This paper provides insights into the operational features of community-based financing mechanisms like CAF groups. CAF groups are self-financed communities where people save and lend money to each other. The implementation of such self- financed communities in the Netherlands is supported by participatory action research. This paper discusses the first results of this research by exploring whether and how participation of group members can improve their well-being in regard to social networks, financial household management and entrepreneurial positioning based on the capability approach of Sen. For this participatory action research, three groups have been set up, guided, observed, analysed and compared. This paper demonstrates how solidarity economy processes at the grassroots can contribute to the general well-being of vulnerable people in The Netherlands. Sen’s notion of freedom has to be reconsidered when discussed in a context. For this context of overconsumption, inequality and overindebtedness, Sen’s notion of freedom will be reconsidered and adjusted.