Micro-enterprise: Fighting poverty through job creation

Micro-enterprise is a core component of how Soles4Souls fights poverty, while at the same time providing us the funding we need to operate – to collect, donate and distribute literally millions of articles of clothing and shoes, both in the U.S. and in disadvantaged communities around the world. Read on to learn about this important movement for social change!

The term “micro-enterprise” describes an approach toward helping the poor and their  communities by providing sustainable jobs to impoverished people through the creation of ultra-small (micro) businesses.  This might mean, for example, a single table selling used shoes in an open marketplace.  Or a street vendor with an inventory of used jeans spread out on a blanket.
Developed over the last decade, micro-enterprise has become a global movement supported by hundreds of governments, business leaders, not-for-profits and NGOs, researchers and social change advocates.  The concept itself is simple, an embodiment of the old saying,  “Give a man a fish, he will eat for a day; give him a way to fish, and he will eat for a lifetime.”

But why not always just donate shoes and clothes to people who need them? 

It’s a question we hear quite often.  Here’s why:

Soles4Souls continues to make donations, of course – virtually all the new items we collect from volunteers and industry are donated directly, as are many used items as well.  But in developing countries or devastated nations like Haiti, Soles4Souls and other nonprofits are strongly discouraged if not forbidden to inject mass quantities of donated consumer goods because this damages their young or recovering economies by hampering job creation.

While charity creates mostly positive short-term impact, jobs create sustained income.  This in term passes through the local economy, creating more jobs and eventually a self-sufficient community.

So how important is micro-enterprise to fighting poverty in those countries where Soles4Souls operates?

Micro-enterprise is one of the most effective ways that Soles4Souls can create sustained, positive change in places where poor people have virtually no way to earn a living. Let’s put it this way:  In 2010, Congress reported that less than 10 percent of Haiti’s private-sector economy is actually working. The vast majority of residents there get all of their income from informal, usually unstructured ultra-small businesses having little or no long-term security.

The difference we make in Haiti and other countries is in the opportunity for people to support themselves.  A few extra pair of shoes or unused clothing donated to Soles4Souls will generate vital dollars for hard-working people who only want to cloth, educate and feed their families.

How exactly does this micro-enterprise concept work?

Soles4Souls receives millions of articles of used shoes and clothing that have been collected by individuals, schools, faith-based institutions, civic organizations and corporate partners.  After sorting items in its national warehouse system, Soles4Souls sells the used and allowed new shoes and clothing to carefully selected micro-enterprise organizations.  These are private and non-profit companies with whom we establish contract relationships to provide shipping, financing, inventory, training and other support to ultra-small businesses in Central America, South America, and Africa.

Our contracted partners provide the micro-enterprise (ultra-small business) operators with shoes and clothing to sell in their communities.  Like any business, this inventory is often provided on credit -- also provided by our partner organization – and the operator keeps the profits they make from what they sell. These profits become the income that passes through the local economy.

Shoes are in high demand for micro-enterprise programs because they are universally needed and valued, can be easily bartered for other goods, and are a tangible commodity that is easy to transport and sell.  One very important aspect of this system is that Soles4Souls helps ensure a steady flow of inventory – that is, shoes we collect being delivered regularly to our partner organizations in each country. If we don’t collect and distribute enough shoes, the ultra-small business operators have nothing to sell. And that can mean having nothing to eat.

How does Soles4Souls use the money is makes by selling shoes and clothing to micro-enterprise programs?

The revenue we generate by providing inventory for ultra-small business operators in several countries pays for distribution costs – by far our highest expense – operations, salaries and benefits, and to grow our ability to acquire and directly donate new and used shoes to people in need, or in the aftermath of a disaster.