Instead of giving grants to entrepreneurs to seed financial viability, foundations should think about leveraging their grant money to guarantee low-cost debt to SMEs or social enterprises. Not only will your philanthropic dollars address a vital unmet need, but these dollars will stimulate an institutional shift where the banking sector can increase its risk tolerance for SME finance. That’s the takeaway in a long and well documented story on Next Billion about the working capital gap by Global Easy Water Products, an Indian social enterprise.
Foundations, don't grant, guarantee debt instead
SOCAP Global June 18, 2009