David Roodman is an expert in microfinance and research fellow at the Center for Global Development. David is currently writing a book on microfinance as an “open book blog” project, where he shares sample chapters of his book in progress with his growing online community.
David’s blog has prompted an international discussion on poverty alleviation, generated national media coverage, including a story in the New York Times, and underscores a new publishing model where authors write books in real-time in partnership with their readers, forming a living dialogue between author and audience.
David shares his experiences and tips on how authors can now position themselves as thought leaders during the book writing process, building an audience for their books before they are published, while shaping a national dialogue around their topics.
Can you tell us a bit about the Center for Global Development and the work you do there?
The Center for Global Development is a think tank based in Washington, DC. We do serious research that, we hope, leads to changes in how rich country governments help poor countries while going beyond foreign aid to include trade, migration and climate policies that affect poor people around the world.
Can you provide a short overview of microfinance?
The most popular type of microfinance is micro-credit, which involves making small loans of $50 to $100 to poor people. These loans are given to individuals who form into borrower groups of 5-40 people who are each responsible for each other’s loans, which is how you assure repayment.
The common perception perpetuated by microfinance charities is that the poor always invest these loans in their businesses by stocking items in corner stores or buying a new sewing machine. Sometimes that happens, but the reality is more complex and people use credit in all sorts of ways, and not necessarily in their small businesses.
You’re currently writing a book online. Why did you choose this approach as a way to build your book?
In 2008, after initial research, I realized that though I’d learned a lot about the history of microfinance, I didn’t know everything. Instead of writing my book from the seclusion of my office, I decided to share it online and get ideas from other people to improve the text.
My goal in writing the book was to get at the truth about microfinance and explain it to people. I wanted to explain the benefits, and even the harms, of microfinance and examine the implications of how to best support microfinance, or determine whether we even support it at all.
You recently wrote a blog post entitled, “KIVA is Not Quite What it Seems” which challenged the popular non-profit organization for posting inaccurate information on its website. Can you talk about that blog post and essentially what happened when it went live?
KIVA is a new player on the microfinanance scene. It started just four years ago and their big innovation, their big idea, was to bring the internet to micro-credit and make it sort of like Ebay so that someone like you or me could go on their website and choose exactly who we wanted to lend money to on the other side of the world.
Great idea, and they have been growing really fast. It’s been on Oprah and gotten lots of attention. However, after some basic research, I learned that Kiva doesn’t operate as most people believe. Here’s a summary of what I wrote on my blog post, Kiva Is Not Quite What It Seems:
Kiva is the path-breaking, fast-growing person-to-person microlending site. It works this way:
Kiva posts pictures and stories of people needing loans. You give your money to Kiva. Kiva sends it to a microlender. The lender makes the loan to a person you choose. He or she ordinarily repays. You get your money back with no interest. It’s like eBay for microcredit. You knew that, right? Well guess what: you’re wrong, and so is Kiva’s diagram.
Less than 5% of Kiva loans are disbursed after they are listed and funded on Kiva’s site. Just today, for example, Kiva listed a loan for Phong Mut in Cambodia and at this writing only $25 of the needed $800 has been raised. But you needn’t worry about whether Phong Mut will get the loan because it was disbursed last month. And if she defaults, you might not hear about it: the intermediating microlender MAXIMA might cover for her in order to keep its Kiva-listed repayment rate high.
In short, the person-to-person donor-to-borrower connections created by Kiva are partly fictional. I suspect that most Kiva users do not realize this. Yet Kiva prides itself on transparency.
I started reading about the history. It turns out that they were inspired by child sponsorship, which comes from a previous generation where you sponsor a child in a developing country. And so, I wrote about everything that I learned and it was a very long blog post. And I think this is important to emphasize, I couldn’t quite justify what I was doing with my time. It just took a few days, but I felt passionate about it and I went with that passion.
I also tried to do it in a very gentle way, saying here’s a criticism I have but I’m not going to beat them over the head with it because I realize it’s easy for me to give it. It’s easy for me to Monday morning quarterback. They’re out there actually making a difference. So it was gentle but also passionate and thoughtful. And the other thing that made it of interest to a lot of people is that I was sort of tweaking a hot brand.
And so that combination, and I didn’t expect this to happen at all, just led to a huge amount of attention. It spread over a weekend after I posted it on Twitter. I got a couple hundred tweets. Then, a few days later, the bloggers started coming in and linking to it and it just swelled to this phenomenon and eventually led to an article on The New York Times.
Did you have any idea this would spark such a firestorm of conversation?
I had a mild idea, but I certainly didn’t anticipate the scale.
What does this controversy say not just about donors’ desires to feel a personal connection, but possibly even a distrust of NGOs and nonprofits to the point that they can’t really be trusted by writing an anonymous check?
