Beyond Giving Hope – Religion’s Contribution to Financial Capability

Posted by John Gitau, CEO, Kenya Financial Education Centre

I was once a seminarian. Had I followed that path successfully, I would most probably be a Catholic bishop today. I blame my wife for the failure, though she never admits it. She instead boasts of 27 years of successful marriage complete with two adults and a teenager as offspring. She says, in jest, that marriage is celibacy tweaked. I don’t like her bravado, especially when she recalls how she crafted the fall that felled me. Before you can throw a stone at her, know that we always unite against a common enemy.

During my seminary days and perhaps since time immemorial, religion was about preparing the soul for eternal life. It is a way of life, complete with doctrines, laws, dogmas, liturgies, beliefs, and ethos, all meant to cultivate spirituality. Most religions profess the existence of a deity and a final heavenly place where the souls of the departed rest in eternal peace. Religious orders were givers of hope and takers of monetary offerings.

Today, religious orders are working to change the perception that they are mere purveyors of hope and recipients of offerings. They are increasingly creating programs meant to empower their members in many ways, including economically.

Before we delve into what religion is doing for financial capability, it is important to understand some definitions. Monique Cohen and Candace Nelson in their paper Financial Literacy: A Step for Clients towards Financial Inclusion have given clear definitions of the constituent elements of financial capability as follows:

  • Financial literacy is the ability to make informed judgments and to take effective actions regarding the current and future use and management of money. It includes the ability to understand financial choices, plan for the future, spend wisely, and manage the challenges associated with life events.
  • Financial education is the process of building knowledge, skills, and attitudes to become financially literate. It introduces people to good money management practices with respect to earning, spending, saving, borrowing, and investing and helps them shift from reactive to proactive financial decision-making.
  • Financial capability is the bringing together of informed clients with appropriate products in the marketplace. It is the combination of knowledge, skills, and attitudes with the opportunities to apply them, which requires input from multiple sources including those that educate the consumer and those that sell the products.

Evidence of religion’s role in financial capability

One can be excused for assuming that religion is only about spirituality and life after death. We in the financial inclusion space hardly think of the important contribution religion is making and its potential in advancing financial capability among the poor it so effortlessly reaches. Most of the time, we erroneously consider religious orders as reactive behemoths, contributing too little too late during calamities. Their support for the poor is considered half-hearted at the least and pretentious at best. Such perspectives are based on ignorance.

To start with, religious orders are development leaders in education, health, and housing across the globe. Unlike corporates that shout from the mountain tops whenever they make puny contributions during disasters, burnishing their images as leaders in corporate social responsibility, the bountifulness of religious orders percolates unnoticed in the poor neighborhoods. Their economic and social empowerment outreach within the urban and rural low-income neighborhoods is near perfect. Churches, mosques, temples wherever located, are conspicuous by action.

Many religious orders are already key players in financial capability efforts, albeit quietly. Of course, given the expansiveness and outreach, religion has a wider capacity and influence than perhaps education or political institutions.

The Islamic religion with a global following of over 1.6 billion people is increasingly creating impact in financial capability through their Sharia law based Islamic finance. The first Islamic Development bank was set up in 1975 to promote acceptable financial practices. Since then, there has been a deliberate growth of Islamic banks across the world that serve the low-income segments of the society.

The Christian religion with over 2.2 billion followers has as many financial capability programs as their many denominations. Some examples of such denominations and programs are:

  • The Catholic faith, with over one billion followers, runs a Catholic Charities Program and the Catholic Financial Life-Youth in Financial Education, two programs in the forefront of financial capability.
  • The Charismatic and Pentecostal faith movements are teaching financial prosperity and abundance principles. Motivational teachers trace their two controversial statements “God wants us to be rich” and “It is a sin to be poor” to the Evangelical movement and their prosperity gospel.
  • The World Evangelical Alliance, a global network of over 600 million serving evangelical Christians, offers practical support in promoting financial capability with renewed belief that the church has a role to support those in debt and at risk of losing their possessions, encouraging savings, and promoting good money management practices as part of a holistic service to communities. The evangelical church is known for prosperity gospel, playing a crucial role in empowering the poor through hope, inspiration, and teaching the principles of abundance.
  • The Lutheran faith runs programs through The Lutheran World Federation. One such program is Sustainable Livelihood Programs that work with the poor and marginalized. They provide access to savings and credits schemes, and they create markets for the communities where they operate.
  • The Anglican and Episcopal Churches comprise over 80 million members, with member churches spread across 160 countries. The Anglican and Episcopal communions run separate programs that promote financial capability. The Anglican communion for example runs an Affirmative Investing Program with a goal of encouraging their financial resources to be preserved in financial institutions that serve underserved communities and which provide financial services such as savings, credit, and investing to the poor. Indeed, they have an Economic Justice Loan Program that on-lends funds to organizations that support the poor in enterprise and credit. The program provides loans to communities and groups that lack full and equal access to financial resources. Their loans are issued below market rates and on a non-commercial committal basis.
  • The Mormon Church with over 14 million members across the world runs an educational fund known as Perpetual Education Fund that provides finances for education to the youth in secular and spiritual training as well as in economic empowerment through cheap business loans.
  • Many other Christian denominations such as Presbyterians, Methodists, Mennonites, and Baptists have their unique financial capability invigorating programs reaching most of their followers.

Hinduism, as the third-largest religion with over a billion followers, teaches its adherents the principles of thrift, savings, and investment and is strong in community cultivation of financial education associated with enterprise development and wealth building.

Apart from the religious orders and their denominations, we have strong religious-based institutions contributing immensely in the field of financial capability.

A leading example is the Chalmers Center a Christian institution led by professor Brian Fikkert. In addition to propagating financial education, the center encourages Christians to form savings and investment groups and has a program that reaches out to churches in the world to help empower their followers economically. The Chalmers Center is part of the Covenant College and has, in addition, a Faith and Finance Training program, a financial education program for low and moderate-income people. The program, available to all Christian churches across the world, offers context for low and moderate-income people to learn best practices of financial literacy including savings, expense tracking, and building productive assets.

The Islamic religion has solid and expanding institutions that propagate financial education. One such institution is Silatech Communication that trains youth on faith and financial management with a special focus on financial literacy in the Arab world.

Religious orders, given their financial influence, outreach, and contact with the poor, make a deep impact in financial capability.

John Gitau is an independent financial education consultant and trainer and is the CEO of Kenya Financial Education Centre, an independent centre that supports and promotes financial inclusion efforts among the Kenya poor living in low-income neighborhoods. He does that using his home grown financial literacy curriculum, Practical Financial Literacy Counseling (P-FLC) adopted from the Global Financial Education Program (GFEP) developed by Microfinance Opportunities, Citi Foundation, and Freedom from Hunger.

Image credit: St Mary Magdalene Willowick

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