Big Issue Invest goes Person-Centered

The investment arm of Big Issue aims to build on its mission to put people first, reports Pioneers Post

The person-centered approach to counselling derives from the work of Carl R Rogers and has had considerable impact in the world of care services. Rogers reasoned that helping people gain access to the resources they needed, could help them resolve their own problems, flourish and grow.

"Originally described as non-directive, this therapy moved away from the idea that the therapist was the expert and towards a theory that trusted the innate tendency (known as the actualising tendency) of human beings to find fulfilment of their personal potentials. An important part of this theory is that in a particular psychological environment, the fulfilment of personal potentials includes sociability, the need to be with other human beings and a desire to know and be known by other people. It also includes being open to experience, being trusting and trustworthy, being curious about the world, being creative and compassionate."

See: The British Association for the Person-Centered Approach  

Both Rogers and colleague Erich Fromm were influences on the conception of a compassionate form of economics.

In 1996 it was the P-CED white paper that proposed putting this approach into business and economics and in 1999 it lead on to a pioneering initiative in microenterprise development in Russia.

See: Re-imagining capitalism for people and planet

It was a business plan to tackle poverty which introduced the concept of a business re-investing surplus into community development funds to the UK. The response was a rather resounding "not invented here". That sent us back to Eastern Europe and our focus on childcare transition in Ukraine.

“This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way. “

A few weeks ago, Marcus Welby, Archbishop of Canterbury,  spoke out about Wonga. I was reminded of our work in Russia where we drew attention to women prostituting themselves to feed their children. Something that was also reported in Hull recently.

See: Wonga, Welby and the Socialists 

Interestingly, the subject of transformational finance is raised in the Pioneers Post article. It was in our 2003, proposal for asssisting the repatriated Tatars of Crimea that we put this approach forward,

"These programmes are distinct because they combine access to credit with more comprehensive business assistance services to help microentrepreneurs address the challenges of operating a larger enterprise. The technical assistance may focus on general topics, such as cash flow management, personnel, market development, and production technology. Alternatively, it may focus on the market information and technology needed to develop particular business sectors. "

The proposal goes on to describe our community re-investment model and how it might align with a micro credit union: 

"Creating an enterprise for community funding will work for enriching a community just as well as it will work for enriching a few people. The profit motive remains intact. The enterprise is sustainable as long as it makes a profit, just as with any other business. The main limitation is the time it will take to grow enough to provide the money needed by the community. A credit union or bank, by comparison, can make sufficient money for a community available more quickly. These can be funded immediately with sufficient money to service entrepreneurs in a community. In turn, businesses and jobs are created quickly, reducing the overall financial needs of the community. The limitation of a bank or credit union is making enough money in the process of lending money to sustain itself. This money is made by charging interest rates, which must be high for micro loans. It requires much more time, work and therefore cost to lend one million dollars among a thousand different people than lending the same amount to one person, for example. As a result, the interest rates for micro loans need to be high in order to cover the operating costs of making these loans. Even with high interest rates – up to 35% in the present case – it remains difficult to earn sufficient profits to be able to make loans across a wide region such as Crimea where potential borrowers are spread out in remote areas across the region. The cost of outreach, training and multiple visits in that process can exceed 35% interest ultimately earned on micro-loans to remote areas.

By combining a community-funding enterprise (CFE) with a micro-credit union, the limitations inherent in each one is greatly diminished. The CFE provides sufficient funding to ensure the operating costs of the credit union, reducing the risk that the credit union will have any need to use its capital to sustain itself. The credit union immediately makes available sufficient loan money to match the needs of the community, thereby eliminating the time needed for the CFE to generate the same amounts of money. Additionally, CFE profits over and above what is needed to help with the operating costs of the credit union can be put directly into the credit union. Over time, the amount of money used to originally fund the creation of the CFE is offset by CFE contributions to the credit union. The credit union is increased so that larger amounts of money become available either to make larger loans or to service more borrowers. Together, the CFE and credit union create an enterprise where the original funding not only remains but also increases with time. They complement and balance each other by addressing the economic goals both have in common and offsetting each other’s limitations."

See: Tackling terrorism through compassionate economics

Imagine a person-centered investment strategy being deployed nationally before the economic crisis and before the predicted uprisings.:

See: Capitalism is an insufficient economic model  

Could we be separated by a common language?