The Challenge of Charity: My Failure to Help Marcus and Gabriela

First I felt ashamed. Then I was hopeful. Then I was disappointed. Now I’m resigned.

Marcus and Gabriela came to work for us in 1999 after we built a second home in Nicaragua.

Marcus tended the landscaping. Gabriela kept the house. Antonio, my Nicaraguan partner, had recommended them to us. Their parents and siblings had worked for him.

They were very young at the time – in their late teens or early twenties. But they were already burdened with the responsibility of being parents. Gabriela’s husband worked in construction. Marcus’s wife worked part-time cleaning at a local restaurant.

Neither spoke a word of English, so we had to communicate in the very rudimentary Spanish I had at the time. They showed up every morning at 7:30 and worked, not energetically but dutifully, until 3:30. Then they were gone. In those early days, they left without saying goodbye.

They were shy and I did my best to relax them in that American sort of egalitarian way. But Nicaragua, like all countries, lives with its history. And the vestiges of Spanish colonialism still existed. Most upscale households in Nicaragua employ domestic workers, who are, I gathered from observation over the years, treated with respectful condescension.

I asked Antonio what I should pay them. He told me $150 a month.

“A month?”

“That’s the going wage,” Antonio assured me. ”If you pay them much more, it will cause problems in the community – for them now, and for you later on.”

I knew that he was right, but I wasn’t going to accept it…

I sat down with Gabriela and Marcus and told them that if they wanted to earn more money, I could give them jobs that fell outside of their normal duties. Marcus could give a room a new coat of paint. Gabriela could plant flowers along the side of the garden. That sort of thing.

And they could do these extra chores during their regular hours, I told them. (Which would work out just fine for me, because I didn’t really have eight full hours of work a day for them.)

I thought they would be delighted with the opportunity, but they were not. Nestor, a local friend and colleague, explained their lack of enthusiasm.

“They probably think you are trying to take advantage of them by asking them to do extra work,” he explained. “Even for extra money.”


It was another vestige of the country’s history – in this case, the years it had existed as a Communist state.

But although they were reluctant to do “extra” work, they were not averse to asking for financial “help” with family problems – a sick parent, a leak in the roof, etc. I was more than happy to give them what they needed, but I insisted that they work the “extra” hours for the extra money.

For a few years, it seemed to be working well. They used the extra money they earned to buy themselves bicycles, cell phones, and clothing.

But when I had the opportunity to visit their homes, it was clear that the extra money had bought them all sorts of things that put them in the upper economic ranks of Limon, the hamlet they lived in. Still, like everyone else in the area, they were living in simple mud and wood shacks.

Despite free-market views to the contrary, this huge gap between their homes and mine bothered me. I had to find a way to increase their income yet again so they could at least have proper windows, doors, and floors.

So I came up with a solution that was popular among charity advocates at the time: I’d give them micro-loans to start their own side businesses. My idea was that they would follow the strategy I’ve recommended for years to other would-be entrepreneurs: Start small. Test the product and the pricing and the pitch as quickly and efficiently as possible. And then, if the business starts to take off, expand.

Considering their earlier reluctance to do extra work for pay, they were surprisingly open to the idea of having side businesses, businesses that could be run by an unemployed sibling or relative while they were at their regular jobs.

I told them, stupidly in retrospect, to choose the businesses they wanted to have. (I thought that this would provide them with the extra motivation they might need to succeed.)

Gabriela decided on a children’s clothing store. Marcus decided to open up a pulperia, a rustic version of a mini 7-Eleven, in front of his house.

Two very bad ideas! READ MORE

If you’ve read Automatic Wealth or Ready, Fire, Aim or most any other book about business and wealth building that I’ve written, you know that I advise wannabe entrepreneurs to avoid any brick & mortar retail business.

Success in such a business is very dependent on the location of the store. Both Marcus and Gabriela lived on the main dirt road that runs through Limon, so that wasn’t a problem. But another important factor in retail is product demand. And another one is how much product you have on display.

The cost of fixing up their homes to accommodate a little store was reasonable. The cost of inventory was significant – but though it increased my investments in them (and, thus, increased my risk), I insisted that they be well-stocked.

