Deceptive advertising hurts the entire aid industry

The aid blogosphere is alight with the controversy surrounding Kiva. According to Kiva’s website:

“Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe.”

The gist of the controversy is that Kiva is not clearly portraying exactly what they do. Three posts to learn more are Is Kiva misleading the public?, Kiva is not quite what it seems, and Even more questions about Kiva. According to these posts, Kiva gives the impression that the donor’s money goes directly from them to a specific person that they choose, when in reality it doesn’t.

The person-to-person illusion

Microfinance is not the only form of aid that uses the person-to-person illusion to attract donors. Many child sponsorship programs function similarly.

- Clarification – I’m not addressing whether or not person-to-person programs work, nor am I saying that no microfinance or child sponsorship programs actually do person-to-person funding. I apologize if it came across that way. Instead I’m addressing the problems caused by aid agencies that do not actually do person-to-person donations but give the impression that they do in order to attract donors.

According to the US Better Business Bureau’s section on Donating to a Child Sponsorship Program.

“One commonly misunderstood aspect of child sponsorship groups is that, in most cases, sponsor contributions are pooled with other donations and used to support project(s) designed to benefit the local community where the child lives as opposed to being conveyed exclusively to the child. These community projects may include schools, medical care, disaster assistance, construction of water wells, and/or food distribution activities. Although some organizations do allocate a certain amount of the sponsor’s contribution as a cash grant to the sponsored child’s family, this type of sponsorship is far less common than the one described above.”

Why do aid agencies purposefully mislead donors into thinking that their money goes directly to an individual? Because it appeals to the desire on the part of many donors to make a difference in just one person’s life. While this may be an effective fundraising technique, it is misleading and calls into question the professionalism of the organization because truth in advertising is part of many aid industry standards.

Misleading donors is clearly against charitable standards of professionalism

The US Better Business Bureau’s Standards for Charitable Accountability states:

15. “Have solicitations and informational materials, distributed by any means, that are accurate, truthful and not misleading, both in whole and in part. Appeals that omit a clear description of program(s) for which contributions are sought will not meet this standard.

A charity should also be able to substantiate that the timing and nature of its expenditures are in accordance with what is stated, expressed, or implied in the charity’s solicitations”

The InterAction PVO Standards (Private Voluntary Organizations) states:

5.1 The member organization shall be committed to full, honest, and accurate disclosure of relevant information concerning its goals, programs, finances, and governance

5.2 Fundraising solicitations shall be truthful; shall accurately describe the organization’s identity, purpose, programs, and need; shall only make claims which the organization can fulfill; and shall avoid placing excessive pressure on donors. There shall be no material omissions or exaggerations of fact, no use of misleading photographs, nor any other communication that would tend to create a false impression or misunderstanding. Information in the organization’s appeals should give accurate balance to the actual programs for which the funds solicited will be used. The organization shall not undertake negative advertising or criticize other member organizations to benefit themselves.

Regardless of whether or not microfinance or child sponsorship charities provide quality aid with the money they raise, by deceiving donors they are helping to create and perpetuate problems caused by ill-informed or misinformed donors. As I stated in my recent post “Does your aid agency website inform or misinform donors” if aid agencies are not providing accurate information on the real situation and are not working to educate their donors then they are contributing to the endemic aid problems caused by donor expectations.