus, including Strathmore staff, might hold anti-LGBT viewpoints or beliefs (as we saw in the guest lecture video). Keep in mind that similar hate speech could be heard on campuses anywhere in the U.S as well. No institution that invites a diverse community to live and work together can be completely free of unfortunate comments and clashes in culture and beliefs.
 
We don’t support or encourage these views or policies. However, with respect to how we evaluate countries to work in and organizations to partner with, it’s natural that not all of our values and beliefs will align perfectly. We have to look at the core purpose of an organization’s programs to determine the difference that Kiva lenders’ capital can make. 
 
Q: Did Strathmore University deny academic credit to a student for interning at a human rights organization, as reported by the Kenyan Human Rights Commission in “The Outlawed Amongst Us”?
 
A: Strathmore University was not quoted in “The Outlawed Amongst Us” report, and the staff has assured us that they haven’t heard of this case. Additionally, the school’s statutes have a provision for students to report grievances and they have no formal complaints in their records from this committee. Further, they confirmed that they have no blacklisted organizations for internships. If you’re interested in learning more about Strathmore’s internship requirements, all the information is posted here
 
Q: Opus Dei has a reputation for discriminating against women; is that true of Strathmore University as well?
 
A: The evidence we’ve found shows that Strathmore University is a leader in fighting gender discrimination in education. It has one of the highest female-to-male ratios of all Kenyan schools -- and within a few years, it expects to have more female than male students. Additionally, the school always allocates at least 50% of its financial aid pool for female students. 
 
We can't stress enough what a difference education can make for women and girls around the world, especially in developing countries. Consider the ripple effect:
 
Children of women who have completed primary school are 40% less likely to die before age 5.
 
Studies have shown that investing in education for girls can move the needle on national GDPs.
 
Girls who receive at least 7 years of education marry 4 years later and have 2.2 fewer children.
 
Kiva's education loans are designed to spark these changes in the countries where we work, and we're incredibly excited about the number of women borrowers that Strathmore has posted to the Kiva website. Students like Lilian, a brilliant, budding computer scientist who grew up in the Masai territory of Kenya. In this territory, illiteracy has emerged as the number one cause of poverty, and to make matters worse, girls are much less likely to have access to education.
 
Like so many students, Lilian comes from a family that cannot afford to pay tuition. Her story, like so many millions of others around the globe, typically ends with dreams dashed. But Strathmore identified her as one of the bright, promising students eligible for an 11-year student loan through Kiva. Once her loan was posted to Kiva, 502 Kiva lenders came together to fund her tuition in less than 24 hours. She’s now taking full advantage of the opportunity provided by these lenders, and has even started to repay her loan early. Watch Lilian tell her own story in this video
 
Q: Why didn’t Kiva initially list the Opus Dei affiliation on Strathmore University’s partner page?
 
A: It was never our intention to withhold this information. We have always linked directly to the Strathmore website which clearly states the connection to Opus Dei. Historically, we haven't required Field Partners to disclose their religious affiliations or include related information on their partner pages -- in part because we already face challenges overwhelming lenders with too many details. And, in most cases, religious affiliation has nothing to do with Kiva’s lending activities. Our hope is that lenders who are interested in learning more about specific partners, such as religious affiliation, will take time to check out organizations’ websites for more information.
 
That said, this is clearly an important issue for many lenders. So, in an effort to increase transparency, we’ve worked with Strathmore to add this information into the first paragraph of its partner page. Going forward we have also decided to add the Opus Dei relationship to the information included with each of their loans.
 
Q: Opus Dei and the Catholic Church are known to have a lot of money. Why aren’t they funding loans to students at Strathmore University? 
 
A: Strathmore University is a non-profit institution owned by another non-profit, the Strathmore Education Trust. It is not owned or operated by the Catholic Church or Opus Dei. It's also worth noting that Strathmore had a ROA of less than 1% this year -- its first profitable year in 3 years. As a non-profit organization, those funds were added to their capital reserves to further support the university. There is also no flow of funds between Strathmore University and Opus Dei (or the Catholic Church) according to their audited financial statements.
 
