Christian Enterprise Solutions to Poverty: Trail Notes on the Field Guide

Nathan Mayo
Network Director
Read more from Nathan

Jump to:

The Purpose of the Book

This field guide aims to uncover the role and contributions of Christians serving the poor through business and economic development referred to as “enterprise solutions to poverty (ES2P).” Because “despite its many contributions to date, the full potential of the Christian community in the enterprise space is still largely untapped. The Christian mainstream is still largely beholden to a charity mindset and a relief model of care that makes enterprise and economic development approaches less compelling or even imaginable.”

The Perspective

The primary authors, Amy Sherman and Josh Yates, have decades of experience in Christian poverty reduction with a developmental lens. However, rather than lean primarily on their own insights, they synthesize the perspectives of the diverse people who make up the ES2P field. They survey and interview people with a wide range of theological and political beliefs, which may differ in their diagnosis of the problems but largely agree on the solutions.

The Key Points

History

The work begins with a historical overview of Christian contributions to ES2P stretching back to the middle ages. Benevolent Catholic pawn shops offered low interest loans in the 1500’s. Methodist businessman Arthur Guinness offered exceptional working conditions for employees of his breweries in the 1700’s. And faith-based community development corporations strove to improve conditions for African-Americans during the Civil Rights era. Other historical Christian models include microfinance, credit unions, mutual benefit societies, community land trusts, and economic co-ops.

From this rich tradition of serving the poor through business, emerges a dynamic modern landscape of free-enterprise Christians.

Mapping the Field

The authors divide the enterprise solutions field into three segments: Entrepreneurs, Investors, and Capacity-Building Organizations. They provide numerous examples, as well as key trends, insights, and recommendations for each sector. Each segment is also rich with case studies, survey results, and human stories.

1) Entrepenurs

Entrepreneurial Organizations work directly with the poor to provide them with better paths to employment, business creation, and equity ownership. Note that this definition includes all front-line poverty-fighting organizations and is broader than the conventional definition of entrepreneur. Their models include social purpose businesses, earn-it models, work and entrepreneurship training programs, matched savings programs, and community development corporations, which are locally controlled developers seeking the improvement of a neighborhood for its existing residents, among others.

Trends & Insights: Interest in social entrepreneurship is rapidly expanding and Christians are becoming more involved in the field. Books like When Helping Hurts have accelerated the interest. Participants have a wide range of theological and political perspectives and have mixed opinions on modern capitalism. However, they agree on a holistic definition of poverty, the importance of opportunity, and the dignity of work. They reject the idea that the economy is a “fixed pie” that can only be redistributed.

Recommendations: Church leaders should preach and teach that care for the poor is central to a Christian’s responsibility and leverage congregational assets to build effective outlets for this duty. They should shift their mission funding from income-supplementing strategies to wealth-building strategies.

Domestically, they should explore the promise of wealth-protecting strategies like community land trusts and economic cooperatives. Entrepreneurs should redouble efforts to measure spiritual and social returns.

2) Investors

Investors are Christians who finance entrepreneurs and existing businesses that serve the poor, expecting a joint financial and spiritual return. These investors move beyond the “do no harm” approach of socially responsible investing to an “impact investing” mindset. Their platforms include specialized mutual funds, equity crowdfunding, and solo accredited investors.

Trends & Insights: Interest in impact investing is increasing among Christians but is far from dominant. Christian investors tend to prioritize spiritual returns over social or financial returns. There are few agreed-upon ways to measure spiritual impact, and measuring social impact is still a new concept.

Recommendations: Church leaders should teach that stewardship encompasses “not just your charitable giving, but your full balance sheet.” They should promote ways their congregations can invest for their own futures while simultaneously building the Kingdom of God. There are over 90 investment funds that use faith-driven investing; Christians should be made aware of them.

3) Capacity builders

Capacity builders are organizations that support and coach enterprises. In some cases, they support the poor directly, such as by equipping them to start their own businesses. In other cases, they support ministries that serve the poor such as social enterprises and work training programs. Some also promote and advocate for better government policy. Examples include groups like Jobs for Life, the Chalmers Center (a True Charity partner), the Acton Institute, and the True Charity Network.

