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The idea of small, collateral-free loans for poor, now widely known as 'microcredit', has spread around the world. The pioneer in this form of business is Nobel Peace Prize winner Muhammad Yunus, who first launched a microcredit project in 1976 and founded the Grameen Bank six years later.

Since then, microcredit has become a phenomenon known all over the world and in 2005 Kiva was founded, an international non-profit that is based on microcredit. Since the launch of Kiva, it has grown into a big community providing support in 82 countries helping over 2.7 million borrowers.

I consider it to be a good practice. However, I will look into this organization objectively and I will look at it critically.

In order to be able to give detailed recommendations for Kiva, the organization will be examined based on various subjects. These will be further described in the following chapters. The topics covered in this report are:

' A description of the outline and history of the social business

' A critical reflection on the vision and mission of the social business

' Relation of Kiva to my own field of study

' Relation of Kiva to social development work/social business theories

' Recommendations

' Critical reflection on the future of the concept Social Business

 '

Outline and history

Kiva is a non-profit organization based in San Francisco, that allows people to lend money via the internet to low-income entrepreneurs and students in over 80 countries. Borrowers are given the opportunity to grow a business, go to school, access clean energy or realize their potential (Kiva, 2017). Money can be lend to people in many different categories such as agriculture, women, water and sanitation, food, retail businesses, education. The minimum amount that people can lend on the online portal is $25.

Its Mission is 'to connect people through lending to alleviate poverty' (Kiva, 2017). The organization does not collect interest on the loans that they facilitate, neither do Kiva lenders. The organization works closely together with its Field Partners. These partners are local organizations working in communities to vet borrowers, provide services and administer loans. Kiva's Field Partners are all not for profit organizations such as schools, microfinance institutions, social enterprises and more who share the desire to improve people's lives through safe, fair access to credit (Kiva, 2017).

In my opinion, one of the best part about this online portal is the fact that people are able to choose a story that inspires them the most, whether it is in the category 'women', or 'education'. Moreover, because Kiva has such an incredible repayment rate, the money can be 'recycled' into another project after its been paid back to the lender! Besides providing this access to capital that will help change lives for the borrowers, lenders and borrowers are connected psychologically. It turns out that many borrowers and lenders actually become friends and lenders can give guidance and tips whenever there is a need for this.

The organization was founded in 2005 by Matt Flannery and Jessica Jackley, who were inspired by a lecture of Grameen Bank's Muhammad Yunus at Stanford Business School in 2003. Before this lecture, Flannery had never heard of the concept microfinance. However, Jessica Jackley worked at the school and invited Matt Flannery to attend the lecture by Yunus (Flannery, 2007).

Not long after the lecture, Jessica Jackley began her work as a consultant for the not for profit organization 'Village Enterprise', which provided help to small businesses in East Africa wanting to start. While Matt Flannery visited Jackley in East Africa during this time, the couple spent time interviewing local entrepreneurs about the difficulties they faced in starting a business and discovered rather quickly that, in general, these entrepreneurs had no access to start-up capital. When the couple returned from Africa, they developed their plan for a microfinance initiative that grew into Kiva, which means 'Unity' in Swahili (Flannery, 2007).

Kiva's first loans were funded in April 2005, consisting of $3,500. It was a success, since the entrepreneurs who were given the loans repaid the entire sum by September 2005 and the founders of Kiva realized that they had developed a successful and sustainable microcredit concept (Kiva, 2017).

After this big initial success, influential businessmen and entrepreneurs joined the staff of Kiva. To give a couple examples; Premal Shah from PayPal and Reid Hoffman, CEO and founder of LinkedIn (Kiva, 2017). In October 2006, shortly after Kiva's first anniversary, the organization reached $1 million in facilitated loans. Currently, Kiva continues to grow and, as mentioned before, is providing support in 82 countries helping over 2.7 million borrowers worldwide. Moreover, the repayment rate of the loans that are handed out worldwide is 96,9%, and the company has offices in Nairobi and staff around the globe (Kiva, 2017).

Critical reflection on the vision and mission

Kiva's mission: Connect people through lending to alleviate poverty.

Kiva's vision: 'We envision a world where all people hold the power to create opportunity for themselves and others' (I am not entirely sure that this is the vision of Kiva)

a. What social issue does the social business address? Why is this social issue persistent/not solved yet?

