A Roadmap to Prospering “Communities” Worldwide
by Judah Musick
Intro
We are living in an unprecedented era where businesses around the world are seeking strategies and solutions that will allow them to “Do Well” by “Doing Good.” Companies are starting to realize that there are Economics of Mutuality1 in their value chains. This means that all stakeholders need to flourish to maximize financial returns and that they need to be positively impacting their employees, members, customers, and local communities to do so.
Look no further than the Business Roundtable which is made up of CEOs of America’s largest companies who, in August of 2019, formally redefined the purpose of a corporation to promote “An Economy That Serves All Americans” not just corporate shareholders.2
You may call this corporate social responsibility, social entrepreneurship, or impact investing; however, what they are describing is simply an example of how God’s Kingdom operates and the outcome of seeking Shalom in your community.
Jeremiah 29:7 gives us a glimpse into this reality when it says, “Seek the peace and prosperity of the city in which I have carried you into exile. Pray to the Lord for it, because if it prospers, you too will prosper.” Could this be the key to prospering communities worldwide? The reality is that businesses all over the world, regardless of their tax status, industry, or geographic location, have a mutually beneficial relationship with their communities to seek flourishing.
The Why
As believers, we all share the same “Why.” Jesus loved God and, in response, He also loved His neighbors well by searching for ways to meet their real and immediate needs—and He commanded us to do the same. When asked by an expert in the law in Matthew 22:36-40, “Teacher, what is the greatest commandment in the Law?” Jesus replied: “Love the Lord your God with all your heart and with all your soul and all your mind. This is the first and greatest commandment. And the second is like it: Love your neighbor as yourself. All the Law and the Prophets hang on these two commandments.” In other words, this is the purpose of life for every follower of Christ. We don’t need to question that. It’s pretty clear.
Jesus took it even further with the Parable of the Good Samaritan in Luke 10:29-37 when He explained not only that your neighbor is anyone that the Lord puts into your path but also exactly what it looks like to meet their needs. He went to extreme lengths in the story to model what He meant by “Love your neighbor.” It wasn’t saying, “I’m going to pray for you,” or “I hope you get well,” but instead, it was the transactional meeting of physical needs. First, he bandaged the wounds and poured oil and vinegar to help with a medical need. Then, he put the man on his donkey and helped with a transportation need. He brought him to an Inn and met a housing-related need. He cared for him with food and clothing, and if that wasn’t enough, he took out his wallet, paid the Innkeeper for any expenses, and then offered to follow up in 30 days to see if there was anything else he could do. Wow! What an example of what it looks like to love a neighbor.
It is the great commandment of loving neighbor and the example from Jesus of meeting the physical needs of people in a community that unlock the key for communities to prosper worldwide. What if businesses, nonprofits, government agencies, and churches all were motivated by a shared agenda to meet needs in their communities, just as the Good Samaritan did in the parable? This is possible but will require a clear understanding of the problem, the opportunity for enterprises to solve it, and the actionable tools that can help facilitate it.
Hidden Needs
You can’t solve a problem that you don’t know exists. That is exactly the problem today with employers who are trying to impact their communities through social responsibility programs. They are only responding to causes or needs that they can see or hear about which are often related to helping families at or below the Federal Poverty Line (FPL). When most of us hear the word poverty, we are thinking of inner-city communities, and things like homeless shelters, rescue missions, and food banks come to mind. But in reality, the majority of households struggling financially with unmet needs are hiding in plain sight in the suburbs, and nobody knows about it. These families may not be labeled as living in “poverty” as the government would define the term, but they are nonetheless struggling financially just to survive. The term that best describes this demographic of families is based on research from the United Way and is called ALICE—an acronym that stands for “Asset Limited, Income Constrained, Employed.”3 These are hard-working American families who typically have dual incomes, are not frivolous with their money, and are living on a budget. However, while they are above the federal poverty line, they are falling behind financially each month. An ALICE household is likely living with a negative cash flow and falling further into debt every month, having less than $400 in emergency savings. They pay a quarter of their after-tax income to consumer debt payments, and half of them have nothing saved for retirement. As of the latest Census data in 2018, there were 121 million households in the U.S., and 16 million (13%) earned below the Federal Poverty Line (FPL), while another 35 million (29%)—more than twice as many—were ALICE Households. These are your neighbors, friends, family members, co-workers, and people you sit next to in church.
If you look around, you will find thousands of organizations picking one of these components of the household budget and working on solving for that specific “cause,” such as affordable housing, healthcare reform, or food insecurity. Unfortunately, these are often symptoms of a household budget that is broken. What households need the most is access to liquidity so that they can avoid fees, penalties, and high-interest loans and so they can bridge their income between paychecks. They then need to build up an emergency savings fund so that they can handle financial emergencies without tapping additional credit, and then, they need to work to aggressively eliminate all high-interest consumer debt to free up additional cash flow so that they can begin to save for the future. While this type of financial wellness education has been on the market for decades with organizations like Dave Ramsey’s Financial Peace University and Crown Ministries, we have not provided our community with easy, automated, and incentivized tools to help them practically overcome these financial challenges at scale.
The Gap
This is where employers come into play with the opportunity to maximize their community impact and to “Do Well” by “Doing Good.” You see, employers around the world face a significant crisis today. There is a massive gap between the benefits they offer and the real needs of their employees. The cost of this gap to the employer is tremendous—and it’s only getting worse.
