“The most powerful force in the universe is compound interest.”
Yes, it can. I have been leading the Shanta Foundation for almost two years now, and I am still amazed at the “magical” force that powers the development of our village partners. When we partner with a village, one of our first projects is to establish a community bank. The purpose is four-fold. A community bank reduces the cost of capital for farmers and aspiring entrepreneurs. Second, as a community works to establish their bank, they learn basic accounting and banking concepts that will be useful in future development activities. Third, by creating their own lending institution, they establish a profit-generating engine that can finance whatever development projects they would like to pursue. Be it a school, a road, or a water system; they can pay for it themselves with funds generated by their bank. Finally, by becoming financially independent, villages are no longer subservient to outside groups (i.e., potential sources of financial assistance), be they governmental or NGOs.
Look at the attached spreadsheet to see how this capital structure grows while also spinning off cash that can be invested in community development.
At the Shanta Foundation, creating financially independent, thriving villages isn’t marketing material; it is the reality of how our model works. We empower local people to solve local problems. We equip villagers to do the work themselves. As a result, they experience the joy and increased self-confidence that comes with personal and communal accomplishments.