Kiva is engaged in fighting poverty by providing loans for low-income entrepreneurs and students all over the world. Borrowers are given the opportunity to grow a business, go to school, access clean energy or realize their potential simply by lending to be able to start something. For some, these loans are a matter of survival, and for others it's the start-up capital needed for a life-long ambition (Kiva, 2017). In today's world, the majority of people and nations live in a state of poverty.

The answer to the question 'why do so many people still live in poverty?' is rather difficult to answer. The ultimate solution to ending poverty has yet to be found. What would it take? Is it possible to end poverty within a generation? In general, the capitalistic system in the western world is not very helpful in ending poverty. However, quite a lot of progress has been made over the last years. The poverty rate in developing countries has more than halved since 1981. In that year, around 52% of people living in developing countries were living below the poverty line of $1.25 per day. In 2015 this rate was 15% (Yueh, 2015).

Although, in today's world about 1 billion people still live in extreme poverty. The improvements mentioned above were due largely to China. Sub-Saharan Africa is a region where poverty has increased over the last three decades (Yueh, 2015).

To put things into perspective, in East Asia, progress of reducing poverty has been exceptional. Nearly 80% of its population lived in poverty in 1981 and in 2015 that rate had dropped to only 8%. Still, there are about 1 billion people who still live in poverty. What about them? The United Nations have adopted the World Bank's target of ending extreme poverty by 2030. This is of course a very optimistic target that would change the lives of many. However, the question now arises, is this achievable? According to the BBC who did the math on this topic in 2015, the number of people living in poverty will have to decrease by 50 million each year or by about a million each week until 2030. In order for this to happen World Bank President Jim Yong Kim emphasised that it would require funding and a large amount of targeted policies to raise incomes and productivity (Yueh, 2015). This target looks promising, but we will have to wait and see if the UN and World Bank will succeed in this. Meanwhile, organizations such as Kiva combat poverty in their own unique way, by the work of microfinance in the case of Kiva.

In conclusion it can be said that the progress of ending poverty looks fairly promising. However, other huge social issues such as climate change/global warming complicate efforts to end poverty. Climate change hits the poorest the hardest (The World Bank, 2015). These two social issues go hand in hand and it would demand major changes to see drastic changes.  

b. How does the social issue relate to the division of roles between market, government and civil society? What are the opportunities for the social entrepreneur?

Poverty, the social issue that Kiva deals with, is a result of failure in all of these roles: market, government and civil society. It is a result of a history of colonialism, war and political instability, social inequality and many other causes. But what is poverty? It means not having enough money to meet basic needs. However, it is so much more than just a lack of money. As mentioned similarly before, poverty is a complex social issue that requires everyone's attention.  

The role of governments in this social issue is to help those who are most in need, keep order and peace by the help of the law. Moreover, the role of a government should be to prevent inequality and poverty. This has proven to be a difficult task all over the world.

But this problem is not only caused by a government, how the market works is an issue for this problem as well. In the capitalistic nations there is a free-market that encourages trade, profit generation and consumerism. These capitalistic markets, which we in the west live by, have not thought about the potential negative consequences of this free-market. In principle, capitalistic markets have caused great (economic) inequality and even poverty over the years. This in combination with rapid globalization have definitely not contributed to the alleviation of poverty, but have worsened it basically (Leung, 2015).

Civil society can be defined in different ways, but in general the term is used to refer to social relations and organizations outside the state or governmental control. A great example for this definition is a Non-Governmental Organization (NGO) (University of Colorado, 2005). Civil Society protect values of its people, such as freedom of speech, independent judiciary and make up a democratic society (Collins, 2018).  

As I mentioned earlier, poverty is a result of failure in all of these roles; market, government and civil society. Capitalistic markets have caused great (economic) inequality, governments all over the world have failed to prevent it and help those in need and a lack of non-governmental organizations whose role is to protect values of people (Civil Society) are all causes for this social issue. The opportunity for Kiva are to help stabilize economic inequality through the concept of microfinance. Where Kiva operates, there is an enormous need for a banking system that is dedicated to serving the poor who often have no right to any form of loans at all. The fact that so many are not able to reach their potential is a lack of money, but in the system we live in, the policies concerning banking systems prevent the poor from being able to get some start-up credit at all (Muhammad Yunus, 2010).

c. Which elements of the social business' mission and vision do appeal to you and which ones don't (and why?)?

