Nonprofit philanthropy should contribute more than marginal economic improvements. A more holistic approach is needed for transformational outcomes, enabling marginalized groups to sustain their own economic prosperity. Through micro-investment, partners are in a cooperative partnership, rather than a lender-borrower relationship, with small-business entrepreneurs. Common Good Trust is a co-op holding company that will facilitate micro-investments in small businesses in the US and Guatemala.
Economics studies have agreed that micro-lending has produced marginally positive effects, but has been far less transformative than initially suspected. While micro-loans can have some positive short-term effects like increasing business activities, they seldom led to profit increases in existing businesses. Additionally, micro-lending has not proven to increase income or consumption in the long run for the average borrower.
Highland Support Project is creating this co-op holding company to facilitate micro-investment in Guatemalan/US small businesses. In addition to direct investment in these companies, the co-op would supply personalized training, technology, and administrative support. It could additionally expand demand by opening access to markets in the U.S. and internationally through e-commerce. As a direct opposition to micro-lending, micro-investing will provide more accessible funds without fewer risks.
Cooperative investment divides financial risks, empowering entrepreneurs to take chances tweaking business plans and developing skills to boost their income in the long run, a more sustainable approach to long-term wealth creation. Micro-investing through Common Good Trust will limit risk to business owners encouraging more robust involvement in the formal market ultimately leading to sustainable economic growth.