First off, let’s remember that the reason the economy is in the crapper is because people who shouldn’t have gotten loans to buy houses got loans to buy houses, cars, jacuzzi tubs, and jetskis and ridiculously low interest rates based on nothing more than “I want it and deserve it because I breathe air!” When those people didn’t repay the loans, it started a cascade of trickle up poverty. I was writing mortgage underwriting software at the time, so I had a front row seat to the entire thing.
I went to Starbucks over the weekend and saw this new campaign they’re having: Create Jobs for USA
The display they had asks for donations to help create jobs. I’m pretty sure the best way for me, as a consumer, to create jobs is to buy products or services that I find useful. Donating money just so that someone can have a job seems like busywork. Or government.
Me, being me, asked the manager “So how many positions are you hiring for?”
“Oh, at this store? None.”
So I decide to look a bit further into this, and it turns out that the donations don’t go to help people get jobs. The donations go to banks, who then lend out the money to small businesses that are on the verge of failure. Plus they cart out the “created or saved” mantra as a success metric.
So here’s how it works: You donate $5 to the program. That program then gives the money to a bank as a grant. That bank then loans the money out, collecting interest and fees. It’s a great gig for the bank, because there is ABSOLUTELY NO RISK TO THEM. Anything they charge for interest or fees (closing costs, application fees, etc) is pure profit. The borrower, on the other hand, is more screwed now than he was before. He was already struggling, and now he has another bill to pay and another creditor breathing down his neck.
I don’t begrudge the banks for trying to turn a profit. More power to them, but debt is not a blessing, and charity shouldn’t be a profit center unless you’re up front about it. I once gave a truck to a guy I worked with because he heard I was trying to get rid of it and he told me he wanted a project that he and his sons could work on. He was in his mid 20’s and his boys were at that age where they were getting curious about mechanical things. For me, this was win-win: I get rid of the truck, he gets some father-son time. A few days later, his “brother in law” came to pick it up.
I found out a year or so later that he had immediately put the truck on craigslist after I agreed to give it to him. The guy that came to pick up the truck was the guy he sold it to.
I was completely willing to give up the truck for free to a good cause, but I was furious when I found out what really happened. I felt cheated and taken advantage of.
This program is a lot like that.