We call our Small Business Fund grants “seed grants.” Sure, some of them may go to purchase actual seeds for family farms. The reason for the label, though, is that we are planting investment seeds with the hope of cultivating successful, sustainable, blossoming businesses. They are not intended to be one-time gifts that are sunk, disappearing into the ground.
That said, the grants are going to families who have very little money and very big needs. So there is always the temptation to spend the grant right away on immediate needs (like school fees or medical care) to help the family in the short term.
This tension – between our intention of investment and the immediate needs facing grant recipients – was one that I discussed with our Small Business Fund local coordinators at our conference in Uganda last July. Our coordinators are already conscious about not distributing grants right before school fees are due and about counseling groups to go the very day they receive the funds to buy their business products/materials, so that they do not give into temptation.
Sometimes a visual aid is the best way to convey such a message. And luckily, one night in Uganda, after a full day of discussion and visits, a clear visual came to me.
My chalkboard diagram at our conference in Uganda.
“It’s pretty simple, when you look at the alternatives,” I told the coordinators at our morning meeting session. We sat in white lawn chairs on the grass under a white tent to keep out of the already-hot morning sun. I stood at a chalkboard and explained. “Here is one option: you beg for money for immediate needs, you spend it, and then you need to beg again the next time that need presents itself.” This constant anxiety each time school fees are due is a familiar feeling for many families who live in the communities where we work.
“The other option is what Spirit in Action is encouraging with our Small Business Fund program.” It starts with the demand, which we know is there. The $100 initial grant is the seed investment. “The word investment is intentional, we are planting a seed we hope to see grow!”
After one business cycle, active business groups receive an additional $50 reinvestment grant. At this point, the business groups also make their own reinvestment with the profit from their sales, expanding and growing the business. For example, a few weeks ago I mentioned that with their reinvestment grant Stanly and Janet were able to buy a second bicycle and expand their business. This is part of building a sustainable business, one that doesn’t require constant grants to stay alive. And one that is also providing sustainable income for the family to pay school fees or any other basic needs.
Rose is a member of the Manyamula COMSIP Cooperative and received a low-interest loan to open her shop. She is now eating and dressing better and she was able to buy a good bed. (COMSIP = Community Savings and Investment Promotion)
“This reinvestment and building sustainability steps happen many times, each time making the business stronger.” Sometimes the reinvestment also comes in the form of low-interest loans. In Malawi, many of the Small Business Fund groups are also part of the Manyamula COMSIP Cooperative, which has been instrumental in the success of so many SBF groups there, many which are continuing ten years after receiving their initial Spirit in Action grant!
“The final step in the Spirit in Action model – after groups are successfully growing, reinvesting, and having enough money to pay for school fees each time they come due – is that they share the gift with others.” This paying-it-forward spreads the wealth, helps more people start businesses, and plants small seeds in other families in the community. (Click here for stories of Sharing the Gift).
The coordinators nodded their heads in agreement. Several said they would post a similar chart on their chalkboards at their next business training session. It’s a clear explanation. No one wants to have to beg each time schools fees are due. The alternative – long-term success – is available to them, with the Spirit in Action grant. And it will require them to take to heart the idea that this is an investment, one that requires attention, hard work, constant reinvestment, and sharing.