Application of the Kiva Model in the Education World

I am sure many of you may have heard of Kiva before (if you haven’t people can fund entrepreneurs directly through micro loans instead of going through banks) . I like the idea because I believe that subsidies should go to the place where it is needed directly.

For non-profits of the future (don’t know how far away this is), I think the subsidy should go where the cost/benefit accrues. So, in the case of any organization that runs schools, the actual schools themselves should charge fees that allow them to be run them on a no-profit/no-loss basis. However, the subsidy is directed towards the child i.e. the entity that accrues the benefit/cost. So, in an extremely theoretical scenario, each student pays whatever the fees which allows the school to break even. However, the student is re-imbursed for the fees by a donor and the re-imbursement goes directly to the school where the student is studying.

Helping a student directly is far more scalable than helping an organization or school. Additionally, it allows the school to focus on its core job of providing decent education and not running around for fund raising.

To make it less theoritical and more practical, here is my Kiva like idea for students that has been going in my head for the past few months:

  1. StudentDonor Inc/Ltd ties up with schools that provide decent education at a reasonable cost
  2. Any student that wants to study at any of the partner schools just lists thier names on the website. Obviously, the school will help the student list thier name.
  3. Any donor can come to the school and support the student that they want to support
  4. The website will help monitor the progress of the student through journal entries etc…
  5. Additionally, StudentDonor’s volunteers continues to audit/monitor the progress of the school/student
  6. If the student doesn’t show up for class, the school doesn’t get re-imbursed and they go into a budgetary deficit. So, the school is also incentivized to keep the student coming back.

I know this feels somewhat of a replica of the US healthcare system with complex intermediaries and associated administrative costs. However, in this case, by laser targetting the funds to the donor, you can allow a pretty fragmented donor base to directly match to a pretty fragmented reciepient base.

This in turn would allow more schools to develop since they don’t have to worry about raising funds – StudentDonor takes care of that. All of you have to do is provide decent education. Half the people who want to start non-profit schools cant do it because they are afraid of the fund raising process.

Update: When I wrote this, I hadn’t heard of Donor’s Choose. They go part of the way by funding specific initiatives within the school and not necessarily the student itself.

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