I had a good conversation with Kiva co-founder Matt Flannery, who told me the microlending Web site will offer loans to people in the United States later this year and is working to fix the imbalance of borrowers and lenders. He also reflected on his own motivations and hope for the future. He grew up in Gig Harbor and still has family and friends here, in addition to several non-profit partners. Thanks to Susan, Kintan, Lynann and others for contributing questions.

Q: What brings you to Seattle?

A: Primarily to speak to SeaMo [Seattle Microfinance], an organization my long time friend Ryan [Calkins] is running. I've known Ryan since we were 15. I'm meeting several other [microfinance] practitioners: World Vision, Unitus, Grameen Technology Center. We just want to expand synergies with those three organizations.

With Grameen we have a lot to learn from them. They're developing great software...we'd love to encourage our partners to use it. It's free and it's advanced to manage their loan portfolio, and our Web site can connect to that.

As we grow from 6 million to 60 million, it's getting quite complicated. A single organization in Peru might be managing 2,000 borrower profiles on our site. They have to upload those one at a time from a location where the Internet doesn't works so good, and as a woman pays them back $10 a month, enter that information in Peruvian currency. Then relay to somone in Seattle and that person gets paid back in dollars. When you have currency fluctuations in between, it gets pretty complicated.

Q: How has the economic crisis impacted Kiva?

A: Currencies are more volatile than ever. Funding is drying up for partners all over the world. [In the past] there was almost too much debt capital compared to the capacity of lending organizations to absorb it. Because of the credit crunch, most of that has dried up or in the process of drying up. Kiva is growing. We're becoming more important in that landscape. We're depending on people in Seattle with $25 to make up the difference.

Lending organizations helping women in Ghana, you break even charging 20 percent interest, and in order to lend that out you need to get funding. They get funding from wholesale debt and lend it to the women. A few years ago debt capital like that was abundant. If you run a commercial you could get funding from Deutsche Bank, Citibank, USAID, Unitus and local banks. Just as banks in the U.S. are tightening criteria, so are these international lenders. Kiva is contrary to that trend because the money we raise comes from completely different sources. Lenders are borrowing money from Wall Street, the same places that are drying up. Kiva is borrowing $20 from my mom. My mom is not drying up yet. The average lender is contributing $60. We have diversified our sources to half a million people. That's more diversified than if you are Lehman Brothers. The situation is driving more MFIs to Kiva, and more lenders, too, oddly enough.

CAROL PUCCI/SEATTLE TIMES

Radka Borisova Portocalova runs a walnut-cracking business in the Roma ghetto in Bulgaria. She and her husband hope to use the money from their Kiva loan as working capital to increase the volume of nuts they buy.

Q: Does microfinance offer any lessons or solutions to the larger problems in banking?

A: The emphasis on knowing the borrowers is the biggest lesson you can learn. Know the community in which you work. You get to know the people you work with and that results in a high repayment rate.

Q: Kiva has run into the problem of having more lenders than borrowers. Is that still the case?

A: It just changes. Today more borrowers than lenders, yesterday there were more lenders than borrowers. It's just dynamic call and response on the Web site. The equilibrium shifts back and forth often.

Q: Is it a problem of infrastructure within microfinance to find enough borrowers to which you can direct those lenders?

A: I wouldn't go so far to stay that. We have 100 partners, and we work with them closely. It has much more to do with Kiva. We've been chronically short [of borrowers] more than not. Especially since December more often than not loans have been zero. That's because we've been selling out. Lenders - about 150,000 are selling the site out most days. That's a failure on Kiva's part to predict the strength of our lender base to grow exponentially and supply the site accordingly. We should have been signing up more and more [microfinance institutions] and enrolling them last October or last August to prepare for this event.

We looked at our statistics last year, and in February we thought that we would have the same seasonal patterns. This year it's not true at all. Last August we were trying to improve relationships with existing partners rather than expanding. We didn't predict that in 6 months the site will be blowing up. Finding partners takes time. You have to go to Mozambique to get to know a small non- profit, to do an audit, to get to know the funders, and do all sorts of financial analysis. We'll probably be in the opposite situation later this year.