In my opinion, Kiva's mission fits perfectly in what they do and what they stand for. Kiva connects people from all over the world with through lending, with the concept of microfinance. What appeals to me is the fact that it is formulated with simplicity, but at the same time it is very powerful. I can imagine someone reading it who is not familiar with Kiva that gets interested in the motives and in the way Kiva works, all in one sentence. The same goes for its vision: 'We envision a world where all people hold the power to create opportunity for themselves and others', a very clear and powerful message that also fits perfectly with the enterprise.

Relation of Kiva to my own field of study

Currently I am in my fourth and last year of my study International Business and Languages (IBL). My study has given me an insight in most of the skills that are needed in today's global business. I have had courses in marketing and sales, finance and accounting, operations and supply chain management, organisation and people, and my study has also given me the opportunity to improve my Spanish and German since these languages form a big part in my study program. Furthermore, I have learned about different cultures and behaviours.

I have also been part of quite some projects where sustainability was a major theme. To give an example: In my third year I have done a project for Engie Breeze, a company that is engaged in the reduction of Co2 emission in the air. Projects with a focus on sustainability have interested me most during my studies. I have never been interested in courses about making a lot of profits and therefore I will most likely not work for a profit organisation in the future.

I am definitely interested in working for a sustainable company or even a social business in the future. I would like to be part of something that deals with global issues such as climate change or poverty. With my knowledge of the business world, languages and culture I know that I would be a good asset for a company like Kiva. As you can see in the leadership team of the organization, a lot of the board members have a business background, this confirms that having knowledge of business related subjects is a plus for working for a sustainable/social initiative.

What I do think is that business people and social entrepreneurs often tend to misunderstand each other. The main reason for this is that there is a common way of thinking that people with a background in business often look at social entrepreneurs as do-gooders that 'waste' time chasing lost causes. While on the other hand, social entrepreneurs look at marketers as selfish profit-seekers who do not think about the greater good. But why do these stereotypes exist, because a combination of both types of entrepreneurs is actually a good thing for a social enterprise, as we see with Kiva, a nice mixture between social entrepreneurs and businessmen. According to The Huffington Post, there are many reasons for the fact that social entrepreneurs often have this negative image of marketing and marketers. To name an example, our culture criticizes it.  Marketers are often put in a negative light in TV shows, movies, etcetera so it is part of our culture. Another example is the fact that, in general, many socially-conscious people (social entrepreneurs) are more sensitive to rejection. This 'fear of rejection' is therefore often a reason why so many avoid marketing and sales people, since rejection and reflection are often a part of a sales process (Kalb, 2016).

  Relation of Kiva to social development work/social business theories

The first theory that I would like to address is the Human Development Index, which is an alternative way of measuring development besides the traditional measurement forms 'GDP' and 'GNP' that I will explain briefly before getting into the HDI. 'Gross Domestic Product measures the production of goods and services in a country while Gross National Product includes GDP, plus income earned by residents from overseas investments minus income earned within the domestic economy by overseas residents.' (Daly, Regan, Regan, 2016) This is a method widely used for measuring development, but it comes with a number of disadvantages; it measures development by looking at an average of a whole country, so this means that it shows no inequalities. Another weakness of this model is that countries with big differences in living costs are compared to one another. For example, one USD has a much greater value in India than in the US (Daly, Regan, Regan, 2016).

The HDI arose to serve as an alternative for GDP/GNP and was devised by the United Nations Development Programme. it is now widely used as indicator of human progress and quality of life. It implements three measurements  to create a score that represents the HDI, namely; life expectancy, education (literacy and years of schooling) and income (purchasing power in parity US dollars). HDI includes both social and economic aspects and is therefore, widely accepted as a more valid view of development (Daly, Regan, Regan, 2016). Kiva is contributing to the improvement of human progress and quality of life in many developing countries all over the world.

Another relevant theory to link to Kiva, is the theory about top-down and bottom-up development. Top-down development is usually done by big (governmental) institutes on a large scale. Local people will have little to say in the process, meaning that these (governmental) institutes are in control of what is happening concerning development issues. Bottom-up development is done on a more local level without the intervention of the government. It is development on a much smaller scale than top-down development. This allows communities to develop themselves in a more sustainable way (GCSE Geography, 2014), (Potter, Conway, Evans, & Lloyd-Evans, 2012).

