Trust Banks – A Tool for Responsible Business

An article by Frank    6 Comments

A friend asked me a little while ago if I had any ideas relating to what they could do to use the business they are establishing, building and promoting to make it a more ethical entity and to make it something that is making a positive difference in the world. It is an exciting question to hear as I believe responsible business and business where the profit margin is not the be all and end all of what a business achieves needs to be the way of the present and future in terms of how businesses operate if we are to work towards establishing a sustainable world where people are recognized as the center of everything that is done. If a business can prove to be responsible in the way it approaches the world, it should be able to move forward and we should explore avenues to promote this.

The question has taken me a little while to get to as I wanted to offer an answer that takes into account the unique identity of the business being looked at and the restrictions they face in terms of causes they can support and how they can communicate support for such things to their customers. I have something that I think can work.

Any good business represents the creativity and entrepreneurial spirit of those who form it. A good business represents a desire to create something and offer it to the world – to build something that benefits a customer base and therefore the community in some way shape or form and in so doing, benefits the creator and sustainer of the business. Good business can transform a community.

With this in mind, it makes perfect sense for businesses to encourage and assist that creative and entrepreneurial spirit in other parts of the world where sustainable business practices are not yet flourishing, but where communities could largely benefit from such forward movement. If we could see this happen, we would be moving towards a more sustainable world.

Currently, in many parts of the world if someone wants to start a business to earn money to support their families they have to access credit. Any business developer in any developed nation will be aware of this need as most businesses operate through the use of credit. The difference is that in many poverty stricken areas of the world, the poor do not have the necessary means or backing to access credit from established banks so when they do try to access credit for basic needs, it is from local creditors who charge exorbitant rates of interest, sometimes as high as 1600% per annum.

The situations these loans create are oppressive, with people getting into spirals downward as they seek to pay back these loans. Many people end up in debt bondage and slave labour situations to honour their loans. In some situations the people giving the loans take children from families burdened by such debt in order to appease the loans. Often those children end up as slaves in harsh labour conditions, or they end up in the sex industry to be used and abused for the rest of their lives. It goes with saying that such situations are not acceptable, but all too often they are not avoidable.

To combat this despicable system, micro-enterprise has been established. The basic concept is that the poor are given access to small, low interest loans to establish small businesses. They pay the money back and it is then used again for the same purpose. The money keeps working and people are freed from the need to access high interest loans they have no chance of paying back. The success of the scheme is immense and in my mind is one of the most important tools in combating injustice in the lives of those oppressed by needless poverty.

It is within the micro-enterprise system that I think businesses in developed nations can play a part. By participating in the support of solid and proven micro-enterprise schemes amongst the poor, strong businesses have the chance to foster the very things they stand for in nations where these things need to flourish.

TEAR Fund offers a scheme that gives businesses/churches/individuals and any form of group the chance to focus their efforts to achieve just that – Trust Banks.

Rather than try and explain Trust Banks myself, I’ll let TEAR Fund do the talking:

A TEAR Fund Trust Bank is a group of 15-25 poor entrepreneurs who come together to receive Microenterprise loans, training and mentoring. A Trust Bank is funded by a single person, by a group of New Zealander’s, churches or businesses who want to make a real difference in many lives.

Trust Banks are comprised of poor people, who are rich in energy and ideas, but, without collateral or assets, can’t get a loan from the bank. Under the guidance of our local partner organisation, they form a group, appoint a leader and co-guarantee each other’s loans. They are each given a small loan to start or expand a small business and provided with business training. Repayments are collected each week.

This is a unique opportunity to learn about another country, to connect with a community from an entirely different culture and to share what you are experiencing with other people in your community.

To fund an entire Trust Bank $5,000 per year is needed for two years.

So it amounts to a $10,000 donation broken up into a $5,000 donation in each of the two years.

This gives any new business the chance to use some of its profits to support something extremely worthy and in so doing help other budding business people in poor communities around the world. When you consider that it involves co-operatives comprising 15-25 people it can very easily have the effect of transforming an entire community.

For a new business wanting to pursue an ethical stance that makes a difference in the world, this offers the perfect tool and since it gives you the chance to let your customers know that by supporting your business and buying your product, they are helping to support businesses in poor communities – they are helping to transform communities by standing with you and supporting your business.

If you operate a business, I would strongly encourage you to consider the option of using the Trust Bank and micro-enterprise tool to make a difference. For more info or to support a Trust Bank feel free to phone Richard Barter or Kathy Walker at TEAR Fund on 0800 800 777, or email microenterprise@tearfund.org.nz