It used to be common sense that micro-loans were the only way to ensure the sustainability of a micro-finance program and that the act of paying back the loan would instill the sense of “ownership” in the grant recipients. How could a micro-grant – labeled a “hand out” – do anything but create a sense of entitlement on the part of the grantee? We’ve thought that loans were better than grants because they promoted long-term, individual responsibility; but in some markets, loans wreak havoc with indebtedness, hostile payment collectors and inflexible repayment schedules. Grants, unlike loans, can create independence and cultivate sustainable development in a community.

A new pottery business in Uganda.

In 2006, just as the Grameen Bank and Kiva were becoming household names, there was a rush to start new micro-finance organisations and benevolently provide money to the poor. Unfortunately, those funds come at a great cost and with inconclusive effects. Interest rates of 40-100% of the loan principle and travel costs to get to and from the bank mean that people are stuck from the moment they get the money.

Why grants?

A loan is just a financial arrangement in the business of making money for a bank, but a grant creates space for positive relationships and an empowered individual. Spirit in Action provides $150 micro-grants to groups of 3-5 people throughout communities on the African continent. Instead of a debt-collector, we have local coordinators who train grant recipients in business planning, marketing, and basic accounting. The grant cohort also forms a support group.

Receiving a $150 grant – rather than a loan – means that the first $150 in profit from their successful enterprise can help group members go to school, improve their house, or pay for medical care, and is not used to pay back donors. And through our program, some of the additional profits are gifted to others in the community, generating goodwill and further development on the local level. (Read one family’s success story here.)

We are Grant Recipients

Sharing the Gift with a cash grant in the community (Malawi).

Our model for micro-grant sustainability reflects our home-office organisational practices. We recognise that since Spirit in Action relies purely on donations from individuals for our funding, we also are grant recipients. Our supporters don’t ask us to pay them back – they ask us to pay the gift forward to help people as defined in our mission and programmatic plans. By asking our Small Business Fund grant recipients to pay it forward to a neighbor or community member rather than paying the organisation back, we are asking them to do only what we ourselves do. Paying it forward starts with our donors and passes on to many more throughout the world.

Becoming a Giver

Our paying it forward program, Sharing the Gift, suggests to grant recipients that they have received the gift of a grant from Spirit in Action and asks them, “How can you share this gift with others?” The actual form of sharing varies among groups, with input from the local coordinators. Some tithe a percentage of profits toward future groups, others contribute seeds or baby animals to a new group, and sometimes business groups come together to support a project that benefits the whole community.

Sharing the Gift of a pig in Uganda.

After receiving a grant, people are empowered to be givers in their communities. Fundraisers know that people receive genuine happiness from giving to others; the Small Business Fund and Sharing the Gift enable people who have grown up with very little to have more to share with others and to be respected for their gifts to neighbors.

Unlike loans, which create an immediate indebtedness in the community, grants and a “paying it forward” mentality make development sustainable in the communities where we have funded small businesses. Even without additional grants, local growth comes from small business owners themselves. The development of their community originates with their desire to pay forward what they have received. Grants are not a hand out; they enable people to invest in their communities in a grassroots manner.

**I originally wrote this post for the WhyDev blog. WhyDev is an online community for individuals passionate about development, aid, and other global issues.

We have some exciting updates to share with you about Spirit in Action’s ongoing programs!

First, positive reports from the business leaders in Nawangisa Village, Uganda, sharing about their new enterprises started this year:

Ms. Tabisa Jese; Mat Making – “The demand has been higher than what we could supply! Now, I can provide better food for my family.”

Beautiful baskets in Uganda

Ms. Nankwanga Joy; Basket Making – “We have all participated effectively,” Joy says about the family business. A total of 8 people have benefited directly from the business and they have been able to repair their home with profits!

Ms. Magida Moses; Bricks Making – “We earned $50 in profit. Now we can take the children back to school.”

What amazing testaments to the power of a small enterprise to improve lives in a rural village in Uganda! Photos are in the mail from Uganda now and I’ll post them on the website and our Facebook page when I get them!

Girls Learning

Tanya meets with girls who have graduated from the CIFORD workshops. July 2011

A generous grant to Spirit in Action from the Charles Wentz Carter Foundation will go to assist CIFORD Kenya conduct more Girls Empowerment Workshops! We are so grateful for their support, which helps SIA serve this community organization in Kenya.

The Foundation said they were really impressed with the report last spring and so they are pleased to continue support of this great organization! A workshop for 150 girls is planned for this month. [Read more about CIFORD’s programs in our Spring newsletter.]

Upon hearing the good news, one of SIA’s Advisory Board Members shared her enthusiasm for CIFORD’s community work: “We are thrilled about the CIFORD project. Seeing that girls have the opportunity for an education in East Africa is especially dear to our hearts. To keep girls in school gives them a world of choices unavailable to those who aren’t able to attend. The project reports are so inspiring.”

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Searching around for the perfect gift? How about honoring your friend or family member with a gift to SIA? It’s a gift that – through our Sharing the Gift initiative – keeps giving and giving… 

Imagine, last year your received a grant which was large enough for you and three friends to start a new business. You are feeling pretty good – you’ve all worked hard establishing your brick-making business. You made mud, packed it into molds, then left the bricks to dry. Afterwards, you fired the bricks in a clay stove because you knew you can sell them for more if they’re fired bricks.

Now, one year later you are better clothed. You’ve learned how to run a business, and you’re eating better and including more meat in your diet. Perhaps most importantly, you can now proudly send your children to school for the whole school year.

