Program "Community Resilience Foundation"

- The World Bank says Ukraine has a tenfold increase in poverty due to war. For example, 67% the surveyed residents of Dubechnenska community (one of our pilot communities) identified themselves below the poverty line due to war. 

-A massive exodus of MSMEs outside Ukraine can cause a problem for the economy. There is a need to support those who remain and IDPs, and attract them to self-employment and micro-entrepreneurship, especially in rural communities. New ways to accurately assess them are welcomed.

-The situation in Ukraine is very unstable and can change rapidly. When you are afraid of missile attacks, blackouts, occupation, etc., it complicates using usual models and tools for MSMEs support/development to address poverty at a local level, especially in rural areas. The number of underserved adults by financial sector is increasing. 

- In accordance to Challenge Overview by MIT SOLVE, over 1.8 billion adults are still unbanked or poorly served by existing financial products and services. This is a big challenge, on the other hand, it defines a big potential for new solutions.

Our solution includes original way to assess M(SM)Es initiatives as well as tools for their support, which are not available in regular financial sector. Piloting in 2 rural communities provided with data and evidence of their advantages for M(SM)Es and communities resilience.

The "Community Resilience Foundation" program (CRF) is a CTS*-based tool for stakeholders interested in addressing poverty, the development of financial inclusion, and communities' resilience through M(SM)Es support and community engagement. Foundation "Moloda gromada" piloted CRF as such a stakeholder in 2 rural communities in 2022.-2023. Initially, we consider CRF as one of the tools for rebuilding communities in Ukraine, which can also help address poverty in local communities outside Ukraine. 

CRF provides interested local communities with a start capital for Zero Interest micro Loans ($250-$1,500) without collateral for the startup- and micro-entrepreneurs. Communities will receive added value to public goods (AVPG) due to the CTS* instead of a percentage interest in the issued loans to M(SM)Es. The confirmed ratio of 3:1 ($3 - AVPG, $1 - loan amount) defined the main community's interest, which is more than what is available for them in the financial sector. 
Instead of regular credit contracts with collateral to ensure the money return, CRF allows small local communities to use a "Giving pledge" tool adopted locally and based mainly on a reputational guarantee. This approach is not so sensitive to the formal personal identification methods in the financial sector, reduces bias against borrowers who have lacked equitable access to credit, and reduces costs for serving credit.
On the other hand, startup- and micro-entrepreneurs will get more advantages due to the mechanism "Monetization of loyalty" of the CRF, which is unavailable in the financial sector. Entrepreneurs, who participated in piloting the program, rated "Monetization of loyalty" usefulness for their business 20% higher than loans with zero interest and without collateral.

Please, watch this 10-min video of our key-expert and CTS founder about our solution and its piloting 

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* "Citizen Token System" (CTS) includes an innovative communication outreach strategy based on sharing stakes (PB-tokens) in decision-making on local financing with local people in exchange for their goods/services following public smart contracts. PB-tokens is a kind of cryptocurrency governance tokens (their substitutes were used for piloting of the CRF).

Initially, our solution is focused on residents of small communities (up to 50,000 people), mostly in rural areas, which need to improve the quality of their lives. However, they cannot use the existing financial products and services for self-employment and entrepreneurship for various reasons. The lack of knowledge and experience in the start-up and micro-entrepreneur category often creates fear of failure and stress and is another significant barrier to their work with existing products.
On the other hand, attempts to support MSMEs can be less effective without positive changes in their environment. Creating an island of happiness in the ocean of unhappiness is a fragile model. MSMEs’ support, plus human and social capital development, can be more effective for local communities striving to increase living standards and strengthen their resilience.
CRF helps to smooth their entrance to the financial market due to Zero Interest micro Loans without collateral and monetization of loyalty. CRF should help to address the gap between our beneficiaries and the existing financial sector. At the same time, our solution will help to provide positive changes and generate added value to public goods in communities based on a participatory approach due to the CTS.

Our team is working on developing and piloting solutions for local communities in close contact with representatives of local authorities, civil society, and businesses in these communities. According to the first results, our conference "Smart Interactions" became all-Ukrainian, and the government of Ukraine included our developments for cross-sectoral cooperation in their annual programs.

My proximity to the communities was significantly strengthened due to my personal story. After Russia's invasion in 2022, the missile strikes began. After the first casualties in my home city, I took my two minor children and left for one of the partner rural communities in western Ukraine. For three months, we were IDPs, and I met with all challenges of the IDPs' life. On the other hand, it was an excellent opportunity for me to go deep into local life and needs, communicate with people and participate in common activities to address local issues. 

My personal experience has greatly enriched my background. However, the most significant influence on the team's engagement with communities comes from the decentralized structure of our informal partnership network, "Smart Interactions," in which local partners are the main drivers of change in their communities. The recommended video mentions them as a local hybrid team (representatives of local authorities and civil society). They help to provide local surveys and ensure communication with local residents and their engagement in the co-design and implementation of activities. It helps to grow the local "saving group" (also see video) - the key element of CRF management during and after our intervention. "Saving group" became the best solution for representing local communities and ensuring the integration of communities' input, ideas, and agendas into CRF. 

The population of both pilot communities is about 45,000 people. The total number of their "saving groups" is about 800 people, and the total capital of their CRFs is about 5,500 USD. In 2023 pilot results were presented during a web conference, including supported entrepreneurial projects (4 females, including 1 IDP). Slides are available here (in Ukrainian), and some information in English is available on recommended video.

