How does the Small Business Fund work?

How does the Small Business Fund work?

I talk a lot about our Small Business Fund program. Today I’m reposting my (updated) FAQs about how it actually works!

1. What is the SIA Small Business Fund (SBF) and how does it work?

The Small Business Fund (SBF) is SIA’s program to support economic development in developing countries. SIA has supported 660 small businesses in Kenya, Malawi, DR Congo, Rwanda, Nigeria, Uganda, India, and Philippines since the program started in 2003.

Groups (often family groups) of 3-5 people receive business training and a $100 initial grant to start or expand their business. After three months, if the group is successful, they receive an additional reinvestment grant of $50.

The SIA office receives a copy of the business plan, a 3-month Business Report and a One Year report, so that we can follow the group’s successes and challenges.

2. So it’s a grant, not a micro-loan?

Our grants are the first step out of poverty and can eventually lead to micro-loans once the businesses are established. Micro-finance institutions, even ones that claim to help the poor, often require high collaterals and have crippling interest rates – we heard countless stories about families losing their belongings and being charged as much as 48% interest on a two week loan. SIA works with people and in areas that are often ignored or exploited by micro-finance institutions.

It is rarely acknowledged that no company in the United States begins without start-up capital from outside investors. These investors are known as “angel investors” because they believe in the business model and they are willing provide the entrepreneurs with the capital needed to get their idea off the ground.  SIA follows the same principle; SIA donors are effectively Angel Investors for people in developing countries.

3. Who are the SBF Coordinators?

We currently work with six SBF Coordinators who serve in their local communities. They are dedicated volunteers with experience in community development, who work with our SBF Guidelines and send us reports and stories of the businesses. Before people become SBF Coordinators, we get to know them over the course of many months to establish a relationship of mutual trust. Through this process, we also come to better understand the specific needs and challenges in their community.

SBF Coordinators canaan Gondwe (Malawi) and Dennis Kiprop (Kenya) at our conference in Uganda in 2014.

SBF Coordinators canaan Gondwe (Malawi) and Dennis Kiprop (Kenya) at our conference in Uganda in 2014.

4. How do you decide who receives the grants?

Our SBF Coordinators develop location-specific criteria to identify the poorest households in their community. They visit families to ask how many meals they eat and if children can attend school, and to detect the opportunities and skills that the family could use to start a new business.

5. What do you provide in addition to the grant?

Before anyone receives a SBF grant, they receive business training from our Coordinators. They learn about record keeping, accounting, decision-making, marketing, and budgeting.

After receiving the grant, the Coordinators continue to check-in with the group, offering tips to help them improve their business and giving words of encouragement. Many people we met in Kenya and Malawi appreciated this individual support and saw this as a crucial part of their success.

6. Is $150 really enough to start a business?

Yes! Without capital, capable business people cannot get the start-up supplies needed to open a business. The initial $100 grant can enable them to buy materials for repairing bikes or items for their new store.

To ensure that the businesses continue to thrive, our SBF program also requires reinvestment. Members often reinvest 25-50% of their profits to expanding their business.

7. What kinds of businesses do people start?

People start businesses to fill the needs and wants in their community.

Some typical businesses are:

  • Farms (maize, vegetables, tomatoes, cassava, etc.)
  • Bakeries and restaurants
  • Brick making
  • Basketry and other handicrafts
  • Buying items in bulk and reselling in the market
  • Small grocery stores
  • Read more about typical businesses here.
This woman and her husband started a pottery business in Uganda. He forms the pots and she fires and paints them.

This woman and her husband started a pottery business in Uganda. He forms the pots and she fires and paints them.

8. What do people do with their business profits?

SBF members use their profits to expand their businesses and improve their lives. After receiving the small SBF grant, their businesses can generate enough profit to:

  • Send a child to school
  • Buy roofing for their house
  • Buy new clothes and shoes for their families
  • Provide better food
  • Buy a bicycle, so that they don’t have to walk everywhere
  • Buy more items to sell in their stores
  • Read more here.

