Growing a Garden According to the Economics of Philanthropic Crowdfunding

Every day, people around the world lend money to strangers through philanthropic crowdfunding platforms like Kiva and GlobalGiving. You could help a farmer in El Salvador buy cattle, fund a Cambodian student’s university tuition, or support a man in Palestine who wants to buy his family a heating system. These transactions, orchestrated with a few mouse clicks, are coordinated by a network of microfinance institutions, nonprofit organizations, and other groups; they are also all invisible to their lenders, who rightly feel good about their charitable deed and often share the news on social media after making a contribution.The economic flow, however, also often includes high interest rates and fees that borrowers have to pay.

“Who profits?” artist Stephanie Rothenberg asks in Reversal of Fortune, her data art series that makes visual the relationships between lenders, borrowers, and banks in these complex crowdfunding systems. The larger installation, “The Garden of Virtual Kinship,” shows that it is the banks that profit — that there are disadvantages in microfinance models even if they do help borrowers attain goods or empower them in some way. Currently on view at the ZKM Center for Art & Media in Karlsruhe, Germany, as part of the exhibition GLOBAL: infosphere, “The Garden of Virtual Kinship” consists of a telematic matrix of microplants that form a global map; connected to Kiva, it responds to real-time donation data and uses water to visualize the flow of money. A second installation by Rothenberg, “Planthropy,” on view at Manchester’s The Lowry, shows how social media has affected philanthropic efforts.

“This is about the intersection between social media, finance, and philanthropy,” Rothenberg told Hyperallergic. “Both pieces are questioning what it means to donate through the click of a button.”

Every time a campaign listed on Kiva receives funding, “The Garden of Virtual Kinship” waters a certain plant (each of which represents a borrower from a certain region of the world) through a computerized watering system. Donation data triggers the droplet to move to the appropriate plant and squirt out water from a tank labeled “Money lended for microfinance loans”; each plant receives only a little bit, with most of the liquid seeping through to an undertank, which represents high interest rates and fees. Borrowers, therefore, receive only small benefits, while bank profit is huge. An LED screen also records the relationships between the loan amount and the interest rates, which range from 30 to 50%. While Kiva does not collect any interest on its posted loans, its partners do charge high rates — currently, the overall average portfolio yield is 34.8%.

“It’s not really the lenders that are bad,” Rothenberg emphasized. “It’s just that microfinance industry has a lot of these contradictions. It is aimed to help people, but when you’re dealing with people that are really in poverty, why are the interest rates so high? There has to be a better model than charging someone who is asking for $300 to make them pay half of that back in fees.”

The organic map also reveals geographic patterns of philanthropy and emphasizes the humanitarian aspect of many of these projects. Not only does it make clear the movement of donations from developed countries to developing ones, but the economic system also naturally echoes geopolitics. More funding, for instance, is occurring in the Middle East because of the refugee crisis. Such patterns, Rothenberg noted, create a peculiar inversion where literal growth occurs in areas of the map with conflict or weak economic infrastructures, while the regions representing the developed world remain barren. She stressed that she believes donors ultimately do have good intentions, but thinks that Kiva’s listings of areas and types of borrowers are strategic as well.

“I think banks are looking to profit where there’s disaster economically and politically, and that’s part of the reason why you start to see a lot of borrowers in certain areas emerge,” Rothenberg said.  “Where there’s trauma in the world, there’s also money to be made.”

Her probe of online-facilitated philanthropy continues in “Planthropy,” which consists of five planters that each represent a major charitable cause: world hunger, breast cancer, climate change, animal rights, and refugee issues. The plants themselves relate to the cause, with a medicinal plant representing breast cancer, for example, and a gardenia for climate change. They receive water whenever someone tweets about donating. A system scans Twitter for certain hashtags and phrases such as “#donate world hunger” or “#donate climate change,” and the planters read pre-selected tweets explaining why people choose to donate in computerized voices.

“I donate because cancer is so last year, and I’m a survivor today,” one planter says; another intones, “I donate to climate change because Leonardo DiCaprio does.” Social media, as “Planthropy” suggests, is transforming how philanthropy happens online, with the ability to publicly broadcast a good deed becoming a major motivator.

“Every time you donate, it’s like, I bought a Filet-O-Fish sandwich, and five cents goes to end world hunger,” as Rothenberg said. “It’s called an ethical consumption. So I can purchase things and feel good about being a consumer because I am also donating, and I think that social media has enhanced all of that. The act of giving has almost become … you just push a button, and you don’t really think of it, but you feel like you did something good.”

She hopes that Reversal of Fortune will make people more aware of their roles in these economic systems, pausing to consider where their money is going and whether they are truly making contributions. As philanthropic crowdfunding sites like Kiva become more popular, Rothenberg would like to see alternatives to current models.

One website she champions is Zidisha, which directly links lenders and borrowers. Although the platform’s user base is much smaller than Kiva’s, its lenders may determine their own interest rates, which tend to remain low. Kiva itself has been exploring alternative models to better connect its lenders and borrowers, especially after a 2009 blog post revealed exactly how it operates. Just this month, it launched Kiva Zip in the US, an interest-free program for small business owners that is peer-to-peer, like Zidisha. Of course, one can also always help out the old-fashioned way. As Rothenberg said, “I think people have to remember that it’s important to go out in the physical world as well and help in what you can do.”

Stephanie Rothenberg’s “Garden of Virtual Kinship” is on view in GLOBAL: infosphere at the ZKM Center for Art & Media (Lorenzstraße 19, Karlsruhe, Germany) through January 31.

Stephanie Rothenberg’s “Planthropy” is on view in Right Here, Right Now at the Lowry (Pier 8, Salford Quays, Manchester, UK) through Februrary 28.