Positive Power of Principled Profit
Volume 3, Number 9—May, 2006

Positive Power Spotlight: SHARE (Guest article by EF Schumacher Society)

SHARE: Putting a Human Face on Banking in One's Own Community

By the E. F. Schumacher Society

Imagine a world where we no longer see ourselves as passive "consumers," but instead we actively create an economy that supports the life of our community. Not all of us are destined to be entrepreneurs, but we can all participate in supporting the businesses that provide the products and services needed for a sustainable economy.

The Self-Help Association for a Regional Economy (SHARE) is a model community-based nonprofit that offers a simple way for citizens to use their savings to make micro-credit loans available at manageable interest rates to businesses that are often considered "high risk" by traditional lenders. Local SHARE members make interest-earning deposits in a local bank; these deposits are used by SHARE to collateralize loans for small businesses that have a positive community impact.

SHARE depositors live in the same community as the business owners they support--bringing a human face back to lending decisions. The SHARE program of the Southern Berkshire region existed from 1981 to 1992, collateralizing 23 loans with a 100% rate of repayment--surprising the bankers but not the SHARE depositors, who knew the community businesses they supported. Members of SHARE pointed to Rawson Brook goat cheese or Jim's draft horses or Marty's Washing Machine Repair Service or Bonnie's wool-knit sweaters and knew where their savings were at work. They had a true picture of the social and environmental effect of their investments, a picture not available from an abstract bank statement merely showing a standard rate of return.

When Sue's house burned to the ground at Rawson Brook Farm in February of 1992, SHARE members thought it natural to extend her loan, and in addition members individually donated clothes, household items, and time to help rebuild. The visibility and good will generated toward a community-collateralized business thus helps ensure its success.

The SHARE model is a useful and simple-to-operate tool that allows citizens to make affordable loans available to businesses that cannot secure loans at reasonable rates for a variety of reasons. For example, there may be community members who don't have a good credit history or women who stayed home to raise children and have not built credit. There may be entire communities, especially low income communities, where banks are wary to invest or where local banks don't exist. There may also be new and innovative business ideas that aim to preserve resources or enhance the community in unique ways that banks are unfamiliar with and are therefore less likely to fund.

The power of SHARE is that it allows the community to decide what types of businesses it wants and leverages the community's capital to make those businesses possible. The E.F. Schumacher Society, originator of the SHARE model, now has made the background and organizational documents available online so that others may replicate SHARE in their communities. The SHARE Handbook is available at the E. F. Schumacher Society's web site www.smallisbeautiful.org by clicking on SHARE Micro Credit Program link or going directly to http://www.smallisbeautiful.org/frameset_share.html.

We thank our members for their support in making this work possible!

Sincerely,
Merrian Fuller, Chris Lindstrom, Dane Springmeyer, Susan Witt
E. F. Schumacher Society, 140 Jug End Road Great Barrington, MA 01230 USA
www.smallisbeautiful.org

Another Recommended Book: "The Integrity Advantage: How Taking the High Road Creates A Competitive Advantage in Business" by Adrian Gostick and Dana Telford (Gibbs Smith, 2003)

This thin and easy-to-read book looks at a number of companies, most of them quite well-known--and shows how their ethical commitments to treat their workers fairly, be honest with their customers, and minimize negative environmental impact all help create a healthier bottom line. Citing examples from Canadian Tire (Canada's #1 rated employer to Warren Buffett's Berkshire Hathaway to an unknown insurance agent whose refusal to lie about a policy's starting date to cover a pre-existing claim led an initially greedy client to give him over a million dollars worth of business, the authors demonstrate that standing up for what's right generates more profit. Unlike my own Principled Profit, the examples don't really look at the marketing benefits--but it does look closely at the difference in public perception of a Johnson & Johnson or a Gillette that does the right thing, and an Enron that does not.

And they occasionally look beyond the business context, as in the powerful example of Clarence Jordan, leader of an interracial and egalitarian Christian community in the segregated American South of the 1950s. When he tried to buy chicken feed from a local merchant, the storekeeper would only sell to him if Jordan publicly renounced his views on integration. He answered, "I just came in to get a bag of seed. My soul is not for sale."

The authors identify and explore 10 characteristics of integrity--including, ironically enough, the feeling that people of integrity are quiet, humble, and don't "spearhead large ethical crusades." I hope they'll forgive me for touting their virtues in spite of my own campaign for the Business Ethics Pledge (business-ethics-pledge.org). And when faced with ethical quandaries, they suggest a four-step process for evaluating the decision.

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