Five Ways Impact Crowdfunding Addresses Poverty and Homelessness
Donating and Investing in Parallel May Be an Effective Tool for Lifting Those Suffering from Gaps in Our Economic System and the Social Safety Net
I’m not a financial advisor; nothing I write in Superpowers for Good should be considered investment advice. You should seek appropriate counsel before making investment decisions.
Last Saturday, my local congregation of The Church of Jesus Christ of Latter-day Saints, the El Dorado ward, did something I’ve never seen first-hand before. We made lunch for and delivered it to some of those in our community who are living without shelter.
Over the years, I’ve seen and participated in many efforts to feed and serve unsheltered people. Often, in those contexts, I’ve seen surprisingly large quantities of food with labels indicating the origin was from the Church. Those efforts always involved some fellow members, too. Mormons, as we’re often called, do care about serving the unhoused. But, I’ve never been a member of a ward that organized an effort to deliver food right on the street. It was great to see.
Our ward not only made and delivered 279 lunches, but we also made about 150 hygiene kits for members of the unsheltered community as well. The video clip at the top of the article shows the materials we assembled into hygiene kits.
You’ve likely been part of similar efforts in your community. You’ve likely seen it done in other ways—maybe better ways. The more I see of these efforts, the more I’m convinced that most help more than they hurt, even when you can see the challenges the generosity creates.
I’m glad I got to be a small part of this work—pleased especially that my health allowed me to engage in this largely physical activity to end the year after a wild Thanksgiving.
This also got me thinking about how impact crowdfunding—investment crowdfunding with a focus on impact—is a tool for addressing poverty and homelessness. I count five ways.
Of course, I don’t think that crowdfunding is the solution to homelessness any more than any other single intervention is. For big, pervasive, persistent problems, we need to deploy all of the interventions.
Let’s get started with the list.
Enterprises Providing Social Services
One of the opportunities impact investors have is to support social enterprises that address factors that contribute to poverty and homelessness. While many of us agree that the primary contributor to homelessness is the lack of affordable housing—which is both a function of the cost of housing and the average wage in a community—there are social issues that contribute.
For instance, addiction is a factor. I’ve seen some evidence that suggests addiction is often a symptom of—rather than a cause of—homelessness. Still, I think it is safe to believe that there are people who are living unsheltered lives today because of addiction, especially related to the opioid crisis of recent decades.
One social enterprise that the Impact Cherub Club voted to back is called Sober Sidekick. While the company withdrew the offering, there are others with similar missions that have also raised capital via crowdfunding. Sober Sidekick continues to operate, providing nearly instant, on-demand support from a sober recovering addict to help those feeling tempted to drink or take drugs. The tool may help break addictions and prevent people from ending up on the streets.
One of the most direct ways to fight homelessness is to invest in affordable housing. I’m a proud, if tiny, investor in Small Change, an investment crowdfunding portal focused on real estate. A common theme on the portal is affordable housing.
When community members come together via crowdfunding to capitalize and construct affordable housing locally, you not only get the benefits of more affordable housing, but the economic development benefits of local investing as well.
This can even provide renters with an opportunity to own a small part of the building where they live. That’s a game-changer.
Fighting Climate Change
The opportunities for investing via crowdfunding in climate change interventions may be the most common among impact opportunities. Massive amounts of capital are required, and innovative entrepreneurs are working on everything from solar-powered electric cars (Aptera) to better wind turbines (NextPower 360 and many others).
For the sake of discussion, I just counted the number of green investments I’ve made and found 25 in my crowdfunding portfolio—ignoring what’s in my little portfolio of public company investments. There are huge opportunities in this arena.
I’ll grant you that investing to fight climate change is only an indirect way to address homelessness, but it is an indirect way to reduce homelessness. Fires in the west, floods across the country, and hurricanes that primarily hit the Gulf and Atlantic Coasts impoverish inadequately insured residents in their paths. All of these problems are exacerbated by climate change.
By fighting climate change, you fight a contributing cause of homelessness.
Building Your Local Community
When you invest in any local business, you are putting your money to work alongside your other efforts to bolster your community. Anything that has the potential to increase employment and wages where you live should help to address housing affordability. When people have good jobs, they can afford housing.
Many small, local businesses—as opposed to startups that may be small but have plans and projections for scale—raise capital in the form of debt on Honeycomb Credit and SMBX. All crowdfunding portals can help companies issue debt, but those two specialize in it.
That’s where you’re most likely to find genuinely local businesses like daycare providers and cafes.
Supporting Disadvantaged Founders
When you support founders who are in disadvantaged groups, you help to support those groups, increasing the prosperity in the group and potentially reducing poverty there.
Given that less than 2 percent of venture capital went to women last year, we can easily include them in the list of disadvantaged. Minorities are also often disadvantaged in the broader capital markets.
If you back an African American woman founder, chances are good that some of that capital will work its way into the broader African American community in the form of new jobs, higher wages and, in turn, capital investment in similarly situated founders.
While it is true that it is rarely going to be the case that your investment in a traditionally disadvantaged founder is the difference between that individual’s being housed, it is unequivocally the case that minorities experience greater rates of homelessness than white folks.
By moving capital from the broader population into disadvantaged communities, we are part of a long-term solution to economic growth and prosperity for them.
When we hand a hungry person a sandwich, they are not instantly housed, but they are fed for the moment, provided an instant of dignity and human contact. It makes a difference in helping people survive difficult circumstances and provides a glimmer of hope for a better future. It is only curative when other interventions are also deployed.
Most of us face meaningful limitations on our resources. Even the wealthiest of readers can’t solve global poverty unilaterally with one or more donations to charity or even giving cash directly to those in need (something that data seems to suggest works remarkably well). We simply lack the resources.
Impact crowdfunding can make a difference. Unlike our donations, effective impact investing via crowdfunding allows us to recycle the capital repeatedly and regularly supporting enterprises that make a difference. The success of our investing that fights poverty can also produce profits for us that allow us to give more to charity.
If you haven’t started investing for impact via crowdfunding, please do. Join us for the SuperCrowdHour on January 17 to hear from a panel of five impact crowdfunding investors. Or join us in person at SuperCrowdBaltimore on March 21st to go in-depth on community building and investing. Our biggest event of the year is SuperCrowd24 on April 17 and 18; it will blow your mind! Whatever you do, join us in the movement!
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