That said, the unfortunate reality is that tuition loans and scholarships in Kenya and many places outside of the U.S. are still rare. At Kiva, we believe this can change, and together we can make education more accessible to students worldwide. In a sense, Strathmore is leading this initiative. In addition to Kiva loans, Strathmore has a strategic objective to increase the number of students able to access financial aid over the next 3 years, with a long-term goal of giving more than 30% of students access to some form of financial aid. Kiva is just one small part of helping them achieve this goal, and we hope other funders will follow suit.
 
Q: Why are these loans to Strathmore University students so large? Could they have been structured to be smaller?
 
A: It’s true, these student loans (averaging $10,000 to $15,000) are larger than typical Kiva loans because they cover the full 4 years of tuition, plus living expenses while at school. When we first partnered with Strathmore, we discussed how the loans might be made smaller -- for example, having students take out loans one year at a time. However, this option came with the risk that students could be funded one year but not the next. They’d have to drop out of school after only one year, without a degree to help them get a job and with debt from their first loan. At Kiva, we aim to keep borrowers’ well-being at the heart of everything we do. So, when we launched this partnership, we decided to move forward with full-tuition loans to help ensure that these students will be able to not only start, but also complete their degrees -- and therefore have the education to find jobs that will enable them to pay off their loans.
 
Q: These loans are much larger than the average income in Kenya. Are they detrimental to students’ financial future?
 
A: The issue of over-indebtedness is always top of mind at Kiva, and a major driver in our decision making. That’s why all of Kiva’s partners must endorse the Smart Campaign’s Client Protection Principles, which includes a focus on preventing over-indebtedness:
 
“Providers will take adequate care in all phases of their credit process to determine that clients have the capacity to repay without becoming over-indebted. In addition, providers will implement and monitor internal systems that support prevention of over-indebtedness and will foster efforts to improve market level credit risk management (such as credit information sharing).”
 
The main reason these loans are structured with a 5-year grace period (which includes students’ 4 years in school) and an interest rate far below market rates (2-6% per year) is specifically to help alleviate the burden of debt for students, and give them time to secure employment after graduation. When we initially explored these loans, we looked at things like the debt-to-income ratio based on earning estimates. And even though these loans are much higher than the average Kenyan income, it’s important to note that the average income figure is inherently skewed by a large population of Kenyans without high school diplomas, let alone college degrees.
 
Because full-tuition loans were new to Kiva and Strathmore, we also tried to get as much data as possible on its students, including average graduate salaries. Unfortunately, there’s not a lot of reliable data on income for college degree holders in Kenya, but anecdotal research showed that jobs paying around US$2,000/month were common for comparable university graduates. Since the expected repayments for these student loans are roughly US$200/month (depending on the degree earned) that would mean a 1:10 debt to income ratio, which we believe to be very manageable.
 
Our Investment Committee took into account what information they could find, along with the anecdotal reporting and our evaluation of students’ abilities to pay back the loans. Given the information available, we ultimately decided these loans were worthwhile investments and not overburdening recipients.
 
Q: What does the 2-6% interest rate cover?
 
A: Strathmore University, a non-profit institution, chose a far-below-market interest rate of 2-6% on these student loans strictly to cover the cost of administration for this loan program. Here's what this administration includes:
 
  • Developing an extensive recruiting program and selection standards
  • Reviewing applications
  • Transportation and related expenses to visit remote areas of the country to interview students (sometimes these prospective students can be an 8-hour drive away from the university)
  • Creating loan documents, contracts, policies and procedures, as well as systems to communicate balances and delinquencies to students
  • Training students to ensure they're aware of loan obligations
  • Marketing costs for this loan program, such as advertising Kiva loans in Kenyan newspapers
  • Collecting information for Kiva profiles and posting loan profiles to the Kiva website
  • Developing financial reports required by Kiva, and developing the capacity to report repayments in the format required to work with Kiva
Strathmore University also developed a Kiva club on campus for Kiva loan recipients to help foster a sense of community, which notably includes mentor roles after graduation.
 
Q: Do these full-tuition loans (and other large loans) harm the balance of Kiva’s marketplace and cause loans to expire?
 
A: One concern shared by both Kiva and our lenders is loan expirations. Expirations happen when a loan posted to Kiva isn’t fully funded within 30 days. In cases where the loan has been pre-disbursed, the Field Partner must use other sources of funding to cover the loan amount that isn't funded by Kiva lenders. In cases where the loan is disbursed only after being fully-funded on Kiva, there's a chance that the borrower won't receive any funds if their loan expires. For these Strathmore students, because there are not other funders for these tuition loans, they would not be able to pay for or attend the university without funding from Kiva lenders.
 
