Business Model Reflections

Earlier this year, one of our foundation supporters declined to provide a grant to CLI. This, of course, is an obvious risk with philanthropy. Any small change in external circumstances - a deeply contested election result, in this case - can have a large effect on revenue and budgeting.

The truth is that philanthropy will always have a place in our work, but we don’t think it’s the only way. In fact, we happen to believe that there is a better way.

In 2015, we began to track the results (in terms of profit/loss) of our young leaders’ projects and businesses in the Congo. Early returns were spectacular and surprised even us: The first year of projects generated an average return of 70% in only 3 months. Even more modest returns as we have expanded the program have been impressive. Most years, young leaders are able to transform $1 into anywhere from $1.15 to $1.50 in only three months.

Partially as a result of the success experienced by our young leaders, we deepened our commitment to the microfinance model by requiring payback of the funding so that we now offer talented youth loans instead of simple grants for projects and businesses. This year, we are going one step further by charging (nominal) interest on these loans, further enhancing sustainability and providing youth year after year with an incredible opportunity to create a profitable business.

This brings us back to the philanthropy question above. Now that we are generating a return through the course of our normal activities, we have an opportunity to fund programming for youth in the future via the success of projects started by youth today. We will see what form this takes, but needless to say, we’re excited about the possibilities that this virtuous cycle engenders!

Nathaniel Houghton