This is the story of Efulansi Kauda, Joy Ali Bamgatatie, John Tanzilamba, and Moses Sabirye of Kasozi Village in Uganda who started a SIA Small Business Fund business together in 2008. Today they are still making bricks and working together.

Signing for the group’s initial $100 grant.

At SIA we don’t just give things away. We give people resources and tools to get ahead. We give them the autonomy to start whatever business they think will be successful given their skills and resources, and the local demand. I think this is part of the reason that 100% of new SIA business owners from Uganda say they feel better about the future when they report back to us. Thank you for helping us continue this exciting partnership.

This is just one story that inspired me this week as I put together the Fall/Winter Newsletter. I’m just about finished with the newsletter and it’s filled with stories, photos, and more SBF One-Year reports. Keep an eye out for it in your mailbox soon!

A round-up of some of the exciting things to cross my desk in the last week:

1. Thriving Business: Brown Ngoma, his wife, Beatrice, and his daughter, Glydess, reported that their “Christ Shop Groceries” is thriving due to high demand for soap, sugar, and Coca-Cola. The 3-month report showed that since they started the business they’ve earned $182 in profit; enough to buy a bicycle!

Brown Ngoma helps customers at his market grocery shop.

After visiting Malawi last year, I know that having a bicycle will make it much easier for them to travel the long distances between home, the market, and the city. Congratulations on the successful business Ngomas!

2. Seed story: Vegetable and flower seeds donated from Thomsen’s Garden Center in Alameda made it to our volunteer coordinator Godfrey Matovu in Uganda last week!

It’s always a joy to know that the package made it across the world and safely arrived in the hands of our partners. Many thanks to Aileen Gillem, our “volunteer angel,” who sends the seeds from the mailing station in her garage.

3. Giving: “I give so that you may [can] give.” This teaching from the Hindu Vedas is a beautiful counterpart to the Bible verse Luke 6:38, “Give, and it will be given to you.” And both explain the underlying justification for our Sharing the Gift program, encouraging people to pay-it-forward to another person in their community.

4. Speaking of Sharing the Gift: This photo shows happy children in Uganda who received a piglet as a gift from one of the local mat-making businesses. The business was started in 2010 with a Spirit in Action Small Business Fund grant and continues to prosper today.

5. Building a better world: This beautiful Mary Oliver poem, “Song of the Builders”, honors the various pathways to a purpose-driven life.

Have a good week! Be well. Spread good today.

Did you catch the hype and fury around the KONY 2012 video about Uganda last week? The video, by Invisible Children, Inc. told about the violence in Uganda in the recent past. However, many people in Uganda are presenting their own responses to the video.

“How do you tell the story of Africans?” asks Rosebell Kagumire, a Ugandan blogger, “because if you are showing me as voiceless, as hopeless… you shouldn’t be telling my story if you don’t believe that I also have the power to change what is going on.”

Godfrey shares the growth of SIA in his community.

How people and organizations present their work is as important as the work itself. Is the grant recipient downcast, child-like, and dirty? Or are they smiling, confident, encouraged?

Meeting all our Spirit in Action Small Business Fund Coordinators last summer in Kenya confirmed for me that THEY are the work of Spirit in Action. Our coordinators are not voiceless or hopeless – they are leaders working to make their communities better places to live.

Today I want to share some excerpts from my interview with Godfrey Matovu, SBF Coordinator in Uganda, about his work to uplift and empower his fellow community members. I hope that listening to him tell his story will also confirm for you that Godfrey, and all of our SIA partners, have the power to change their communities.

Godfrey Matovu:
COMMUNITY INVOLVEMENT: “One time a local leader asked and I had to explain about Spirit in Action and what it is doing. I explained to him: SIA is bringing people together in Uganda.

Ugandans learning how to weave baskets

COMPASSIONATE WORK AT THE CROSSROADS: ”I organize and I train [people] and people know they are welcome to learn or to work. So these things come through Spirit in Action. One of the local leaders said, “this thing that you are sharing, is very good. Why don’t you start over there [at the crossroads] – they are drunkards.” So we are targeting the youth at the crossroads. I started teaching them how to start a business; the handicraft work [like weaving, pottery, and brickmaking]. I tell them “you can make this, you can make this.” We started to gain respect. So far we have trained thirteen people. I am planning more small workshops, for the school dropouts, and those who have lost their parents to come and to start doing this quality work. So that is why I give.

ON DEL ANDERSON, SIA FOUNDER: ”I tell people that Del Anderson came from a poor family. So he decided also to help the poor. I tell them and they understand.

HELPING THOSE WITH HIV/AIDS: ”There are people who are not involved in these programs who are suffering. So what do I do? I just care and counsel them, just give them advice when they are sick or suffering with AIDS. What do I do? I just counsel them; tell them how to handle the sick.

DEALING WITH PREJUDICE: ”Sometimes, most especially in Africa, when you are suffering from HIV/AIDS, some people they fear to touch you, they fear to be near you. So I go there and I am preaching the word of God. I again talk to them and the members who are around, tell them not to avoid him or her, just to get friendship with him.

Godfrey and Tanya in Kenya, August 2011

DEFINING CARE: ”I remember I went to one family and met with a man who was sick. He had skin that was [bad]. He was not doing much bathing or washing. So I started helping, that is what I call care.

GIVING THANKS: “So I have to thank you for this brotherhood of workers. It is not easy but I am doing very good. They are doing very good. We have the groups there [in Uganda] and we are doing good.”

Thank you, Godfrey, and all SIA partners, for serving God by empowering others! We are honored to support these committed change-agents.