9. Shouldn’t people have to pay back the grant with their profits?

Rather than ask people to pay back the funds to SIA, we ask them to pay it forward, through our Sharing The Gift initiative.

Once a business has been successful they give back to help someone else. For example:

  • Winkly in Malawi received the gift of a piglet from a successful SBF piggery
  • 5 groups in Nigeria saved $150 from their business profits so that someone else could start a business.
  • Mary in Kenya trained another woman to make wedding cakes, so that she could open a new business.
  • Read more Sharing the Gift Stories here.

10. How do your Christian principles enter into the SBF program?

Most of the people we work with come from a Christian faith tradition and people from many different churches and denominations come together through the SBF program. Our training guidelines teach about listening prayer and starting prayer groups to help group members share their problems and pray together for solutions. However, SIA is not evangelical and does not require anyone to declare his or her faith to participate.

Your donation of any amount helps people start small businesses and live up to their potential! We invite you to become an Angel Investor and take a chance on these worthy business-people. You can donate online or find more information here.

A message of encouragement

A message of encouragement

In December, 200* girls from the Samburu tribe in Kenya celebrated an Alternative Rite of Passage, led by Pastoralist Child Foundation and witnessed by their parents and community members. The day-long celebration was an empowering ceremony of song, dance, and speeches, taking the place of the traditional genital cutting. Our partner Margaret Ikiara of CIFORD Kenya, who hold similar Alternative Rite of Passage celebrations in Meru (5 hours away), went to the event to represent Spirit in Action and share my message of encouragement with the girls. 

A message of encouragement from Tanya Cothran of Spirit in Action:

It is our great honor to celebrate with you today this important moment of your passage from childhood into womanhood. Today you go ahead empowered and knowledgeable about the power that you have as women, and the important role that you play in this community.

We pray for you: courage, strength, kindness, and love. Courage to stand up for your rights, and to stand up for honesty and respect in the home and in society. Strength to face the challenges that will come, so that even when you have a challenging day or week or month, you know that people around the world are praying for you and wishing you well. Kindness and a generous heart to promote peace and understanding between old and new ways of doing things. And Love to fill your days with a happy home and loving connection.

Girls from Meru and Samburu together; sharing their experience of the alternative rite of passage.

Girls from Meru and Samburu together; sharing their experience of the alternative rite of passage.

We wish to share this poem by Marianne Williamson with you – to remind you of the power and greatness that is within each of you:

“Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light not our darkness that most frightens us.
We ask ourselves, who am I to be brilliant, gorgeous, talented and fabulous?
Actually, who are you not to be?
You are a child of God.
Your playing small does not serve the world.
There’s nothing enlightened about shrinking so that other people won’t feel insecure around you.
We were born to make manifest the glory of God that is within us.
It’s not just in some of us; it’s in everyone.
And as we let our own light shine,
We unconsciously give other people permission to do the same.
As we are liberated from our own fear,
Our presence automatically liberates others.”

Though we are far away, we are with you and your families today in the spirit of friendship and solidarity, to celebrate you and to celebrate your life and future. Congratulations!

*Correction 2/17/16: 60 girls attended the December workshop and 200 girls who attended all of PCF’s workshops in 2015 (April, August, December) came together for the Alternative Rite of Passage celebration.

Am I too comfortable?

Am I too comfortable?

These are my own reflections and may not reflect the opinion of the SIA Board of Directors:

Sometimes praying for peace can seem like the easy way out. Picturing myself in the flow of life, as a Being of light, I feel the peace within me. But those prayers, I am increasingly realizing, are coming from a place of comfort, from a comfortable life.

Around New Year’s I was faced with a slightly unsettling question from Kayla McClurg in her inward/outward email reflection, “Will this be the year we move from ‘wishing for a nicer world’ to making intentional contributions and distributions of light?”

Is now the time to go from wishing and even praying towards making some concrete steps and intentional contributions to justice in the world?

That might be uncomfortable. It might shake me out of my peaceful prayer.

Philanthropy and charity can get pretty comfortable in its work to address the immediate needs of food, clothing, clean water. In that rush, it may never get to confronting the systems that are creating the poverty and inequality.

