Not every congregation will have the same access to capital, the same financial savvy, or the same investment goals. Congregations will be drawn to a range of mission priorities. We have identified ten areas of social concern that are relevant cultural and social issues, and influenced by economic structures.
The ten social concerns include Economic Development, Immigration, Veterans, Creation Care, Race, Children, Food/Hunger, Prison Justice, Gender, and Elderly/Aging. Through 1K, churches will help to build on this framework as they practice discernment and micro-lending in their own contexts.
Congregations cannot be handed a single program. We want them to engage in the discernment necessary to figure out how they would want to do this work. The mission requires them to reflect and think on how they live out their call as an economic being.
Churches can choose from among these five (5) pathways based on the economic relationships that best reflect their own capacity, context, theological commitments and expressions of faith.
Angel Investment Pathway
A congregation makes a direct investment in a microbusiness at a point of opportunity, creating a reciprocal relationship of lending and repayment. The congregation chooses a person who they either know well or is recommended by a community or social ministry organization, and makes the decision based on the person’s character and rather than a credit score. The loans can be made as an individual or as a group and are paid back accordingly. The loans have an interest rate of 5% or lower, with a repayment term of one year or less. The direct and intimate nature of this path allows for the joys and challenges of meaningful economic relationship-building to be experienced by both the congregation and the entrepreneur.
Example: Lisa’s friend Anna, an experienced nanny who recently lost her job, needs stable income to help her stay on the path to citizenship. Anna has started a small daycare business but needs a $750 loan for materials to help her market her services and get more clients. Lisa gathers five people in her church to pool the funds to lend to Anna, who agrees to repay the loan in 9 months at a 2% interest rate.
Virtues/Spiritual Insights: Hope, Reciprocity, Solidarity
Public Witness Pathway
A church becomes a trustee for an entrepreneur who may not be seen as worth the risk by traditional funding systems. Using the online platform of Kiva Zip, the church publicly provides a loan for the business and encourages others in the community to do the same in small dollar amounts. The congregation chooses a person whom they either know well or is recommended by a community or social ministry organization, and makes the decision based on the person’s character and rather than a credit score. This path is all about revaluing the worth of a person and redefining who we see as risky or safe.
Example: Dan, an active church member with a felony record, has started his own a catering business, but because of his spotty employment history, he is unable to get a business loan. Dan’s congregation becomes a trustee for him on Kiva Zip’s website and lends the first $500 toward the $3,000 he needs for equipment, using the platform so that members of the local and online communities can join in and lend the rest.
Virtues/Spiritual Insights: Witness, Holiness, Accompaniment
Peer Lending Pathway
A congregation selects a set of microbusinesses, and hosts them as they participate in a cohort of fellowship and support. This cohort will have access to a pool of funds, and the participating businesses choose who among their peers will get a loan from the pool. When the loan is paid back, the funds are made available to lend again among the cohort of businesses. This path shifts power from the church to a group of peers, who hold each other accountable and choose where the loan goes each time around.
Example: A church in a community with high unemployment gathers a group of 10 entrepreneurs who, as part of their recruitment and agreement to join the cohort, are poised and enabled to hire at least one person in their business within the next year. The group decides who among them will be the first borrow the $1,500 that the church has invested in the group, and agrees to a repayment term of 9 months at a 1% interest rate.
Virtues/Spiritual Insights: Humility, Mutuality, Hospitality
Justice Partner Pathway
A church decides to invest through a financial intermediary (community development finance institution, credit union, or microloan fund). The church chooses a partner organization that it feels meets important standards of fairness and justice in its lending and operating practices. The church’s investment is then used by the partner to administer loans to microbusinesses in the area. Operating through intermediation is a hands-off, relatively risk-free way to make investments with a sure expectation of repayment and return. By partnering with a fellow seeker of justice in the local economy the church can still have a positive impact on the community.
Example: A church nearby a blighted section of town decides to partner with a local credit union to allocate 20% of their deposits toward a fund that provides micro-loans to businesses in that area.
Virtues/Spiritual Insights: Justice, Compassion, Stewardship
Pay it Forward Pathway
A church selects a mission concern in the community and partners with microbusiness through a lending agreement. The microbusiness agrees to “repay” the loan through donated goods or services related to the church’s chosen mission. This collaborative model not only provides investment into a business, but demonstrates how businesses can invest in their communities. This path also integrates mission more clearly by directly determining who is ultimately being impacted by the church’s investment.
Example: A church concerned about children’s health lends $2,000 to young neighborhood dentist who needs a new piece of equipment. The dentist repays the loan by giving 40 free cleanings for children from low-income households over the next 18 months.
Virtues/Spiritual Insights: Generosity, Evangelism, Compassion
Resources for all Pathways
- Bigger Than You Think: The Economic Impact of Microbusiness in the United States, prepared by AEO, Association for Enterprise Opportunity
- In Search of Solid Ground: Understanding the Financial Vulnerabilities of Microbusiness Owners, prepared in 2014 by CFED, the Corporation for Enterprise Development
- Service of Blessing for the Granting and Receiving of a Loan
- Service of Thanksgiving and Reconciliation
- Sample Announcement Flier
- Sample Invitation Postcard
- Sample Invitation Response Form
- Investment Education Document