Kiva is definitely connected to Bottom-up development. Instead of handing out charity money/goods what many organizations do to help people in need, Kiva and its microfinance system bring 'Social Business money' to its lenders, a much more effective way. With this money, people around the world can create opportunities for themselves and their communities to reach their full potential. Even though Kiva operates all over the world, the bottom-up aspect of this enterprise is the fact that the loans are provided on a local/individual level and therefore looks at the specific needs of an individual and/or community.

Lastly, I would like to discuss the article by Muhammad Yunus, 'Vision 2050: A Poverty-Free World', since it is so closely related to Kiva. In this article, it is addressed that much work has to be done in order to solve the problems of poverty created by the existing capitalistic economic system and that poverty should belong in museums by 2050. For this to become reality, a new global economic and social order has to be shaped. In the current capitalistic system for example, financial institutions refuse to provide financial services to almost two-thirds of the world's population (Muhammad Yunus, 2010). For many generations it was said that the poor are not creditworthy, and everybody accepted this.

The bottom-line is that professor Yunus addressed the bad aspects of this economic architecture and therefore launched a project in 1976 with the idea of small, collateral-free loans for poor, known as microcredit. Kiva works based on this initial project by Yunus and social businesses with similar visions and sustainable goals are on the rise. This I will discuss further in the critical reflection on the future of the concept Social Business in my report. As Yunus states in the article: 'We overcame slavery. We overcame apartheid. We have done other things that people once thought impossible. We have put human beings on the moon, into space to explore far away worlds. Together, by 2050 we can create a 'poverty-free' fairer world. In creating a new global economic and social order toward this goal, the idea of social business is a timely step.' (Muhammad Yunus, 2010)

   

Recommendations

After I have dove into the social enterprise Kiva, I must say that it seems to be an organization with little to no flaws at all. Transparency lies at its core and everything they mention, the way they work, how it is financed, etcetera, is accounted for and therefore I find it difficult to come up with detailed recommendations for Kiva. They have a great team and many powerful and influential news platforms and people, including Oprah Winfrey, speak very highly of the enterprise. Despite this, I will try to give some legitimate recommendations.

For the future of this enterprise it is advisable to be more active on social media platforms, since it is such a good way to reach and expand their target group. Kiva is already active on every popular social media platform, including YouTube. However, my recommendation would be to be more consistent with uploading new content about success stories among other things. At the moment, Kiva has a little more than 4400 subscribers and the last time something was uploaded was over two months ago and the video before that was uploaded 6 months ago (YouTube, 2018). So there is a lot of opportunity to grow and reach a bigger audience through this social media platform. Besides having a bigger audience it is also a nice way to introduce the staff with fun and educational videos. By referring to the YouTube channel on the website, it is highly likely that the channel will get more viewers and subscribers. In principle this comes with hardly any costs.

Besides the way of advertisement mentioned above I would also recommend to invest some money of the annual revenue into other forms of advertisement. It may be a well-known enterprise already, but there is a much bigger audience that can be reached. Kiva depends heavily on donations and grants by donors and other organizations to stay operational. As the organization continues to grow, more capital is needed to be able to stay self-sustaining. Tv-commercials would definitely attract a large group of new 'customers'. However, this form of advertisement comes with a lot of costs, especially tv-commercials but it may be worth it since television ads have proven to still be a very effective way of advertisement (Crupi, 2015). Another more traditional and less expansive way to advertise would be through radio announcements.   

Furthermore, the website is very nicely structured and little can be said about it. It contains all the information about the organization and to become a lender it does not require a lot of effort to find out how it works, it all works simple. But, after seeing the countries they are active in, there is one recommendation that I would like to give. The enterprise is probably already planning to expand as they definitely should. There is an enormous number of entrepreneurs in developing countries all over the world who could also greatly benefit from Kiva's microfinance system. So there is definitely room for expansion. Lastly, Kiva should continue to create new ideas and services to improve and reach even more individuals and communities and to move forward positively!  