Obviously, expirations are a big deal to us, especially when you consider that students’ futures are on the line. Expirations are unfortunately a natural part of the Kiva marketplace, and have been even without the addition of larger loans. This isn’t to say that we accept it and are moving on. We are continuously monitoring the marketplace balance and looking for ways to improve the relationship between loan supply and lender demand. One of the more promising updates on this front is a suite of tools we’re developing for our Field Partners to better inform them about the best times to post loans based on past lender behavior, seasonality, etc. Our hope is that these tools will result in more informed partners and ultimately fewer expirations on Kiva.
 
We’ve also seen concerns about loans with longer repayment terms, and the argument that lenders could be getting repaid much sooner and then recycle that money to help more borrowers.
 
Lenders who recycle their loan repayments to support new loans are vital to the sustainability of Kiva. While Kiva has been allowing loans with longer and more diverse repayment schedules to be posted to Kiva over the past year,1 this subset of our portfolio still accounts for a very low percentage of the overall amount funded through Kiva. In fact, Strathmore University’s loans were just 2.7% of the total amount posted to Kiva in June 2013 (and only 0.2% of loans posted between July 2012-June 2013). As we grow, we’ll continue to monitor the diversity of repayment schedules for all loans -- from the multi-year Strathmore loans to all of the short-term loans that constitute the vast majority of our portfolio. 
 
Q: Why were Strathmore University full-tuition loans posted to Kiva all at once in 2013?
 
A: While Strathmore has been a partner since early 2012, there has been a lot of ramp-up in the development of a robust loan program. With this class of students, Strathmore was not only gathering information for student loan profiles, but also developing that loan program. All of the operations around Strathmore's credit processes weren't fully fleshed out for these loans, and we were working with Strathmore to make sure their credit program had clear loan documentation that the students would understand. We wanted to be sure this entire process was in place before Strathmore allowed these loans to begin fundraising on the Kiva website. But, with a semester start date of July 1, this preparation compressed the timeline from a 2 to 3 month fundraising period into 1 month for all of the students.
 
We completely understand the difficulty for both lenders and partners in funding so many larger loans at once, and we’ll be working closely with Strathmore to encourage them to spread out their full-tuition loans next year. 
 
Q: Why did Kiva market Strathmore University’s loans so much across social media and email?
 
A: We often send out emails to our lender community highlighting different loans and partners that are in need of funding. And our strategy around promoting these full-tuition loans was similar to what we’ve done for other partners that have faced lending challenges in the past: we wrote a blog, posted about the loans on social media, and near the end of the fundraising period, reached out with a last minute appeal via email. We also decided that the email would only go to lenders that had previously funded higher education loans to limit our reach.
 
We believe a certain level of urgency is inherent in the work that we do, and our intent is to always explain why we perceive that urgency in a factual and honest way. That said, if you received an email from us about Strathmore loans or saw a social media post that made you feel pressured into making a loan you wouldn’t otherwise make, we sincerely apologize. It was never our intention to use guilt to motivate lending, and Kiva will always be a website where lenders can freely choose who to support.
 
It’s clear from the feedback we received that we didn’t get the messaging right in this case, and we’re sorry that our communication appeared forceful. This is a huge opportunity for us to learn and work to improve future marketing efforts.
 
Q: Kiva has an office space on Strathmore’s campus. Is that a conflict of interest?
 
A: Kiva's Nairobi office is located at the business school at Strathmore University, however our funding relationship with Strathmore is completely separate from our leasing contract. For example, if this partnership were to end tomorrow or if none of Strathmore’s loans were funded by lenders, our lease wouldn’t be affected. 
 
Prior to our office at Strathmore, our Nairobi-based team worked out of an office space at another Field Partner, Juhudi Kilimo. After outgrowing that space, we signed a lease with Strathmore’s business school, paying market rates for rent after a thorough review of various options in Nairobi. We do recognize how having an office space on the campus of one of our partners may be perceived as a conflict of interest, and we should have been more forthcoming about this in our marketing materials and on our website (we have now added this information to Strathmore’s partner page).
 
