What is sweat equity?

What is sweat equity?

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Sweat equity is a term used often when talking about the creation or building process. It’s about doing the work — the hard work — to bring an idea to life.

That work becomes an investment in the project. It can be an investment as real as money or land.

According to Investopedia, an online financial resource, sweat equity is the “contribution to a project or enterprise in the form of effort and toil. Sweat equity is the ownership interest, or increase in value, that is created as a direct result of hard work by the owner(s). It is the preferred mode of building equity for cash-strapped entrepreneurs in their start-up ventures, since they may be unable to contribute much financial capital to their enterprise.”

At Habitat for Humanity, sweat equity is a new homeowner investing in their home or one for another family. It's not a form of payment, but an opportunity lo work alongside volunteers who give their time to bring to life a family's dream of owning a home.

Sweat equity can take many forms for partner families working with Habitat. It can mean construction work on their home or on a home for another family, cleaning up the build site, working in a Habitat Restore, assisting in administrative duties, or countless other ways of helping out.

Homeowner classes - learning how to manage a home or finances - also count as sweat equity. Families invest their time in the long-term success of their homeownership. Throughout the process of purchasing their home, Habitat partner families can earn sweat equity credit as they learn about their mortgage, insurance, maintenance, safety and more.

The idea behind sweat equity, families working side by side with volunteers to build their homes, goes back to even before Habitat for Humanity began in 1976. Clarence Jordan - the founder of Koinonia Farm, where Habitat for Humanity began - wrote in a 1968 letter, "What the poor need is not charity but capital, not case workers but co-workers."

That co-worker approach informs Habitat's emphasis on sweat equity: all of us working together so that homeowners can achieve the strength, stability and independence they need to build a better life for themselves and for their families.


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