 '

Critical reflection on the future of the concept Social Business

Our planet is threatened by overpopulation, climate change, mass migration and limited resources, just to name a few examples. Therefore, the need of caring for our planet and about each other is arising more and more. Huge shifts in trends have taken place over the years, instead of a mere focus on profits the focus now lies more on people and the planet also. This trend is often described as social entrepreneurship. It is becoming a more common form of entrepreneurship (Winchell, 2017). This type of entrepreneurship combines non-profit ideas with for-profit initiatives, and the idea behind it is to not only succeed but also to change the world and make it a better place.

A report by Social Enterprise UK made in 2015 found that social businesses are growing rapidly in the United Kingdom, they are rising quickly. Most of the social businesses are five years old or less (49% of all social enterprises), and also a noteworthy amount of them is three years old or less (35% of all social enterprises). Another fact about the growth of social enterprises is that social businesses start-ups consist of three times the portion of Small to Medium Enterprise start-ups. Moreover, social businesses are pioneers in innovation. Around 59% of the social businesses introduced a new product or service. To put this in to perspective: only 38% of Small to Medium Enterprises introduced a new concept/idea. Lastly, I would like to mention that in the report it is stated that 50% of social enterprises have made profits, 26% managed to break even. Almost every enterprise used those profits to expand their environmental and/or social goals. All of these results are from 2015 (Social Enterprise UK, 2015).

Not only in the UK positive results concerning social enterprises have been found, because in North America similar results were found. In a 2014 paper by 'The Royal Bank of Canada (RCB)' was concluded that the trend of social businesses is a legitimate trend. For example, it is stated in the paper that social entrepreneurs express a higher level of passion for the work they do. This contributes to a higher level of confidence among social entrepreneurs, because even if the enterprise does not succeed immediately, they still have  that sense of doing something for the greater good (RBC, 2014).

In my opinion it is a great thing that social businesses are on the rise, and I strongly believe that the future belongs to this type of doing business. This form of entrepreneurship is available to all who care and want to make a change towards a better future for our planet and all of its inhabitants.

Since I plan to do the report about Kiva, a microfinance social business that created an online portal for handing out loans to starting entrepreneurs and students in underdeveloped parts in the world, it seemed most fitting to me to discuss this question on the basis of Kiva. Kiva is an organization inspired by the pioneer of the concept microfinance Muhammad Yunus, founder of Grameen Bank.

Kiva and its microfinance system alleviates poverty, something which is a fundamental part of the Millennium Development and Sustainable Development Goals. Kiva targets local business development by handing out loans to starting entrepreneurs and students who simply need a starting capital that they cannot get from a regular banking service. This way of providing opportunities for local business development is great for the creation of an environment that facilitates growth in employment and economic growth. Instead of simply donating money, the idea of a loan that provides opportunities for people to become a sustainable entrepreneur and for people to become responsible for their own success are more likely to succeed in contributing to sustainable development.

As I mentioned earlier, a big obstacle for many local entrepreneurs in developing countries/areas is the access to capital. Therefore, Kiva helps to overcome this obstacle with the simple idea of a loan so that people can have access to this needed start-up capital and so that they can reach their potential and in time contribute to a sustainable community.

Appendix 4: How could Kiva benefit (or not) from a different economic approach?

Economic globalization has led to a massive expansion in the scale and power of big business and banking. It has also worsened nearly every problem we face: fundamentalism and ethnic conflict; climate chaos and species extinction; financial instability and unemployment. There are personal costs too. For the majority of people on the planet life is becoming increasingly stressful. We have less time for friends and family and we face mounting pressures at work.

The Economics of Happiness describes a world moving simultaneously in two opposing directions. On the one hand, government and big business continue to promote globalization and the consolidation of corporate power. At the same time, all around the world people are resisting those policies, demanding a re-regulation of trade and finance'and, far from the old institutions of power, they're starting to forge a very different future. Communities are coming together to re-build more human scale, ecological economies based on a new paradigm -- an economics of localization.

We hear from a chorus of voices from six continents including Vandana Shiva, Bill McKibben, David Korten, Michael Shuman, Juliet Schor, Zac Goldsmith and Samdhong Rinpoche - the Prime Minister of Tibet's government in exile. They tell us that climate change and peak oil give us little choice: we need to localize, to bring the economy home. The good news is that as we move in this direction we will begin not only to heal the earth but also to restore our own sense of well-being. The Economics of Happiness restores our faith in humanity and challenges us to believe that it is possible to build a better world.

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