(Strategy Compass GmbH, Value chain analysis by Porter)
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Key impact points
The above diagram illustrates some of the major activities Kiva carries out as an organization in their process of delivering value to their borrowers through collaboration with lenders and field partners. Kiva’s activities makes economic, social and environmental impacts at many points on their value chain.
Below are seven key impacts of Kiva’s work, both positive and negative. These impacts need to be taken account of and measured carefully if Kiva is to continue to evolve in their efforts to use lending to alleviate poverty. Each impact is listed under the point along the value chain they are most connected.

Economic
Positive
Primary activities > Operations > Lending program
Brings affordable capital to people in need that allows them to engage in economic activity. An estimated 2.5 billion adults around the world do not use the services of a bank or other financial institution (McKinsey, 2010). Kiva loans are able to serve these same people who are not being served by conventional banks.

Negative
Primary activities > Operations > Lending program
Many of Kiva’s field partners charge a high interest rate. Regardless of the source of capital, the partners are typically microfinance institutions that rely on interests they collect to carry out their work. The smaller the loan, the higher the interest rate due to the high transaction costs that must be covered. This disproportionately affects the poorest borrowers who take out smaller loans (Kiva).

Social
Positive
Primary activities > Operations > Monitoring and evaluation
To recognize field partners meeting and exceeding best practices in social performance, they have researched and published a set of ‘social performance badges’. They invite their lenders to learn about the badges and to choose field partners to lend with based on those badges. The badges include anti­poverty focus, entrepreneurial support, client voice and innovation. Most
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field partners have some badges, but few have all. This system can incentivize their field partners to increase their social performance in their work with microfinance clients.

Negative
Primary activities > Marketing and sales > Website
A 2011 study found that Kiva lenders tend to favour making loans to more attractive, less obese and lighter skinned borrowers. Those factors have no influence on the value or reliability of the investment, but yet influence lender decisions. This can serve to aggravate inequalities among those who are already poor (Jenq, 2011).

Environmental
Positive
Support activities > Procurement > Listing loans
Kiva is able to catalyse new industries by using their patient, value­oriented capital towards unproven, small and slightly risky green businesses that would not otherwise receive loans.
This investments not only improve environmental health, but have the potential to catalyse the creation of more such projects. (Gunther, 2011)

Negative
Support activities > Human resources > Kiva Fellows
Carbon emissions released through the flights of Kiva Fellows to send them on their volunteer experience. Primary activities > Operations > Lending program
A review of listed loans show that many projects that cannot be considered to be strictly
“sustainable”. For example, there are borrowers seeking loans to open shops that sell packaged goods, motorcycle and automobile repair, fertilizers and pesticides in agriculture and genetically modified seeds. Whether or not these activities are sustainable is open to debate.
There is no question, however that many if not all of these activities do have adverse ecological impacts that need to be taken into account.

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Sources
Jenq, C. et al. (2011). What do donors discriminate on? evidence from kiva.org. Retrieved from http://riped.utcc.ac.th/wp­content/uploads/2012/03/Dr_Jessica_Pan_30_March_2012.pdf Kiva. (n.d.). About Microfinance. Retrieved from http://www.kiva.org/about/microfinance#interestRatesAreHigh Kiva. (n.d.). Kiva Fellows. Retrieved from http://www.kiva.org/fellows
Kiva. (n.d.). Social Performance. Retrieved from http://www.kiva.org/about/socialperformance
Gunther, M. (2011, May 3). How kiva pushes the envelope on 'green'. GreenBiz, Retrieved from http://www.greenbiz.com/blog/2011/05/03/how­kiva­pushes­envelope­green McKinsey (2012). Counting the world’s unbanked. Mckinsey Quarterly
Strategy Compass GmbH. (Designer). Value chain analysis by Porter [Web Graphic]. Retrieved from http://free­powerpoint­slides.com/strategy­concepts.php

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