Education For Good (Hong Kong) Social Entrepreneur Incubation Program. By EFG – Wikimedia Commons.
Large corporations have excess capital to invest in social projects, but without careful attention, local creativity and wisdom can easily be lost. While corporations may have experience and access to information, local people know which issues take priority and how best to solve them. Small business owners, however, are hesitant to invest in their communities, due to the cost.
What if entrepreneurs were encouraged and trained to develop businesses that would do good and earn a profit? The European Commission does have programs that grant financial support to small businesses in the areas of environment, research and education, but these programs are limited and too few people are aware of this option.
Microfinance institutions have the opportunity to play a leading role in increasing social entrepreneurship on the local level. For example, MFIs could host educational events open to the public where experts introduce the idea of social entrepreneurship to potential borrowers. At these meetings, individuals could discuss social problems in their communities and, with the help of experts, develop products and services that would address these issues while creating profit.
Imagine a young mother, recently fired from her job, who opens a daycare center in her community. Not only is she employed again, but she is also providing a useful service that will allow more women to work and give children a healthy and educational environment to play in during the day. Or imagine a recent environmental studies graduate who is unable to find work. He notices that it is inconvenient for many of his neighbors to buy healthy, organic produce. So, he develops a business plan for a farm-to-table delivery service. His business would increase the health and productivity of his community.
Deputy Secretary of State Thomas Nides meets with young entrepreneurs from the State Department-sponsored Global Innovation through Science and Technology (GIST) initiative on the sidelines of the Global Entrepreneurship Summit in Dubai, United Arab Emirates, December 12, 2012. By U.S. Department of State – Wikimedia Commons.
In both these examples, microfinance institutions could provide the necessary loans. As MFIs finance more social entrepreneurs they will bring in more clients. Many individuals, who would otherwise not consider applying for a microloan, will be attracted to the idea of a small business that serves the greater good. This is especially true of young persons just out of college or graduate school. Besides generating more loans, promoting social entrepreneurship among borrowers contributes to the microfinance industry’s goals of social progress.
The number of small businesses and microfinance institutions in Europe is increasing rapidly due to support from EU officials. Governing bodies and local institutions should utilize this momentum to help small businesses address social inequalities that limit national development. When we facilitate conscious capitalism in small business owners, we not only improve society but also create stronger economies. Starting a business is a difficult task, but if efforts produce income as well as a rewarding career, more people will be willing to take out a microloan to give back to their community.
By Annie Brown for Microfinance Focus
Disclaimer: The opinions expressed are solely those of the author and do not necessarily represent the opinions of Microfinance Focus.