Yesterday I tweeted about how World Vision’s gift catalog promotes donations by giving the impression that you are able to buy farm animals and other items for families in poor countries — but it turns out that they often don’t buy the actual animals that the donor thought they purchased.
Puzzling? Yes. Warren Throckmorton quotes a World Vision representative as saying “As you can imagine, the reality of our programming in the field is much more complex and nuanced than simply giving a family an animal in isolation from other programs and services.”
Now, I can understand that. The problem is: if you give people the impression that they are actually buying a goat or other item for a family, when in fact they are not doing so, that is deceptive.
There is absolutely no place for that. Marketing needs to match reality.
Further, why in the world would you try to motivate someone by means of half truths? Truly, this makes no sense to me.
Another organization, Oxfam, which follows the same practice, says they have never made it a secret that they might buy other items with the donation. So maybe they do a better job of making that clear. But as Warren Throckmorton points out regarding World Vision, a standard visitor to their site who donates through the gift catalog would never get this impression.
Note that the issue is not that these funds are being abused. It sounds like they are still being used for the sake of the poor. The problem is one of marketing. Donors are given the impression that they are buying specific items for the poor in the developing world, when in fact they are not.
Now, this raises a bigger question as well. And that question is: are there better ways of helping the poor in the medium to long term that go beyond giving things altogether? While giving is important, increasingly organizations are recognizing that the answer is yes.
I’ve interviewed Paul Larsen on this question, a pioneer in developing commerce-based approaches to helping lift the poor out of poverty.
Paul is director of the 128 Foundation, where he speaks and provides resources that help Christians think more holistically about human flourishing and poverty relief. He is also vice president of Cheetah Development, where he works with donors, investors, and strategic partners to incubate, lunch, and expand businesses in the for-profit value chain that link the poorest of the poor profitably to the marketplace.
1. What are the main problems with the current approach to helping the poor in the developing world?
I would say the key problems include dehumanizing dependency, perverted incentives and conflicting agendas.
The first “Great Commission” in Scripture is the Creation Mandate. Genesis 1:28 tells us that God’s first word to man was the mandate to get to work. It has been well said that the command to create culture is the command to organize the raw material of creation in ways that allow human beings to flourish as images of God. We are designed to create and produce value. Man flourishes when he creates more than he consumes. And to the extent that poverty programs hinder human flourishing, they dehumanize the poor.
What is unfortunate about even well-intentioned aid is that when short term relief turns into long term aid it not only subsidizes chronic problems that lead to poverty (see When Helping Hurts by Fikkert and Corbett), but also creates a subsequent dependency that hinders and handcuffs the ability of the poor to be obedient to the first command given to mankind.
NGOs and aid organizations play a very important role in emergency relief, in organizing people into groups (for training, etc.) and collecting data. But turning raw materials into food and other goods requires the development of ‘value chains,’ which require the incentives under which businesses operate to create real, rational markets. Aid organizations are set up to spend donor funds and profits would undermine the model.
After pumping some $2 trillion into Africa in the last 40 years, the poverty needle has not moved. Sometimes we chuckle when socialists are asked why socialism has never worked, and they reply that it’s just because the right people have not been in charge. The tragedy in this is that Africa, which has enough land and water to feed 5 times their population, are importing 80% of their food — up from 15% in the 1970’s.
Packing boxes of grain, loading containers full of used clothing (destroying a once robust textile industry in Kenya), asking groups to go overseas to paint schoolrooms, donating money for sheep, goats, chickens or cows and writing checks feels real good because we like to be benefactors. But benefactors need beneficiaries and we must ask if a permanent needy underclass perpetuates that desire.
While it’s easy to develop a heart for the poor, the challenge is to develop a mind for the poor.
2. What is the relationship that you see between business and helping the poor?
The first suggestion is to do the math. If you were to redistribute all the resources in the world available to charity among 7 billion people you would use it up in 30 days or less. So the goal must be to create wealth and value — and that is what business does better than anything else that humans can do.
Regarding resources, using Africa as an example, we see that it contains roughly 30% of every natural resource we can measure, yet only has 15% of the world’s population — but only generates 2% of the world’s GDP. The problem is that Africa has always been considered the place where you extract cheap resources, only to bring them home and make something valuable out of it. The wealth isn’t in the resources, it’s in the engineering, business systems and technical operations that make those resources useful.
In the 1770’s Adam Smith wrote the first book that really made economics something many could finally get their arms around. At that time, both North and South America were being developed and there was a real question about which continent would prevail. South America had some 10 times the natural resources and a much better climate, but Smith predicted that North America would prevail given its particular religious roots and belief in the creativity of individuals which led to, among other things, some of the first patent laws — the ability to own and profit from your ideas.
Over the last 500 years we see that there are no economically flourishing cultures that developed through foreign aid and volunteers. North America, with relatively few natural resources and a difficult climate showed that it’s human innovation and trade, fueled by capital.
3. How does 128 Foundation and its partners seek to help families in the developing world thrive, without giving them anything?
Over 60% of the poor are subsistence farmers, which means some 600 million families are farming to barely starve. In Africa it averages over 70% of the population. Our work focuses on incubating the financial models and value chain businesses that profitably connect the poorest-of –the-poor to the marketplace. Our typical family experiences a 10-fold increase in income and even savings in the first 12-14 months.
We are happy to report that some major aid-based NGO’s are looking for ways to advance our model, so we need to scale up — and we have opportunities for donors, investors and strategic partners.
Paul Larsen is Founder and Director of 128 Foundation and Vice President of Strategic and Faith-Based Partnerships at Cheetah Development. He lives in Minneapolis, Minnesota, and loves engaging with those who seek human flourishing for God’s glory. You can contact him at: plarsen[at]128foundation.org.