Impact investing

In 2011, while on a trip to Uganda, Chris Bosch had an “aha!” moment.

Bosch, then working for World Vision Canada, had a chance meeting with Margaret, an entrepreneur whose efforts to help 6,000 farmers improve and grow their farms was stymied by lack of affordable loans.

“She needed $5,000 for her project, but she couldn’t get it,” he said. 

The problem was the amount Margaret needed for her business. What she needed was too big for a microloan, which typically is between $50 and $500, but too small to get a reasonable interest rate from a bank – charges of up to 27 percent for businesses like hers were not uncommon.

That encounter stuck with Bosch. “It became very clear to me that I needed to find a way for people like Margaret to get the capital they needed to improve their businesses and lives,” he said. “A way that went beyond charity.”

Bosch isn’t the only one who has heard a call to a different way of assisting poor people in the developing world, or here in Canada. That way is called impact investing, a way of putting money to use that goes beyond charity – giving donations – to investing capital into small businesses in the developing world.

For Bosch, that means something in addition to the traditional way Canadians have been providing assistance to people in the developing world through charitable organizations.

“I’m not against charity; it has a place, especially during times of disasters,” he said. “But charity doesn’t address all the challenges facing people who are poor today. If we are going to eliminate the scourge of poverty, we need other tools, like investment.”

In Bosch’s case, it led him and his wife to invite four other couples to put $1,000 into a pool to provide Margaret with the money she needed. When they did that, Flourish Financial was born.

Today, Flourish is a registered non-profit with 60 members who together provide $300,000 in loans to businesses in places like Paraguay, Guatemala, Moldova, Eswatini (formerly Swaziland), Rwanda, Ghana and Mexico. Each member invests a minimum of $1,000 into the fund pool. 

The loans are administered and monitored through partner organizations like Canadian Baptist Ministries, VisionFund, Partners Worldwide and Opportunity International, groups that also collect loan payments and provide support to lenders. 

“It’s like an investment club,” said Bosch, adding that members do not take interest payments, but rather reinvest it back into more loans.

It’s not without risk. “Members also understand they could lose their investment, although that hasn’t happened,” Bosch said. If members need their money back, Flourish promises to return their original investment. 

For Bosch, it’s a way for people who have extra funds to use them to help people in the developing world. “Many people have money in the bank for a rainy day, money that is earning very little interest these days,” he said. “This is a way to put that money to good use.”

One thing Bosch is clear about is that what Flourish is doing isn’t charity. “The best exit out of poverty is a job,” he said, noting that members don’t get a charitable receipt. “If we want to do that, we need to support efforts by entrepreneurs in the developing world to create jobs.”

Although it is run by Christians, Flourish is not just for Christians. “Anyone can participate,” Bosch said, noting “we are motivated by the life of Jesus to serve our neighbours, in this case entrepreneurs in the developing world.”

Looking ahead, Bosch dreams that an organization like Flourish could be “a catalyst for change in the way we assist people in the developing world. The charity model is broken; it’s not working as well as it should when it comes to helping people improve their lives. There’s a new story to be told, a story about investing in people and their dreams.”

Investing to thrive

Like Bosch, Ray Sawatsky feels the charity model isn’t sufficient when it comes to helping people in the developing world thrive. 

“Charity has its place and role, but we need to find ways to deploy our resources better if we want people in the developing world thrive economically,” said Sawatsky, president and co-founder of Kinvest Venture Partners. 

The goal of Kinvest, a social impact fund based in B.C. that Sawatsky helped co-found in 2022, is to generate profitable, sustainable, and equitable value by investing in medium-sized commercial agriculture companies in Rwanda – while at the same time generating a financial return for investors. 

At the same time Kinvest supports those businesses, “we provide leadership training, so employees are set to become future owners,” said Sawatsky, who also worked for international relief and development organizations in the earlier part of his career. 

Currently, Kinvest has 15 investors/limited partners who have invested $5.68 million CAD ($4.2 million USD) into acquiring and developing 605 acres of land to grow crops for sale into the international marketplace, with a goal of raising $13.5 million CAD ($10 million USD) by September 2024. The funds are managed by Capstone Asset Management Inc., also based in B.C., a registered portfolio and fund manager. 

For Sawatsky, a guiding verse from the Bible is John 10:10, where Jesus says his desire is for people to live full, thriving and abundant lives.

“For me, the question is what that thriving looks like economically for people in the developing world,” he said. “Charitable organizations can’t deliver that, they don’t have the expertise to do economic development,” he said. “But by investing in people and their businesses, we can help them thrive over the long term.” 

Sawatsky also pointed to the first half of that verse, where Jesus talks about thieves who steal. “For me, that’s about current economic systems that keep people in poverty, by either preventing investment or poorly spending money that could be put to good use to help them thrive,” he said.

Like Flourish, Kinvest is motivated by Christian faith and open to all who want to invest, Sawatzky said, adding success for him would be creating financial assets that provide long-term economic sustainability for people in the developing world.

“Western organizations can’t run things forever,” he said. “We have to transition to local ownership. They have the motivation and skills to do it. They just lack the funds.” 

Looking ahead, Kinvest’s goal is to create a model that that “addresses the systemic causes of poverty in a collaborative way that promotes flourishing enterprises, economically and spiritually.”

Investing closer to home

Closer to home, Indwell provides Canadians with a way to invest in solutions to homelessness in southern and southwestern Ontario.

The faith-based organization, which creates affordable housing communities that support people seeking health, wellness, and belonging, is raising $5 million through a community bond, to plan and design 140 units of supportive and affordable housing in Hamilton for people who face chronic homelessness.

Nick van der Velde is finance manager at the organization that provides supportive housing for over 1,200 people. He noted that obtaining “first-in” capital for projects is one of the biggest challenges facing organizations like Indwell.

“The biggest hurdle is obtaining capital for asset acquisition, design, and development,” he said, noting it can take over a year for organizations like Indwell to apply for and receive government funding – time that limits its ability to develop new affordable and supportive housing.

“The money will enable us to be shovel-ready,” van der Velde said. 

Through the bond, investors will be able to earn up to five percent interest, depending on the amount they are willing to invest.

“We’re excited by this opportunity for people to invest in finding solutions to homelessness,” said van der Velde. “We think this can have a major impact in our community as we provide safe, clean and beautiful housing for people who need it.”

To participate in the bond, which will be administered by Tapestry Community Capital, a community investment and social finance firm that has helped raise over $100 million in community bonds, investors must put in a minimum of $1,000.

“The goal is to create meaningful change,” said van der Velde, noting that anyone in Canada can participate. “It’s a way to come together to offer more than bandaids to the challenge of homelessness, a way to love our neighbours by making a big impact.”

Going beyond charity

In 2023, Canadians gave $392.9 million to 13 church-based relief and development organizations, including World Renew (based on CRA reporting). What if 10 percent of that was made available to invest in small businesses in the developing world, or to create supportive housing for people who are homeless in Canada? What impact would that have?

That’s what organizations like Flourish Financial, Kinvest and Indwell would like to find out.