Trends & Insights: As in the other two sectors, capacity builders are also expanding rapidly. Enterprises that use capacity builders like business incubators enjoy significantly higher success rates. These incubators are more successful when they focus on “hands-on” instruction and mentoring rather than just classroom assistance. Social enterprises accomplish more social impact when they focus on growing deep roots in their communities, rather than simply scaling as quickly as possible.

Recommendations: Understand the “Redemptive Entrepreneurship” framework as a means to guide social impact. Blend charitable contributions with investment capital to increase investor returns while offsetting costs to philanthropists. Focus business incubation efforts on clear business types to achieve better results.

Barriers

The report identifies five general barriers to the growth of enterprise solutions to poverty. These include a relief-oriented mindset among congregations and nonprofits, under investment in employment-oriented programs, and a lack of investment in medium sized enterprises (investment tends to be concentrated on micro businesses and solo entrepreneurs).

The guide also points out that businesses owned by African-Americans tend to have a more difficult time launching and expanding because they have less personal capital and less access to informal capital networks that drive the growth of small businesses.

Finally, they identify an unhelpful “two-pocket” mentality by which Christians expect solely financial returns from their investment dollars and solely social returns from their charitable dollars. While there is room for market-driven investing and philanthropy, there is also a place for “social impact investing” (consciously choosing to accept below-market rate returns in order to equip people in poverty to provide for themselves).

Since American Christians hold 22 times more in investments than they give to poverty-related charities annually, even a small shift of some of those investment dollars to enterprise solutions could have a big impact.

Details We Love

We couldn’t agree more about the problematic nature of a relief-only mindset. Many of our True Charity Network members provide developmental and enterprise-oriented solutions to poverty, such as a work shuttle, education, social enterprises, and earn-it models.

This guide analyzes how each sector measures its outcomes—a critical element of making a real difference and something we strongly encourage our members to do.

We echo the challenge to Christians to view service to the poor and marginalized as integral to their lives, not merely as an isolated fraction of their budget. It’s encouraging to learn that Christians in the past few centuries have pioneered many of the enterprise solutions in this guide.

Considerations

The report tends to use the word “charity” as a synonym for “relief,” which we don’t think is necessary. Our conception of “charity” is broader and includes empowerment—and it isn’t new. The Jewish Rabbi Maimonedes proclaimed in the 12th century that the highest level of charity was to help someone find employment “so that he will not need to be dependent on others.”

While we agree that social impact investing can certainly generate better spiritual and social returns when done well, it’s worth noting that normal, ethical investment also generates social returns, and not necessarily at lower rates.

Traditional investments seeking the best return in increasingly trade and investment friendly regulatory environments over the past two centuries has yielded a massive reduction in global extreme poverty from 94% to 10%. The many entrepreneurs, inventors, and investors who facilitated that explosive economic growth may not have always been “socially conscious,” but their positive social impact is beyond comparison.

We do well to recognize the benefits of the current economic system before we begin work to repair its shortcomings. Some groups interviewed in the report lament that capitalism has failed, but there is a difference between a system with flaws and a system that needs to be jettisoned. All efforts to get the hundreds of millions with wealth to more effectively aid those remaining in poverty need never to lose sight of how we arrived at our current advantageous situation. Generally speaking, Christians should be encouraged to invest more and not merely repurpose existing investments to more socially conscious ends. All ethical investing leads to positive social returns.

Who Should Read This?

This is an interesting read for Christians who want to be better stewards of their whole giving and investing portfolio. Church leaders will benefit from exposure to a wide range of models, perspectives, and frameworks to help them engage congregations on the topic. Poverty fighters may want to skim the well-structured guide and find segments and case studies similar to their line of work and adjacent models that are worth considering.

While the length of this guide is equivalent to a short book at 170 pages, it is available for free online and intended for wide distribution to promote and advance the Enterprise Solutions to Poverty field.

Enterprise Solutions to Poverty field guide can be downloaded for free at https://www.enterprisesolutionstopoverty.com.