While benefits are designed to help employees, the reality is that most employers are offering benefits that have been around for a very long time and are out of touch with the modern-day issues their employees are facing. Traditional benefit offerings include things like retirement plans, health insurance, paid time off, and sometimes some form of a corporate social responsibility program. While these benefits are important for the employer to be competitive, they do not meet the real and immediate needs of their employees. In general, employers have been very slow to adapt to the changing needs of today’s workforce.
Modern Benefits
For over 40 years, employers have been providing financial benefits that help people save for retirement. The vast majority of companies today have some form of retirement savings plans such as a 401k or 403b. However, we have already discussed the fact that 30% of employees are likely ALICE households and just struggling to get by. On the hierarchy of needs, they are dealing with survival and security, so the retirement savings plan has absolutely no value to them.
What if instead of helping employees only save for retirement, employers helped their employees save for emergencies? What if they help employees bridge their cash flow so that they could avoid late fees, overdraft fees, and high-interest payday loans? And what if employers help their employees get out of debt completely, all as a benefit to their employment with that company? Instead of just donating money to specific “causes” that will never go away or solve the root problem of the household budget, what if employers provided real solutions for employees to experience true financial freedom by breaking the bondage of debt, freeing up their household budget to be able to afford housing, transportation, and food once and for all. Now that is a solution to poverty that is aligned with God’s way of managing money.
Impact Loan
The solution that makes this possible is called an Impact Loan. It’s a 0% interest charitable loan with a flexible payback that builds emergency savings. The purpose is to help households bridge their cash flow and cover emergency expenses without accruing additional fees or high-interest debt. The loan is tech-enabled and can be applied for and distributed to the household instantaneously to meet needs. Repayment is set up automatically from the borrower’s bank account, and 10% of each payment will go to incentivize the building of an emergency savings account. The participant is encouraged to take as many loans as they need to cover cash flow and expenses as long as they can make the monthly payment and keep building savings. There is never a missed or late payment, and if the loan happens to default, it turns into a charitable donation.
The Impact Loan has all of the components to create sustainable behavior change in participants, similar to how retirement plans were designed to get families to save for the long term. The three key components are easy enrollment, automated payments, and a financial incentive or match to encourage savings. The only difference is that we are applying these behavior nudges to the household’s cash flow, emergency savings, and debt elimination, not just retirement savings.
Maximum Impact
When it comes to maximizing community impact, there is nothing more effective than lending at zero interest to your neighbors in need. This is exactly God’s model of helping the poor and is mentioned many times in the Old Testament.
“If you lend money to one of my people among you who is needy, do not treat it like a business deal. Charge no interest.” Exodus 22:25
“You will not lend them money at interest or sell them food at a profit.” Leviticus 25:37
“Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest.” Deuteronomy 23:19
One of the best cases for impact lending is in the book Toxic Charity: How the Church Hurts Those They Help and How to Reverse It by Robert Lupton who elegantly describes how we try to do good but often end up hurting the very people we are trying to help. He outlines what he calls the “Oath for Compassionate Service” which serves as a guide for how to help those in need. It reads:
I will never do for others what they have (or could have) the capacity to do for themselves.
I will limit one-way giving to emergencies.
Give once, and you elicit appreciation.
Give twice, and you create anticipation.
Give three times, and you create expectation.
Give four times, and it becomes an entitlement.
Give five times, and you establish dependency.
I will seek ways to empower through employment, lending, and investing, using grants sparingly to reinforce achievements.
I will put the interests of the poor above my own (or organization) self-interest, even when it means setting aside my own agenda.
I will listen closely to those I seek to help, especially to what is not being said—unspoken feelings may contain essential clues to effective service.
Above all, to the best of my ability, I will do no harm.
With impact lending, we can focus on a community’s strengths more than its needs. The model respects the gifts and talents of the poor and seeks to make an impact in the community with them rather than for them, thus protecting people’s dignity.
In addition to respecting the individual’s dignity and empowering them to “get well,” lending also maximizes charitable giving by using the repayment of the loan to not only sustain impact but to grow it.
Summary
The key to prospering communities is simply: employers around the world regardless of industry, geographic location, or tax status meeting the real and immediate needs of their employees, members, and community by giving them a hand up and not a handout. By lending to those in need without charging interest and using the repayment of the loan to build emergency savings to break the cycle of poverty, we can solve the issue at a root level instead of just addressing the symptoms. Employers have been doing similar things to drive savings behavior for decades, and yet for some reason, it has been limited in scope to just retirement savings. We need actionable tools that help our communities systematically break the bondage of their finances so that they can experience the life God has intended for them to live. In doing so, we will be unlocking the world’s wealth to meet the needs of people in the community just as we are instructed in the Great Commandment. It’s the act of loving a neighbor by meeting needs that allows God to begin to work in the lives of people who are lost but seeking. Our opportunity is to equip employers worldwide to join into a collective impact strategy that is based on God’s economy not our own—one that honors Him, unlocks resources for the Kingdom, and meets the needs of our neighbors.
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2 https://opportunity.businessroundtable.org/ourcommitment/
3 https://www.unitedforalice.org/national-overview
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Article originally hosted and shared with permission by The Christian Economic Forum, a global network of leaders who join together to collaborate and introduce strategic ideas for the spread of God’s economic principles and the goodness of Jesus Christ. This article was from a collection of White Papers compiled for attendees of the CEF’s Global Event.