Pay It Forward With MicroGrants
Twenty-seven years ago, more than a decade after Joe Selvaggio decided he could no longer be Father Selvaggio at Holy Rosary Catholic Church in south Minneapolis (or any other Catholic parish, for that matter), he married Rosario Escanan, a native of the Philippines. Since then, Selvaggio has become one of the Twin Cities’ best-known activist-philanthropists, and one of its most well-connected. He also has traveled frequently throughout the developing world, including several trips to his wife’s homeland. He recalls in particular a journey that he made there in 1984.
“When I was over there, I’d give some of her ambitious relatives $50 to buy a pregnant pig or a sewing machine,” recalls Selvaggio, whose soft-spoken manner also interweaves a Chicago-born toughness. “They were all kind of poor, even though most of them were college graduates.
“So I said, ‘If you make it with this pregnant pig and they have babies and you sell them and you make a real business out of it, you can pay me back. But if not, don’t worry about it.’” Two decades later, Selvaggio tapped this experience to start an organization called MicroGrants.
Founded in 2005, MicroGrants’ work bears some resemblance to “microlending,” an idea made famous by Bangladeshi economist Muhammad Yunus. A microlender, such as Grameen Bank, the Bangladesh enterprise that Yunus founded, provides small loans to impoverished people looking to start businesses; the loans can be used for livestock, sewing machines, tools, whatever’s needed. The model earned Yunus the 2006 Nobel Peace Prize and numerous other awards; it also has its critics, who say that microloans often burden the poor with debt they can ill afford.
MicroGrants doesn’t lend money: It gives it away. The size of the grants might strike most businesses as, well, micro—$1,000 each. (A few have been under a grand, and a few a little over.) But for the recipients, who tend to be poor as well as ambitious, that thousand can be the boost they need to start or improve a business, continue their education, or otherwise climb the ladder of life.
Though he doesn’t make reference to microlending, Selvaggio seems aware of the criticisms that have been made of it. In any case, he doesn’t want to be a lender. “Everyone in America seems to borrow too much: the federal government, individuals, middle-class people,” Selvaggio says. “We all want to acquire a lot of things, and we get ourselves in a lot of trouble. I want to teach equity, not debt.”
The terms “social enterprise” and “social entrepreneurship” have caught fire in recent years as business models for nonprofits (and, in some cases, for-profits). Social enterprises don’t only want to improve people’s lives—they seek to do so in a way that’s sustainable and measurable. It’s something that Selvaggio has done even before social entrepreneurialism became au courant. MicroGrants is simply his latest venture.
Joe and Rose live in a handsome bungalow in Minneapolis’s Central neighborhood. Bounded by Lake Street, Chicago Avenue, 38th Street, and 35W, Central reflects a diverse and complex mixture of poverty and middle-class solidity. Its housing stock includes numerous grand houses from the early 20th century, some gone to shabby seed, others attractively rehabbed. Long a bastion of the city’s black middle class (former Minneapolis Mayor Sharon Sayles-Belton grew up here), Central these days is predominantly Hispanic, though large numbers of both whites and African Americans call the neighborhood home.
Given his background, Central seems like just the right place for Selvaggio to reside. His career has been spent largely among the poor, but his work has always been about helping poor folks to rise above their circumstances—to not remain poor. As Selvaggio says, “I want to help the poor become middle class.” But whether poor or middle class, he believes that people should live within their means. Selvaggio himself bought his house in 1974 for $25,000, putting $5,000 down. The house, he says with quiet pride, is now worth “a couple hundred thousand dollars.”
Though he left the priesthood three decades ago, Selvaggio hasn’t quite forsworn a vow of poverty. He says that he’s never made more than $50,000 a year, and yet this hasn’t cramped his love of travel, which he indulges as inexpensively as possible.