Now the third community with a population of 14,500 is joining. We also received requests for piloting from our colleagues from Azerbaijan, Georgia and Kenya. 

Two main barriers:
1. We used substitutes of PB-tokens to test the CRF. It was perfect for reducing the costs of piloting; now, the absence of this specific digital tool is one of the main barriers to growth and scaling. 
2. CRF is a nonprofit solution, which is very good for reducing the costs of some transactions. At the same time, the absence of a business model is a barrier to our work outside the grant market. 

My reasons for applying to Solve:
1. Solve’s recognition of our solution should be a very useful step toward growth and an excellent record for negotiations with potential partners.
2. I expect support in creating the business model and increasing human capital with interested experts who can support our growth. 
3. Some financial support for our growth will also be very welcomed.

CRF has an original way of crypto tokens usage to address the problem. It helps to multiply (social) impact of the investment/donation/grant/local-budget-financing due to the AVPG, provide local ownership and generate extra advantages for entrepreneurs through monetization of loyalty. Piloting confirmed it works well for residents even during blackouts, without electricity and Internet.

First of all, we consider the CRF as a tool for recovery and reconstruction of the local communities in Ukraine in the conditions of the war and its consequences. ”Reconstruction” is not about rebuilding Ukraine to the pre-war state; it is about a deep modernisation, where financial inclusion is an integral part of this process. 

We’ve already received interest from our colleagues from other countries in piloting our solution in their communities. It looks like a good sign for its potential to grow and create ambitious impact goals for strengthening the resilience of local communities through MSMEs support and communities’ engagement. During CRF piloting, the original implementation strategy was tested, and we consider it as an integral "know-how" technology for the CRF implementation and growth. We expect  transformational impact on people’s lives at least in 5 countries during the next 5 years due to the CRF. 

Our foundation is a part of the GFCF global network, which is our primary channel to expand CRF globally. We should develop some special IT-tools (blockchain) and establish partnerships with interested stakeholders/donors to strengthen our capacity for growth and scaling within the philanthropy sector. Governance sector is another target for CRF scaling through participatory budgeting mechanism and local financing (it was also already tested and proved in pilot communities). 

The civilized world helps us (Ukraine) survive, and in turn we will be happy to contribute to solving the global problem of poverty with our solution.

CRF is a part of our general initiative “Smart Interactions”, its correspondents with SDGs targets you may find here.

Dashboard of the CRF’s progress indicators includes: number of self-managed CRFs, size of their capital ($), number of the engaged people by smart-contracts and size of their AVPG ($), number of served M(SM)Es by CRFs and their structure (% of vulnerable groups), "monetization of loyalty" index (three main types of M(SM)Es support by engaged people), loan repayment percentage, percentage of timely repayment of the loan. Such indicators as the level of increasing M(SM)Es Profitability Index (%) and household consumption (%) can be implemented in the next steps.

Theory of change is available here

It is a kind of hybrid based on blockchain technology, gamification, elements of circulation economy and some other techniques.

During piloting, our "solution team" used Agile, whose values sound close to MIT's definitions. We tried to expand them in communities through a design of the CTS smart contracts and step-by-step implementation by local residents. Pilot results demonstrated an essential progress in this way.

Now CRF is a nonprofit solution. Development of its business model in the future is one of our reasons to apply to Solve.

NOTE. The format of the next paragraph does not allow me to give a correct answer, so I have to give an explanation here. While I noted B2G below we have been working with local hybrid teams (representatives of local authorities, B2G and civil society, B2B) to implement CRFs that serves residents and entrepreneurs, B2C

Its implementation into a participatory budget mechanism with financing from local budgets is a confirmed plan for financial sustainability. 

Further implementation into the philanthropic sector as well as its integration into the business sector due to the developed business model, will help to strengthen financial sustainability.

Foundation “Moloda gromada” engages private donations and has successfully grant experience, for example:

-2023 "Coalition’s recovery and emergency preparation" with CTS pilot scaling supported by BST (The German Marshall Fund of the United States), $15,250

-2022-2023 “Renewal of local communities in Ukraine with CTS, Ukraine”, supported by GFCF (17,960$). Project wa aimed at piloting CTS (when CRF was designed) in two local/rural communities to strengthen their resilience on the basis of citizen participation in the conditions of the war and its consequences. 

-2021-2022, “Strengthening Public Engagement in Monitoring Reforms” supported by NED (35,000$). Project was aimed at enhancing citizen participation in the public monitoring of local governance and implementation of reforms at the local level in 6 regions. It was implemented in coalition with 10 NGOs with the help of the innovative outreach strategy to public monitoring and original IT tool for “Smart Interactions”.

- 2019-2020, “Strengthening democratic culture” supported by the Norwegian Embassy in Ukraine (50,000.00$). Strengthening democratic culture in local communities of 6 regions of Ukraine through providing transparent, participatory decision-making and open budgeting with the help of innovative mechanisms for cross-sectoral interactions, citizens engagement and ICT.

For a few years, the foundation "Moloda gromada" focused on piloting innovative solutions in rural communities with an annual budget of up to $60-70,000 (2022), which was enough for our tasks. Our solution did not need more money for successful piloting, and I believe it demonstrates strong financial capacity and ability to sustain plans financially.