Investing in Microfinance, Social Enterprise and Business to Empower the Poor

“Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.” – Matthew 6:19-21

This article is part 2 of 3 in a series about how we can use money to aid those who have less. Part 1 focused on giving. Today we’ll discuss investing. 

Investment of wealth can be a very effective tool to help–and indeed, empower–the poor. There are many examples of how this can be achieved. However, over recent decades three broad movements illustrate what can be achieved by investment in the poorest communities.

1) Microfinance

The first is the world of microfinance. Across the globe, though particularly in developing nations, co-operatives are established in poor communities to make loans to initiate small businesses. As these businesses generate income, the start-up loan is paid back and the capital lent to new small businesses. At least, this is the intention. The effectiveness of microfinance seems to be uneven in various contexts, and it has its share of supporters and of critics. However, at its best, it is a mechanism for those with entrepreneurial abilities to obtain capital, create a value-adding business, provide for themselves, and benefit their communities.

One example of microfinance comes from Five Talents International, a faith-based international development organization that empowers the poor in developing countries by implementing microcredit and savings programs, as well as business training.

A second broad form of microfinance is that of “savings-led” co-operatives, which rather than giving loans to members, asks them to commit to saving a small amount each week, which is then aggregated with the rest of the group and eventually invested. Over time, with support and mentoring, the co-operative builds a reservoir of capital, which can be drawn on by individuals for urgent needs or borrowed in order to begin a business. The shared capital can also be used for enhancing the well-being of the whole community. Savings-led co-operatives help poor communities to overcome one of the primary barriers for people improving their lot—that is, a lack of options for safely investing their minuscule savings.

In the following video, Katie Nienow talks about her call from youth ministry to microfinance. (Thanks to our friends at The High Calling for the story.)

Business as God Meant It To Be from Christianity Today’s This is Our City Project.

2) Social Enterprise

Another movement growing in both developed and developing nations is that of “social enterprise.” These are businesses that are established to achieve social goals in addition to being profitable. Such enterprises often seek to generate a “sustainable” profit, but not necessarily to maximize return on investment. 

One example of social enterprise is Freeset, a fair trade business that offers training and alternative employment to women trapped in the sex trade in Kolkata, India. They make and export high quality jute bags and organic cotton t-shirts.

3) Business

Although we have focused on investment vehicles that explicitly seek to aid poor people, ordinary for-profit business investments in poor countries and communities can also be powerful means of reducing poverty. The productive capacity of the world is not close to being exhausted, although human ingenuity and diligent stewardship of natural resources and the environment are required.

However, because the purpose of businesses is generally to benefit shareholders, not poor communities, they can also become powerful means of exploitation and abuse. Hundreds of millions of Christians work in businesses that invest in, manufacture, distribute, sell or transport goods and services in poor regions. Perhaps they have the greatest opportunity of all to creatively shape business strategy and operations in ways that aid poor people throughout the world.

One example comes from Collin Timms. Timms is the founder of GSK Enterprises, a venture-capital company developing socially responsible enterprises having a wide portfolio in health care, transportation, hospitality, and education. An interview with Timms is here.

Investing in God’s Kingdom

By investing in and empowering the poor through microfinance, social enterprise and business, we participate in God’s work of restoration and justice in the world.

“Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.” – Matthew 25:40

Part 1: How to Give Generously to the Poor This Year
Part 3: Aid the Poor by…Spending?

The article Aiding the Poor Through Investing is excerpted from the Theology of Work Project’s Overview on Provision and Wealth, which explores God’s original intentions for us regarding provision and wealth, the consequences of living in a fallen world and how we are to handle wealth as we participate in God’s redemptive plans.