Abstract
From the perspective of a non-profit microlender, this chapter analyzes with accurate data how civil society can improve the living conditions of those most in need through micro donations and crowdfunding. To this end, in addition to analyzing crowdfunding as a strategy, it invites the reader to help micro-SMEs related to green innovation and societal awareness in order to generate future B Corps. Although the analysis is made to help the civilian population sensitive to poverty, many of the ideas expressed in the chapter are also valid to help disadvantaged communities that survive in the economically wealthiest nations of the planet.
TopIntroduction
One of the main problems of many micro-SMEs in developing countries is the difficulty of accessing commercial credit circuits. Lacking sufficient collateral or regular income over time, micro-SMEs are often excluded from the traditional means of access to credit that exist on the planet: conventional bank loans, venture capital, angel investors, and government, regional, or local aid. As a result, they can only use their personal savings (if any) and financial support from family and friends, while crowdfunding through nonprofit organizations is a whole new way to explore.
Microfinance is one of the solutions being implemented in developing countries to address this serious socio-economic problem that hinders economic growth and wealth creation. Also, microfinance is looked upon as a means of credit-based poverty alleviation through financial inclusion (Maity, 2023). However, this chapter will not focus on microfinance, but rather on micro donations, due to the lack of knowledge in the literature on this topic. In fact, a special type of microfinance is given when there is no profit motive on the part of those who lend the money, giving rise to micro donations.
Technology applied in the finance sector has become a means to combat the financial exclusion of the world's socially disadvantaged population (Demirgüç-Kunt, Klapper, & Singer, 2018). The growing expansion of the Internet in developing countries is making it possible to access greater possibilities of obtaining financing that will benefit startups. In this process of technification of the territory, the public administration plays a fundamental role, whether acting alone or in public-private partnerships. Therefore, the role played by public administrations is essential to relaunch entrepreneurship in the early stages of development and promote its growth in the population at risk of social exclusion, such as young people and women.
While in developed countries civil society plays a decisive role through non-governmental organizations (NGOs) and civic associations (political or otherwise), in developing countries the responsibility of civil society is reduced (or even non-existent) because these are countries where the population is fighting for survival and not for the harmonious development of the territory. This struggle for survival becomes even more intense in countries characterized by corruption. Corruption processes eliminate any possibility of expansion, since the economic resources generated are channeled to a few individuals who monopolize the political and economic power of these countries. As a result of these corruption processes, the economic oligarchies want to maintain the existing status quo in order to preserve their privileges, many of which generate social injustice.
Social justice is, in fact, an essential objective in developing countries to ensure a balanced and equitable distribution of resources, opportunities, and rights among all members of society. Some mechanisms that can contribute to achieving social justice in developing countries are by complementing wealth distribution policies, assuring equitable access to education, strengthening social protection by public administrations and avoiding corruption, promoting women’s autonomy, encouraging decent employment, and citizen participation and inclusive governance.
Key Terms in this Chapter
Circular Economy: It consists of the total recycling of resources to achieve zero waste.
Societal Awareness: It refers to a deep understanding and consciousness of the various cultural, economic, environmental, and social factors that shape and influence a community or society. It involves recognizing and empathizing with diverse individuals and groups’ needs, challenges, and dynamics within a broader societal context.
Snowball Principle: This is the principle according to which the number of microloans is increased through repeated microloans, without the lender redeeming any amount of money for his pocket, but using it to lend it in nonprofit crowdfunding to whoever needs it.
Bioeconomy: It refers to an economic system in which biological resources, such as plants, animals, and microorganisms, are sustainably harnessed and transformed into valuable products, processes, and services. It encompasses various sectors, including agriculture, forestry, biotechnology, and renewable energy, to achieve economic growth while promoting ecological sustainability and minimizing environmental impacts.
B Corps: Also known as Benefit Corporations, for-profit companies prioritize social and environmental impact alongside financial success. They commit to meeting specific social and environmental performance standards, transparency, and accountability and are legally bound to consider stakeholders’ interests beyond just shareholders.
KIVA: It is an innovative Internet-based platform that uses technology and global collaboration to connect people willing to lend with people who need financing to improve their lives.
Environmental, Social, and Governance (ESG): It refers to a framework used to evaluate a company’s performance and practices related to environmental impact, social responsibility, and corporate governance. ESG considerations are used to assess businesses’ sustainability and ethical practices for investors and stakeholders.