An SMS alert tells recipients of aid – in countries like Kenya – to collect the cash donated from a local mobile money agent. © Ton Koene/PA Images

Zoran is a friendly looking 45-year-old father of two who lives in Kosovo. In order to supplement what he and his wife earn in their day jobs he also grows vegetables to sell at the market. Zoran is trying to raise $1,700 to install a water irrigation system for his greenhouse. Borrowing $25 from you could help him do that.

Zoran is one of over 5,600 people or groups from across the world available to lend to through the Kiva website in just a few clicks.

Users choose a borrower and say how much they want to lend. A network of local field partners, such as microfinance institutions (MFIs) or non-profits, deal with making the loans. When the borrowers repay, the money lands back in the lender’s Kiva account to either lend again, donate or withdraw. So far nearly $12.2 million has been lent through Kiva by nearly 1.5 million people.

It’s not just microfinance platforms like Kiva, Zidisha or Deki that offer this ‘direct’ approach to helping people in need. Others, like GiveDirectly, allow you to get cash transferred straight to the recipient to do with what they think is best.

GiveDirectly locates extremely poor communities using publicly available data. Households are then targeted using criteria that vary by region – for example, they may include whether the potential recipients have grass or permanent roofs. An audit takes place to verify eligibility, including data-consistency checks using GPS co-ordinates and satellite imagery. Around $1,000 is transferred to families using electronic payment systems, usually an SMS alert to collect the cash from a local mobile money agent.

These organizations offer the chance to bypass traditional NGOs and give money straight to people living in poverty.

Like child sponsorship?

‘People are getting fed up with charity,’ says Deborah Doane, international development and sustainability consultant. ‘They mighthave been giving direct debits for 20 years but the same issues remain.’

David Nichols, a 27-year-old from Bristol, has been lending money through Deki, a platform similar to Kiva, for around six years. This is now the main way he gives to charity. ‘I prefer to know where my money is going,’ he explains.

Nichols is not alone. When asked what would restore their faith in the charity sector, 78 per cent of responders to a British YouGov survey replied: more transparency over how a charity’s money is spent.

‘When you’re giving to a large charity – a monthly donation – you don’t know how exactly that’s having an impact,’ says Doane. ‘That’s not because NGOs aren’t doing useful work. It’s because some of what they do isn’t easy to quantify.’

We don’t seem to have given up on NGOs entirely, however. The 2016 Edelman Trust Barometer found that trust towards NGOs across the world is at its highest level since the global financial crisis.

Oxfam has taken a leaf from the ‘peer-to-peer’ book with Projects Direct – its own direct-giving platform that presents a list of community-based projects for people to donate to and get regular updates from.

In terms of their marketing, many direct-giving and lending platforms owe much to child sponsorship – a model that was sharply criticized by New Internationalist in the 1980s and 1990s for fostering paternalism, singling out individual children, misleading donors, and failing to address the root causes of poverty and inequality.

‘It’s very hard, as a fundraiser, to say to someone, “come and deal with the ins and outs of the global financial system” – who wants to do that?’ says Ashley Erdman, founder of HumansFor, which works with individual donors to help them find ways to give that tackle problems of power and inequality.

The internet offers personal connections and an apparent ‘democratization’ of giving and lending. And it’s popular. In Britain alone, the average online donation rose by 20 per cent from 2010-14.

But there are problems. Kiva, for example, has been criticized for not being as ‘direct’ as it might seem. Loans are normally disbursed by the local microfinance partners before the money has actually been raised. A more controversial issue is the interest charged by many of the local microfinance institutions (MFIs) that act as intermediaries. Some have even been described as ‘loan sharks’ who charge borrowers rates of over 20 per cent, although the loans come from Kiva with 0-per-cent interest.

It is argued that the intermediaries or MFIs should have their costs covered by the lenders, not the impoverished borrowers. Kiva argues that the rates the borrowers are getting are still better than any others they might obtain locally.

Questions have also been raised about GiveDirectly, in relation to targeting and creating potential tension within communities, as some people receive money and others do not.

Then there is the question of who has access to a mobile phone, on which direct giving relies: men are more likely to own one than women. GiveDirectly says this need not be a barrier: what recipients need is a SIM card, which they can be given. And recipients can always buy a mobile phone from GiveDirectly, the cost of which is then deducted from the transfer.

‘My own choices’

Adina Claire, Fundraising and Communications Director of the charity War on Want, has concerns about how data is used to find people to help. ‘Where’s the data coming from? What about all those communities that you can’t locate because the data is not available? Those are the really poor communities,’ she says.

GiveDirectly has also had problems with fraud. According to the aid monitoring group GiveWell, in 2014 two GiveDirectly field staff colluded with mobile money agents to steal $20,500. GiveDirectly has since taken measures to address the vulnerabilities exposed by this case.

Julia Kurnia, founder of Zidisha, another microfinance platform, has argued that cash transfers are no more than ‘handouts’. Microfinance is a business transaction – where, she argues on Huffington Post, success is ‘a result of my own choices’.

Doane disagrees. ‘We need to think more about aid as a social benefit that’s done much like welfare. You provide it, then people are accountable to their lives and what they’ll do with it. Some people will succeed and some people won’t.’

GiveDirectly is taking this further with a basic-income experiment. The plan is to provide at least 6,000 Kenyans with an income high enough to meet their basic needs for 10 to 15 years and then test the impacts.

These platforms are just some examples of the intersection of tech and charity. In 2014, 12 of the 50 people on the Chronicle of Philanthrophy’s list of the biggest US givers came from the technology industry. But under ‘philanthrocapitalism’ the lines between profit-making and non-profit activities can be blurred.

For example, eBay founder Pierre Omidyar set up the Omidyar Network to make investments in both non-profit and for-profit enterprises. The Network awarded Kiva a $5 million grant in 2010.

There are close links with the tech titans. Both Kiva and GiveDirectly have benefited from Google’s Global Impact Awards: $3 million for Kiva in 2013 and $2.4 million awarded to GiveDirectly in 2014. Google staff also sit on the board of directors.

GiveDirectly has also received $25 million from Good Ventures, a foundation started by Facebook co-founder Dustin Moskovitz and his wife Cari Tuna.

So how can someone with money to give decide where to direct it?

‘Look for organizations that are analysing and challenging the policies and power of our governments and global institutions,’ says Erdman.

‘It’s nice to make a connection; it feels good, but what’s the impact?’ asks Claire. ‘Development is not like online shopping.’

Amy Hall is a freelance journalist and frequent contributor to New Internationalist.

This article is from the July-August 2016 issue of New Internationalist.

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