Q: Does Kiva have ulterior motives with the Strathmore University partnership?
 
A: We’ve seen a few theories expressed in the community about our staff’s ulterior motives, and we’d like to address them head-on:
 
“Kiva and its founder and CEO, Matt Flannery, are ‘in bed’ with Strathmore and Opus Dei. Further, Matt could be associated with Christian Descoups (General Secretary to the Archbishop of Luxembourg) who voiced support for Strathmore loans and is a member of Opus Dei and marched against marriage equality in Paris.”
 
To be clear, Kiva is in no way affiliated with Opus Dei, and Matt Flannery is not a member of Opus Dei. Matt also doesn’t know Christian Descoups and is not associated with him. 
 
“Cher Jacques, Kiva’s Regional Director for Africa, went to a Catholic prep school, has been involved in Catholic ministries, and personally advocated for and established the partnership with Strathmore University.”
 
As with all of our basic and full due diligence Field Partners, the decision to work with Strathmore University involved our entire regional team and was approved by Kiva’s Investment Committee -- not just one person. Cher did attend a Catholic prep school, though she herself is not Catholic, nor was she involved in on-boarding Strathmore as a partner.
 
“Kiva is a deeply conservative Christian organization that doesn’t support the LGBT community.”
 
Kiva is not a religious organization, however we are open to partnering with organizations that have religious ties. For instance, we currently partner with organizations that have Christian, Hindu, Jewish and Muslim affiliations. Our partnerships are not an endorsement of any one system of belief, but a way to support individual borrowers in the context of their cultures and communities.
 
In some countries, partners are able to take a more public stance when reaching out to LGBT community members who are excluded from financial services, for example People’s Forum. By partnering with Kiva they were able to develop a loan product specifically to support transgender women. Transgender people in India are often socially and economically excluded and, due to a lack of financial access, are forced into begging or prostitution in order to survive. People’s Forum always wanted to design a loan product for this community but was unable to find funding, until Kiva. People’s Forum and the Kiva lenders who fund its loans are providing these individuals with training, support and income generating loans so that they can start their own enterprises. 
 
“Kiva’s CEO, Matt Flannery, is on the board of a company named Puddle. That company is run by a former Kivan and has a major investor that also supported Strathmore loans through Kiva. Does that represent a conflict of interest?”
 
There is no conflict of interest here, but if you’re curious to learn about Puddle, it’s an online software company for village banking, rotating savings and credit associations, etc. It was started as a side project by Matt and a couple of friends -- Skylar Woodward (a former Kivan) and Jean Claude Rodriguez-Ferrera. Matt is now a board member and owns a 10% stake, though he has no operating role. One of the investors (mentioned in this quote) is a long-time friend and supporter of Matt's, and also an active Kiva lender.
 
Q: Where can I find more information about Strathmore University?
 
A: While these links are in no way exhaustive, here are a few places where you read more about Strathmore University:
 
Q: What does Kiva plan to do differently with next year’s Strathmore University full-tuition loans?
 
A: The past few months have been a great time of learning for us, and going forward we plan to be much more mindful and explicit about Strathmore's affiliation with Opus Dei. As we've noted above, we have now made this clear in the first paragraph of the school's partner page, and we will be adding text to all future Strathmore loans highlighting the school's affiliation with Opus Dei.
 
When thinking about our marketing strategy going forward, we do plan to continue to highlight different partners and loans that we feel are doing great things, however it's clear from negative comments we've received that our efforts this year were too forceful, and we will absolutely work to improve future initiatives.
 
On the operational side of things, as noted above, we have asked Strathmore to spread out their full-tuition loan postings next year. This will reduce the burden on lenders to fund these loans quickly, and they won’t seem as detrimental to the Kiva marketplace.
 
Did we miss a question? Let us know!


1 Examples of large loans posted to Kiva.org:
 
  • Andy in Tanzania took out a loan of $25,375 to buy stock of micro-solar lighting kits from a Barefoot Power wholesaler.
  • Renee Olivia used a loan of $24,800 to provide her community of weavers with stable income and pay for materials needed in making native bags made from seagrass.
  • Rozafa used a loan of $23,950 to finance a social business that will help 120 poor, rural Albanian women earn a livelihood from making traditional Albanian handicrafts.
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