Faith-based approaches to project financing, particularly but not exclusively in the Islamic context, tend to refrain from the use of interest-bearing loans. This has implications for preserving and regenerating social and ecological commons. Equity finance is an established method of non-interest based financing. As a partnership based model, equity finance requires the passive investors have more “skin in the game”, often through community ties, and this reduces the likelihood of speculative bubbles of the sort associated with leverage. It adds important guardrails to project financing that can be sustainable development goals. Further, it adds a stewardship component that aligns well with the preservation and regeneration of ecological commons, as well as in promoting a type of social commons.
Faith-based financial initiatives seek to cohabit or compete with mainstream financial practices, under the banner of prohibition on interest. This paper presents a scalable framework for transcending interest-based financial systems through productive partnership models, synthesizing Islamic finance principles, Catholic social teaching, and modern enterprise risk management methodologies. Rather than confrontationally opposing existing financial structures, we propose a positive-sum transition pathway that aligns institutional risk management with social and ecological resilience.
The research explores how financial institutions can evolve toward equity-based partnership models that prioritize real value creation over extractive practices. Our analysis suggests these approaches can promote financial, social, and ecological outcomes that are desirable from the standpoint of stewardship and regeneration of ecological and social commons.
This paper has two parts. In the first, it presents a process for introducing equity finance models into an interest-based financial system. In the second, it presents a proposal for sustainable affordable housing in Canada using cooperative project financing and institutional arrangements for enabling the project to be perpetuated.