By that time, I really wanted to see those little businesses succeed. I imagined how proud I’d be on the day that they came to me to quit their jobs because the income from their businesses was greater than what they were being paid as employees.

Alas, that day never came. Gabriela’s store went out of business in 18 months. Marcus’s pulperia failed even more quickly.

What had gone wrong?

Turns out, the challenge of the clothing store was greater than Gabriela had imagined. Her sister managed it, but she had to spend one of her off days driving 5 hours to and from Managua to buy her goods. On top of that, there was only a meager demand for Managua-priced children’s clothing in Limon.

As for Marcus,  when he decided on a pulperia, he hadn’t considered the fact that there were about two-dozen of them within a mile of his home. And (shame on me) I didn’t think to ask him for a count until after he was up and running.

Well, I wasn’t going to give up easily. Especially since I felt responsible for having allowed (encouraged!) them to choose businesses that they were “passionate” about. (One of the stupidest entrepreneurial ideas out there, I’m sure you’d agree.)

I suggested that they try again. This time with businesses that were both in demand and also less reliant on expensive inventory.

Marcus came up with a good idea: a bicycle and motorbike repair shop. Gabriela’s idea was a hair and nails salon, which seemed promising.

But these businesses, too, eventually failed. The salon failed because – frankly, because Gabriela didn’t do anything to promote it. We got her the equipment and supplies. We put up a sign. But she had no interest in drumming up business. The repair shop did very well for a while until Marcus developed a taste for alcohol. That not only sunk his prospects for entrepreneurship but also eventually landed him in jail.

So what did I learn from this experience?

  1. You cannot expect someone with no business experience to have any idea of what a good business might be.
  2. Giving people money to start a business is irresponsible if you do not also commit to guide them and teach them and even manage them to some extent.
  3. Micro-loans make no sense if the business plan makes no sense.
  4. An entrepreneur must have skin in the game to succeed.

Sometime later, we put our house under management, which meant that Gabriela and Marcus became employees of that company and no longer reported to me. Gabriela didn’t like working for them because she said they worked her too hard. Marcus got fired because he was coming to work drunk and armed with a handgun.

I gave them both replacement jobs across the street at FunLimon, the community development center my family and I had set up by then. Marcus got fired from that job, but Gabriela is still there.

I see them both almost every time that I’m in Nicaragua. I see Gabriela when I’m visiting FunLimon and Marcus always finds me at my house when I’m outside working by the pool.

They still come to me with their problems, and I find that I cannot bring myself to say no. The difference now is that the money I give them is not even postured as a loan. They can’t repay it. They don’t expect to repay it. It’s a gift.

Marcus always thanks me for the help I give him. Gabriela doesn’t. She simply expects it. When I ask her if she liked that new sink I bought her, she says, “It’s okay.”

And then she tells me that she needs something else.

I think of them as troubled offspring, children I spoiled that are now both dependent and, in Gabriela’s case, entitled. Perhaps I should think of them as the children of a bad father. What I did for them I would never have done (and never did) for my biological kids. Kathy and I were parsimonious when it came to gifts and tightwads with financial aid. We made our boys buy their own cars and cell phones. We withheld from them as much as we gave – and that seems to have worked because they are adults now and they never ask for financial assistance.

Together, Gabriela and Marcus helped me realize that helping people improve their economic lot is a problematic activity.

The easy part is writing the check. And the fun part is seeing what it buys for them. The difficult part is avoiding the two principal byproducts of charity: dependence and feelings of entitlement.

The motto of the Ford Family Limited Partnership is: “Do Less Damage Than Good.” So at FunLimon, we now have a protocol for giving financial aid that is based, in part, on my experience with Gabriela and Marcus. There are about a dozen “rules” that we follow, three of which are:

* We don’t loan money unless we approve of its use and can be assured it will be repaid.

* When we support entrepreneurship, we treat it as an investment. That means we fund it only if we are confident it can work – and we act as majority shareholders until the business is healthy and has repaid its loan.

* We require that recipients, once successful, pass the benefit forward by helping others just starting out.

We have been doing this with dozens of local people for about 6 years, and it seems to be going well. But as for Gabriela and Marcus – well, I spoiled them when I could have challenged them. And I treated them as independents when, in fact, they were my dependents. So I’m just going to have to deal with that. They will too.