In an opinion piece in the New York Times Darren Walker, President of the Ford Foundation, writes about giving to charities during the holiday season, “I worry that through these acts of kindness, I absolve myself of asking deeper questions about injustice and inequality. We Americans are a remarkably bighearted people, but I believe the purpose of our philanthropy must not only be generosity, but justice.”

Justice might be uncomfortable. It might mean that I have to give up something. It might mean that I have to do more than just pray for peace and give money.

Source: OutFront Minnesota

Walker continues, “Philanthropy can no longer grapple simply with what is happening in the world, but also with how and why.” We must ask: Why is it still so hard for people in rural Africa to access loans? Why is it still so dangerous for our local coordinator to visit the slum in Nairobi? How do we get more youth educated and then employed in stable jobs? And we will likely find that those answers take more than easy money.

Martin Luther King, Jr. was way more radical than the collective memory suggests. In a passionate lecture to the Unitarian Universalist Association General Assembly in 1966, King calls on those gathered to wake up to action. “One of the great misfortunes of history is that all too many individuals and institutions find themselves in a great period of change and yet fail to achieve the new attitudes and outlooks that the new situation demands. There is nothing more tragic than to sleep through a revolution.

There are the beginnings of a revolution now. A revolution of people demanding justice for black lives, demanding rights for women, demanding for their voices to be heard. Will this be our year to wake up and do more than throw money in the bucket, hoping for change, wishing for a nicer world?

*Pictured above: Working with local leaders in Malawi for economic justice through their savings and loans cooperative is part of SIA’s role in the revolution. Here I am pictured with the leadership of the Manyamula COMSIP Cooperative in July 2014.

Welcome another Small Business Fund coordinator team!

Spirit in Action is expanding and strengthening our Small Business Fund network!

I met Naomi Ayot when I was visiting Kampala, Uganda in 2014. She was working for Raising the Village at the time and I met with her to hear about an update on the Bucece sustainable agriculture grant. She also safely delivered me from a sketchy bus stop to my hotel, for which I will be forever grateful!

I was impressed with Naomi’s professionalism and passion for helping others, and so I am extremely pleased to be able to welcome her to the SIA SBF team! When I talked to Naomi, she knew immediately a village that could really benefit from our $150 grants and business training. Better still, she knew a local leader there that would work with her.

Naomi and Santa Enume reviewing the Small Business Fund materials.

Naomi and Santa Enume reviewing the Small Business Fund materials.

Santa Enume is a respected leader in the Akwiridiri village in northern Uganda, a midwife and community elder. This very rural village was heavily affected by the violence of the Lord’s Resistance Army in the last 20 years and as a result there are a lot of female-led households, widows, people living with HIV/AIDS, and orphaned children. Santa Enume is eager to work with these women and their families to help them start small businesses and improve their lives and the community in general.

This SBF Team model has been very successful in Nairobi, with Wambui and Josephine. Wambui is my direct contact and she works with Josephine who lives in the Koch slum where we give the grants. Josephine provides the hyper-local knowledge necessary to make the SBF work for the women, and Wambui helps prepare the reports and keep me updated.

Women from 8 SBF groups in Korogocho slum. Wambui, the local coordinator stands behind Tanya. Josephine is pictured left of Tanya.

Women from 8 SBF groups in Korogocho slum. Wambui, the local coordinator stands behind Tanya. Josephine is pictured left of Tanya.

The closest computer to Santa Enume is about 20 miles away. Clearly, it would be difficult for me to communicate directly with her. However, with cell phones ubiquitous throughout Africa, Naomi can easily keep in touch with her and relay information to me. Del would be impressed with all that is possible with technology these days!

In December, Santa Enume made the long journey to be with Naomi, so that they could review the SBF materials, report forms, and training tools. They also took time for prayer together. Last month we sent the funds for the first three new small businesses to a newly established SBF bank account. I’ll keep you updated as these new businesses get off the ground! In the meantime, please give Naomi and Santa Enuma a warm welcome!

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