Nonprofit philanthropy should contribute more than marginal economic improvements. A more holistic approach is needed for transformational outcomes, enabling marginalized groups to sustain their own economic prosperity. Through micro-investment, partners are in a cooperative partnership, rather than a lender-borrower relationship, with small-business entrepreneurs. Common Good Trust is a co-op holding company that will facilitate micro-investments in small businesses in the US and Guatemala.

Challenge

Economics studies have agreed that micro-lending has produced marginally positive effects, but has been far less transformative than initially suspected. While micro-loans can have some positive short-term effects like increasing business activities, they seldom led to profit increases in existing businesses. Additionally, micro-lending has not proven to increase income or consumption in the long run for the average borrower.

Long-Term Impact

Cooperative investment divides financial risks, empowering entrepreneurs to take chances tweaking business plans and developing skills to boost their income in the long run, a more sustainable approach to long-term wealth creation. Micro-investing through Common Good Trust will limit risk to business owners encouraging more robust involvement in the formal market ultimately leading to sustainable economic growth.

References

1. https://highlandsupportproject.org/

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