Selvaggio’s life journey brought him to Minnesota in 1966 as an associate priest at Holy Rosary, an inner-city parish. There, inspired by the example of Martin Luther King, he began to work closely with the poor. Disenchanted with the Church, he left the priesthood and became a social activist, then hit upon a way that he believed might make more of an impact on the lives of the poor than just protesting and campaigning for social justice. In 1972, Selvaggio founded Project for Pride in Living (PPL), which established programs designed to engender greater self-sufficiency among the needy through employment training, education, and support services. Now headquartered on Franklin Avenue in Minneapolis, PPL not only provides services but also runs a used-furniture store and a custom-manufacturing operation.
After retiring from PPL in 1997, Selvaggio started another social venture, the One Percent Club, which encourages wealthy individuals to donate 1 percent of their net worth each year to tax-deductible causes. (The organization is now in a self-described “holding pattern” as it determines its future activities.)
By the middle of the last decade, Selvaggio had passed the age of 65. But he remained restless, not ready to retire. His next social enterprise project started informally. Some years back, Selvaggio started giving small amounts of money to people he knew—$1,000 to a security guard so that he could attend bartending school, for instance. But “I ran out of people after 40 or 50,” he says.
But he still wanted to carry on giving enterprising poorer people a little financial boost to keep going. Working his connections both among local nonprofits serving the poor and the wealthy folks whom he’d gotten to know through PPL and the One Percent Club, Selvaggio began to conceive of an organization that could provide donors with a way to fund the entrepreneurial poor.
Why a grand? “It sounds big enough,” Selvaggio says. “You can buy a lawn mower or a snow blower or a tool that can strengthen your business. But it’s not too big that it’s going to spoil them,” he adds, a touch of wryness in his voice. So far, he says, “we haven’t had anyone abuse it and go to Las Vegas or anything like that.”
For that, Selvaggio credits MicroGrants’ partner agencies that vet grant recipients. These nonprofits keep close tabs on the people they work with and pass on names of those whom they think would best benefit from a MicroGrant.
“They’ll say things like, ‘We’ve been looking in their eyes the last six months or a year. We know the ones who are lazy and the ones who do what they say they’re going to do,’” Selvaggio says.
That mild note of tough love may surprise, perhaps even shock, those who think of Selvaggio as “Saint Joe,” the halo bestowed upon him about a decade and a half ago in an insightful local-magazine profile. But given his decades working with the poor, Selvaggio has earned his realism. Too, he has nothing critical to say about those who truly need a handout—people sleeping on the street, for instance. “I’m not at all against emergency assistance,” he says. “But my niche is helping people get jobs and running their businesses.”
Selvaggio has experienced the power of entrepreneurship—in his wealthy donors, the poorer people aspiring to build a successful business and a better life, and his own career. He himself is the son of a small-businessman—his father owned an awning shop on Chicago’s West Side.
Businesspeople “understand entrepreneurialism and ambition and drive and focus and accountability,” Selvaggio says. “Those are good old-fashioned conservative values. That’s their motivation [for being MicroGrants donors], I think.”
One of the tenets of the social enterprise model is demonstrating a measurable return on investment. In the case of donors, that “return” is proof that the businesses that MicroGrants have given money to have been worthy of the money. “If we can’t show results,” Selvaggio says “they’re going to get turned off as investors and donors.”
He adds that “we don’t want to fund basic needs, like food or rent. There are groups that can help with that, and they do a great job. We fund opportunities.”
Some of MicroGrants’ board members have argued for flexibility in size of the funding. “But it takes works to do that, too—to evaluate the amount. Our partner agencies don’t have a lot of time—they’re doing this for free. We should make it simple for them.” After all, “the quality of the recipient is really important,” Selvaggio says. “The funders want their money to go to success.”
In November 2011, MicroGrants made its 2,000th donation. That meant, as Selvaggio proudly notes, that his nonprofit has made, on average, roughly one grant for each day of its existence. Some of those recipients operate businesses inside the Midtown Exchange on Lake Street, not far from where Selvaggio lives. Other recipients don’t run businesses at all, but work in construction (the $1,000 has been used by some awardees to buy tools) or are finishing up a college degree.