Q: What are you doing to address that?

A: We raise money from our lenders, who donate little amounts to us optionally. That's the main way we are able to pay the rent, and occasionally donations from foundations [such as eBay founder] Jeff Skoll's foundation and the Kellogg and Rockefeller Foundations. Right now we're trying to raise another big round of money from foundations, so we can stop operating incrementally, and correcting, correcting, correcting... because we're understaffed.

While we're growing, the world just looks quite unstable. We have a few months of good data...but it's inconclusive. Part of our income comes from foundations. I am seeing a noticeable tightening on the part of foundations. I view foundations as much more volatile than the Internet public at large. That makes up 30 percent of our budget, and the outlook for that is much more dire.

Q: Is Kiva expanding to offer loans to people in the U.S.?

A: Yes, I expect it to happen probably later this year. Obviously there's poverty everywhere including the U.S. As we've grown up, we've begun to think of our Web site not only as a developing world Web site but a place to lend to people in poverty. When we started we thought it's an interesting idea for this one village in Uganda ... Time and time again we were just forced to think bigger. We just were responding to thousands of people who wanted to do something.

Q: Can you envision applying the Kiva model of dispersing financial capital to dispersing human capital, such as mentoring entrepreneurs in developing countries?

A: Yes, I think the flow of information is just as important as the flow of money. That's a really good idea. It's been hard for us to pull it off in the early days. The borrowers typically aren't computer literate or even literate. People who are borrowing don't read and certainly don't use the computer. That's a barrier. In running their business, they know what to do. If you've been selling vegetables in Cambodia for 15 years, you're pretty good at it and you know your market. It's really just [a question of] funding. That's by and large the problem we're trying to solve. It's challenging if you're a Microsoft employee in Seattle speaking to someone selling vegetables in Cambodia.

Q: Do you think global poverty can be eliminated in the next 35 years?

A: Oh, absolutely... wide scale poverty that is. There's always some segment of people that will be poor because of their situation. But we live in a world where a huge percentage of the glob is in poverty. It's completely out of whack. I think we'll look back at this era in shock that we let this thing get this far out of hand. I think this is a temporary anomaly in a world where there's disparity in wealth. It's this weird moment in time, in history, that will correct itself because it's unsustainable.

Q: What motivates you to do this work?

A: I grew up in a Christian family... my mother was a volunteer for World Vision, my sister worked for World Vision. I definitely had international development on my mind. I realized I was an entrepreneur and that was what I was best suited for. I tried to start several companies and failed and failed. It wasn't until I went to Africa with [co-founder and wife] Jessica. I loved talking with people in Kenya about their plans and dreams. That was a different vibe than I had when I was sponsoring children and had an idea of Africa as a desolate place. I found it vibrant and fun. I just wanted to convey that sense of hope and have people convey that to each other. That set me on fire. I thought wow, if people knew the country and started helping a business in Africa that would be so exciting. I told my family I'm going to start thousands of businesses in Africa. People are entrepreneurial. People have a lot in common if you can just break down the barriers between them. Neighbors are not just here, they are in Cambodia and Nicaragua. You are so connected to them spiritually and financially, but it just hasn't been evident.

Q: What do you mean by that?

A: In any major faith tradition there is a proponent of the idea that people are very connected. Whatever religion you're in you'll find there's a universality of people and our actions affect us all.

Financially what you have is a good metaphor for spiritual connection. Someone making a foolish decision in Louisiana, a loan defaulting, a bank no longer able to lend money to international lending organizations, then institutions collapsing in Cambodia because they can no longer raise money, and a seamstress weaving silk in Cambodia can no longer get a loan. It's connected now more tightly than ever.

Q: What else is in Kiva's future?

A: We're opening a development community for volunteer developers all over the world. Volunteer coders are writing apps, where you can browse loans on an iPhone and see transactions. With a second round of apps hopefully you can make a loan from Facebook, or put Kiva loans on your Web site... People could buy loans or where you access a 401k online, you might be able to put a Kiva loan there. We want to spread transactions across the Internet. One day, borrowers can actually get the money on their mobile phones. That's probably five years away. The regulatory and technology barriers are too great to do it today.