That’s a really good question. We need to recognize that helping is difficult and that we’re part of the problem. We shape how charities behave. I think it shows how we can sometimes be our own enemies when we want to give to a good cause.
There’s a lot of skepticism of foreign aid that it doesn’t really work. That it just goes to the pockets of corrupt dictators. Yes, even though donors know that helping is difficult, but when the right emotional pitch is made for charity, like look at the picture of this poor child that you can help, our emotions take over.
We respond to pictures and simple stories that are not the whole truth, because that’s how we behave, we force charities to adapt to us. And so, in order to survive, they need to tell us simplistic messages.
In your opinion, what really points the way forward toward innovative, possibly or partially market inspired approaches to poverty alleviation?
What I would say is this: if you imagine your life without financial services, no credit cards, no mortgage, no bank account, nothing, no health insurance, no life insurance, it’d be pretty difficult. So, financial services are kind of invisible but they’re actually really important, and that goes for poor people too.
If you live on $2 a day, it doesn’t mean you get $2 every day. It means you get $4 one day, $0 the next, $1 the next, and you’re constantly having to save on the good days and maybe even borrow on the bad days.
So poor people actually need financial services more than middle-class people in rich countries. And so, from the perspective, it’s almost a no-brainer that appropriate financial services are good for poor people. That’s not to say that will lessen the amount of poverty and that’s not to say that there’s no danger in credit. We know that there are dangers in credit. But overall, it looks like it’s a useful thing.
Do you think microcredit helps poor people with no business experience just naturally grow their micro-enterprises?
There are lots of good uses of credit that don’t involve starting a business. More likely, it helps poor people with no business experience pay for their kids’ school fees or repay relatives for the money they had to borrow when their husband got sick and had to go in the hospital.
Your blog has gone beyond online buzz, and we talked about a story in The New York Times. What do you think this says about the future of ideas and how authors should gain influence in the future as they’re building their books?
The whole experience really helped me appreciate how the world has changed. It essentially has made journalism more democratic. Roughly speaking, anybody can become a journalist–but that doesn’t mean people will listen to you! But if you do things right, and have something interesting to say, barriers to entry are far lower than they were fifteen years ago.
It’s an amazing change in our society that I did not fully appreciated until I participated in this way. The blogging experience has been terrific for my work, and again, it’s not that I planned it. I just sort of discovered this. It has slowed down the book writing. I’m trying to get this book done and I feel stressed about the fact that I’m not done yet. But it has, in every other respect, advanced the purposes of my project. I’m learning more.
I signal to the world that I have expertise and, of course, the blog does that. And I’m producing short pieces that are more likely to be read than the book itself. And so it’s really been a boon for the project and I think this is the wave of the future.
You started the blog in February of 2009 and you already have quite a following. How did you go from publishing your first blog post to having thousands of people reading and passing your ideas around?
It’s not enough to just start putting up blog posts. You have to drive traffic to your blog and it’s a reinforcing process. The more people come to your blog, the more they tell other people who come to your blog, and so on. So you do have to be your own agent, and there are a few ways to do that.
One is finding email discussion groups on the topics you’re interested in. Find online forums where people who you want to reach are already congregating and submit occasional posts from your blog. Don’t overwhelm them but submit a few and say, ‘Hey, I’m doing this blog. I’d welcome your comments.’ Do the same thing through Twitter.
Find out who’s tweeting on your topics and re-tweet them and engage them in dialogues. Do it through all the various social media. It’s a process that takes time. And it’s true I got a huge amount of traffic with the Kiva post. I don’t get that traffic on a daily basis. Nevertheless, some percentage of the people who first came to the website because of the Kiva story stuck. They became subscribers of the blog or what have you.
In summary, what would you tell potential authors about jumpstarting a respectable readership? What final words or what tips might you lead people with about making the move in this direction if they’re thinking about writing a book?
Well, if they’re thinking about writing a book, then presumably, they like writing and they care about it, because that’s an important requirement. If you don’t take to blogging per se, then you shouldn’t be doing it because your discomfort will come through. So that’s one.
I guess what I would say is everybody needs to find their own blogging voice and style and that will develop naturally as you do it over the months. And there’s some reward for being contrarian, as I was with the Kiva post. But I think there’s also a reward for letting your passion and your personality show through up to a point.
As time has gone on, I’ve revealed more about my personal life, my children and my activities outside of my work. I’ve become more comfortable stating my opinions with feeling. At the same time, you need to apply all the disciplines that you need to apply in writing in general. You need to be aware of your audience, what jargon terms they won’t understand, how to write clearly, and so on, and how to keep things short when appropriate.
I think that this is an area where we’re all inventing it as we go.