HOPE Global Investments: Moving Capital and Discipleship Around the World
Image by Kyle Glenn
by Josh Ruyle
HOPE International’s journey into deepened support for SME business owners across our network began in many ways with the Login family of Western Ukraine. We had the privilege of watching as their microbusiness – a bike shop – blossomed into a platform for real impact in their home village, namely, helping adolescents with a tendency to turn their backs on family and fall into drugs and alcohol addiction in their teenage years. As the business scaled, profits not invested back into the business went towards their tithe and deepening their impact on these youth – creating a youth bike club program, opening a free-to-use BMX grounds next to their shop, and organizing community biking competitions for families to connect with each other and the church. And given they came to Christ just before they started the business, it’s not surprising to see them making their decisions with a Kingdom mindset – in their words, “when God gives, we are called to give back.” We’re grateful to now offer spiritually-integrated SME lending and coaching services in five of HOPE’s nine microfinance institutions, and we’ve come to appreciate the enormous potential for Kingdom impact through continuing to invest in businesses like the Logins’.
Impact investing is a relatively new yet burgeoning industry, with the market growing to over $500 billion since the term was formally coined in 2007[1]. Likewise, the marketplace for faith-driven investments is nascent but growing, as investors seek to steward their resources in alignment with Biblical principles. This means there are many new and exciting offerings in the marketplace, from retail products like mutual funds and exchange-traded funds to private placements like venture capital, private equity, and direct investments.
One area where there are relatively few Christ-centered offerings is low-interest debt. To be sure, there are many fixed-income-type products that have strong social and/or environmental impact, yet very few that also incorporate intentional discipleship and Kingdom impact into their model. Given how microfinance institutions are traditionally financed – using debt capital to leverage equity and expand loan portfolios – we realized that an investment offering that would allow us to scale our SME portfolio while maintaining a values-aligned and spiritually-integrated approach to our work could fill a unique gap in the impact investing marketplace.
Earlier this year we launched HOPE Global Investments (HGI), a for-profit lending vehicle that enables accredited investors to provide debt financing to HOPE-network microfinance institutions around the world for follow-on lending to these local, small- and medium-sized enterprises. We are particularly excited about this Kingdom opportunity as research has shown that SMEs in the developing world generate 58% of all new jobs and 67% of GDP/income growth, yet these businesses nearly always lack access to the full capital needed to realize their growth potential. As business owners like the Logins have an opportunity to receive capital and be discipled towards faith and obedience to Christ, the potential to harness the latent power of the business for the expansion of God’s Kingdom is immeasurable. HGI is the result of an increased demand from both current and potential borrowers in the field — many of whom have outgrown micro-loans and require larger capital infusions — and investors — who are seeking investment opportunities with a clear strategy for business growth, Gospel proclamation, and Kingdom impact.
In addition to filling the market gap for faith-driven debt offerings, we believe HGI is unique for a few other reasons:
1. It builds on HOPE’s 22-year foundation. By God’s grace, HOPE International has been making microfinance loans since its founding in 1997, and now serves nearly 1,000,000 people across 16 countries. HGI is first-and-foremost built on HOPE’s long-term relationships with clients, a portion of whom have the capacity to make the transition from microenterprise to SME, scaling the business and employing staff beyond the immediate family. Staff within HOPE network MFIs nurture client relationships, provide capacity-building support for borrowers and their businesses, and use a strong and standardized control structure for underwriting, securitization, and oversight of loan capital.
HOPE has a deep commitment to spiritual integration and spiritual impact. We celebrate the coming of God’s Kingdom as we witness material, social, and personal impact in the lives of SME business owners, their families, their employees, and their communities. Yet HOPE’s commitment to spiritual impact as an integrated part of our loan process — from initial contact, to underwriting, to loan visitation, training and support — is what makes us most unique. We track and report on spiritual integration metrics for the SME business owners we fund on a quarterly basis.
3. HGI is simple in structure and provides options to investors. HGI is a simple, fixed term note structure that provides accredited investors a variety of options, including the country of investment, duration, target rate of return, and level of risk. The investment vehicle was structured to allow for maximum simplicity and transparency on the usage of funds, to allow line of sight from investment to SME businesses funded.
All of us at HOPE International and HGI are motivated by the great commission and the greatest commandment to love God, love our neighbor, and make disciples of all nations. As the faith-driven investing marketplace continues to mature and live out these mandates, we are excited to be along for the journey, and to see God’s Kingdom coming to the nations through the advancement of this movement. We dream of a day when more entrepreneurs like the Logins are able to grow their businesses, deepen their faith, and serve their communities.
If you’re interested in learning more, please email jruyle@hopeinternational.org.