It’s Giving Tuesday, a day that has become prominent enough in our culture to make us either give, feel guilty about not giving, or come up with a powerful, self-justifying excuse that relieves our guilt for not giving. One of the most common of these is “I would give more if only I knew that my giving would truly have an impact.” The purpose of this post is to eliminate this particular excuse.
In past posts I have encouraged people to consider donations to Compassion International and GiveDirectly, and based on rigorous evidence of impact, I am no less enthusiastic about these organizations than before. Compassion’s child sponsorship model produces large, significant, and long-term impacts as measured by subsequent educational attainment, adult employment, income, and leadership in the community. GiveDirectly’s unconditional cash transfers reduce hunger, build household assets, and do a tremendous amount of good in other ways. But just so this blog is not confused with an infomercial for these organizations, I want to suggest a new option where you can be certain your dollar is getting the bang-for-the-buck that you and the global poor both deserve and desire: Giving a microenterprise grant through Silicon Valley-based Village Enterprise.
Village Enterprise was doing microenterprise grants before microenterprises grants were fashionable. A decade ago both researchers and practitioners viewed microcredit as the silver bullet for jump-starting global microenterprises. Small business grants were viewed as unsustainable charity. But it appears the tables have turned on this one. While the evidence of microcredit impact has been far more modest than expected, there is considerable evidence that microenterprise grants, especially when combined with some form of mentorship and training, are highly effective for supercharging microenterprises. Research by Chris Blattman, David McKenzie, and other leading researchers have documented long-term impacts from microenterprises grants. For example, Blattman and his colleagues worked with 10 to 40 members of 535 village-based groups in Uganda who submitted formal proposals for cash grants related to vocational training and microenterprise start-up.[1] Among those randomly selected to receive business grants, business assets increased 57% relative to the control group and profits increased by 38%, producing annual returns of an estimated 30-50% from investment in the program.
David McKenzie’s well-known study in Nigeria in partnership with the YouWiN! business plan competition randomly selected 729 winners from 1,841 semifinalists in a competition to receive large grants for expanding small businesses.[2] The winners were given large cash payments, conditional on achieving some basic milestones at different stages. After three years, entrepreneurs chosen to receive the grants were 37 percentage points more likely to be in business than those in the control group, 23 percentage points more likely to have more than 10 employees, and they added about five more employees. Sales and profits were also significantly higher. The Blattman et al. and McKenzie studies reveal the kind of large impacts from grants that we once thought could be realized through microcredit alone.
Silicon Valley-based Village Enterprise implements an effective microenterprise intervention that includes a cash grant, entrepreneurial training, and mentoring. There is evidence that the microenterprise grant-training-mentoring combination is powerful. Each of these interventions alone has been shown in recent studies to have significant effects, but there is good reason to believe that in combination, they reinforce each other to create what economists call “complementarities” that lead to especially large impacts.
A randomized controlled trial with Innovations for Poverty Action on Village Enterprise’s work showed Village Enterprise’s microenterprise graduation program led to increased consumption, assets, and income, as well as improvements in nutrition and subjective well-being. If you would like to see an entrepreneur flourish in Kenya or Uganda, Village Enterprise is an excellent place to give on Giving Tuesday.
[1] Blattman, Christopher, Nathan Fiala, and Sebastian Martinez (2013). “Generating skilled self-employment in developing countries: experimental evidence from Uganda.” Quarterly Journal of Economics, 129(2) 697–752.
[2] McKenzie, David (2017).
On Giving Tuesday: The Gift of Entrepreneurship
It’s Giving Tuesday, a day that has become prominent enough in our culture to make us either give, feel guilty about not giving, or come up with a powerful, self-justifying excuse that relieves our guilt for not giving. One of the most common of these is “I would give more if only I knew that my giving would truly have an impact.” The purpose of this post is to eliminate this particular excuse.
Village Enterprise was doing microenterprise grants before microenterprises grants were fashionable. A decade ago both researchers and practitioners viewed microcredit as the silver bullet for jump-starting global microenterprises. Small business grants were viewed as unsustainable charity. But it appears the tables have turned on this one. While the evidence of microcredit impact has been far more modest than expected, there is considerable evidence that microenterprise grants, especially when combined with some form of mentorship and training, are highly effective for supercharging microenterprises. Research by Chris Blattman, David McKenzie, and other leading researchers have documented long-term impacts from microenterprises grants. For example, Blattman and his colleagues worked with 10 to 40 members of 535 village-based groups in Uganda who submitted formal proposals for cash grants related to vocational training and microenterprise start-up.[1] Among those randomly selected to receive business grants, business assets increased 57% relative to the control group and profits increased by 38%, producing annual returns of an estimated 30-50% from investment in the program.
Silicon Valley-based Village Enterprise implements an effective microenterprise intervention that includes a cash grant, entrepreneurial training, and mentoring. There is evidence that the microenterprise grant-training-mentoring combination is powerful. Each of these interventions alone has been shown in recent studies to have significant effects, but there is good reason to believe that in combination, they reinforce each other to create what economists call “complementarities” that lead to especially large impacts.
A randomized controlled trial with Innovations for Poverty Action on Village Enterprise’s work showed Village Enterprise’s microenterprise graduation program led to increased consumption, assets, and income, as well as improvements in nutrition and subjective well-being. If you would like to see an entrepreneur flourish in Kenya or Uganda, Village Enterprise is an excellent place to give on Giving Tuesday.
[1] Blattman, Christopher, Nathan Fiala, and Sebastian Martinez (2013). “Generating skilled self-employment in developing countries: experimental evidence from Uganda.” Quarterly Journal of Economics, 129(2) 697–752.
[2] McKenzie, David (2017).