One recipient is Connie Lee, who in May 2010 opened her Brooklyn Park beauty salon. (Selvaggio gets his hair cut at the barbershop upstairs.) Last year, leaking water damaged the floor of Lee’s shop, and she needed to remove the existing carpeting and refinish the flooring underneath. After all, she notes, “people judge a business on how it looks.” Lee used the MicroGrant to upgrade her space; the money also allowed her to add two new stations, giving her business a further boost. “I’m so appreciative of MicroGrants,” Lee says. “It came at the right time.”
Donors to MicroGrants also sing its praises. Chuck Garrity, a longtime Twin Cities insurance executive and MicroGrants donor, likes that the model is “simple and easy to understand.” He also praises the organization for being “efficient, with little or no overhead. Most of the dollars are going to the people who need them.” What’s more, “it’s measurable”: MicroGrants details to donors how its grantees are doing in terms of income and related gauges.
Mike Ducar, a retired portfolio manager for Minneapolis-based American Express Financial Advisors (now Ameriprise) has known Selvaggio for two decades and has been both a donor to MicroGrants and a board member. Ducar touts the nonprofit because it provides “a hand up, not a handout.” But in addition to the grant recipients, he sees another group benefiting as well—the young collegiates from Yale, Macalester, and other schools who undertake internships at MicroGrants. “It really provides them with a window to people who are needy,” Ducar says.
Another sign of a social enterprise is scalability. MicroGrants is demonstrating that, too. In January 2011, MicroGrants opened a satellite program in St. Cloud, launched thanks to a friend of Selvaggio’s who donated $13,000. The St. Cloud branch has established a relationship with a partner agency there. Mankato, Willmar, and Northfield could be home to other Minnesota branches. MicroGrants has set up a branch in Selvaggio’s hometown of Chicago, where a priest friend has set up a connection with a partner agency. Selvaggio says that the Chicago branch has raised $6,000 and has given out $4,000 as of mid-January.
A more surprising outpost is Naples, Florida—not only because of its distance from Minnesota but also because it’s not the kind of place one would associate with poverty. But Selvaggio notes that many Minnesota transplants have settled there. One is Garrity, who says that while Naples may make you “think of big houses,” the county in which it’s located has its share of poverty. Selvaggio says that MicroGrants has “closed the deal” in Naples and has lined up two partner agencies. With money in the bank and some interested funders, he says that the Naples branch will be able to give at least one grant per month.
However many of these branches get up and running, MicroGrants appears to be well established, and Selvaggio would now like to pass the torch: “I’m going to turn 75 years old [in April], and I’ve been doing it from my basement for six years.” His dream candidate is a “younger hotshot executive director who could bring [MicroGrants] statewide and national.” Selvaggio believes that larger foundations could find the MicroGrants model appealing, and that a well-connected professional director could help attract those kinds of donors and dollars.
Likewise, Selvaggio would also like to see MicroGrants located in office space that demonstrates that “it’s a place of substance.”
He adds: “I’ve done it, but now it’s ready to grow, and I’m ready to give it up,” he says. He plans to remain on the board.
Still, it’s hard to imagine Joe Selvaggio actually retiring. “Helping people help themselves—that’s what I’ve done my whole life,” he says. And that life isn’t over yet.
Portrait of MicroGrants Recipients
On public assistance in 2010: 38 percent
Making less than $30,000: 91 percent
Female: 64 percent
With children: 63 percent
Single parents, primary household income earners, or both: 67 percent
Average age range of recipients: 35–49
Number of businesses supported in 2010: 110
Nonprofit agencies that provide a “pipeline” of MicroGrants recipients:
African Development Center
Metropolitan Economic Development Association
Midtown Global Market
Minneapolis Consortium of Community Developers
Neighborhood Development Center
People Responding in Social Ministry
Project for Pride in Living
Summit Academy OIC
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