Bridging the Gap by Connecting People
Joe Selvaggio observed two phenomena: (1) low-income people with potential and (2) affluent people who liked to invest, not so much to make money, but to see positive results. He thought of a way to connect the two and have them both benefit. The result was MicroGrants.
Reaching economic self-sufficiency through the microcredit concept.
Here is how it works: Joe finds industrious lower-income people with an idea or opportunity for improving their lives. He evaluates their one-page plans and makes a judgment about their abilities to carry it out. With a reasonable chance of success, he grants them $1,000 for implementation. Typical grants go for computers for home-based businesses, construction tools, office equipment and supplies, books, job training, tuition, licenses for day care or cleaning businesses, insurance, down payments on cars and even working capital.
Most worthy recipients are referred by nonprofits that specialize in helping the low-income become self-sufficient. Nonprofit staffers volunteer their time to the MicroGrants organization because it is in their self-interest to help their people succeed. The volunteers help select the "people of potential," coach them as they implement their plans and evaluate them after six months to see whether they had succeeded (and, if they faltered, to find out why).
Holding recipients accountable through partnerships with other organizations.
The advantage of working with reputable nonprofits is that they already have a trust-relationship with recipients. That relationship is essential to picking the right persons, mentoring them and then holding them accountable.
Keeping overhead low is the hallmark of MicroGrants.
Selvaggio has gotten 100 "investors" (donors) committed to give the MicroGrant Non-Profit Program a total of $400,000 per year. And it has the potential to grow.
The funds enable him to write an average of seven grants of $1,000 per week, or $388,000 per year. He can do this because neither he nor his nonprofit volunteers take any salary. That means that the overhead is only 3 percent.
Teaching others to accumulate wealth, not debt.
The inspiration for MicroGrants came from the microgrant lending programs of 2006 Nobel Peace Prize winner Muhammad Yunus. But Selvaggio changed the investments in two ways: (1) the recipients are local to the area where donors live (Minneapolis-St. Paul, Minnesota), and (2) the investments are grants, not loans. Selvaggio made these two changes because the untapped resource of donors who prefer to give locally was vast, and because the American lower-income population should be taught to accumulate wealth, not acquire debt.
MicroGrants can be replicated nationwide.
Every city and small town across America could have such a program because every area has people with excess capital and plenty of "people of potential" who could use the investment as a springboard to give themselves a jump up. All that is needed to bring this idea to scale, nationally, is the retired volunteer to act as a catalyst. And there are plenty of retired volunteers around, who are looking for a winning project which would bring wealth to not only the poor, but also the community at large. This innovative idea is grass roots capitalism at its best.
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