Culture, Latest News — January 1, 2016 at 11:00 am

Five Poverty Busters You Should Know

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Why? Because research shows they are making a real difference (photo / taimoor)

As a developmental economist, people often ask me, “What can I do as a Christian to really make an impact on world poverty?” Especially as people consider giving and charitable donations during the Christmas season, the question has inspired me to create a list of five of the most dedicated and innovative Christians I have discovered in my work and research in international poverty alleviation. While some of these individuals help lead Christian organizations, others direct what are essentially secular organizations strongly influenced by their faith. Some are well-known in development circles; others have labored for years outside of the public eye. All share in common a dynamic faith that has helped shape innovative approaches to poverty.

They also share a commitment to effectiveness. Not every approach taken by these practitioners has met with instant success. This is okay. Poverty is a tough nut to crack. But through dedication to rigorous evaluation, constant innovation, learning, re-innovation, and the dogged pursuit of excellence in their work, their respective programs share a commitment to genuine impact over feel-good charity.

Auyba Guffwan, Director, Beautiful Gate/Wheelchairs for Nigeria.1. Auyba Guffwan, Director, Beautiful Gate/Wheelchairs for Nigeria.

We sometimes hear the phrases “the poorest of the poor” or “the least of these.” Interested in knowing who they are? They are the disabled in the poorest countries, often rejected as outcasts by their families, left on the street to beg. These beloved human beings are, truly and tragically, the poorest of the poor. There are one billion people living with serious disabilities today, most of them in the developing world.

Ayuba Guffwan is one of my development heroes. Paralyzed from polio at age four, it would have been easy for Ayuba to slide quietly into a life of hopelessness, substance abuse, and begging. Receiving a wheelchair gave him the hope to pursue his dream of helping others like himself. He and “retired” Pastor Ron Rice founded Beautiful Gate in 1999. Since gaining access to a wheelchair and founding the organization, Ayuba earned a law degree from the University of Jos, married, fathered three children, and became an international leader in Rotary International. The organization has become the largest supplier of mobility aids in Nigeria, rescuing thousands from crawling in the dust on hands and feet, giving them the mobility to live with dignity and as integrated members of society.

Furthermore this ministry operates in a region of Northern Nigeria where Christians face violent persecution by the Muslim extremist group Boko Haram. While overtly Christian, Beautiful Gate provides wheelchairs to Muslims and Christians without partiality. Despite the great risks, it has continued to serve in this area with favor among Muslims as a peaceful witness of the hands of Christ.

But just as impressive as Ayuba’s story is the impact of providing wheelchairs. Although unable to carry out fieldwork in Nigeria due to the terrorism risk, inspired by Beautiful Gate my graduate student Justin Grider and I carried out a study among a similar disabled population in Ethiopia, comparing life outcomes between statistically matched current and future wheelchair recipients.

In a study forthcoming in the Journal of Development Effectiveness, we found life-changing impacts from wheelchair provided to the disabled population. In a given week, wheelchair recipients traveled about 7 miles farther away from their homes than those without a wheelchair. We also found that wheelchair beneficiaries spent nearly two hours more per day in income-generating work, reducing begging by nearly the same amount of time. The income of the wheelchair recipients was $6.23 per week higher than those without wheelchairs, a 78 percent increase over the very small baseline of $8.02 (yes, the disabled poor earn this little per week in places like Ethiopia.) Our estimates showed that an economic investment in a wheelchair realized an internal rate of return of 122 percent, simply based on the increased income the recipient would earn relative to the cost of the wheelchair, a rate of return that vastly exceeds that of the most productive Fortune 500 companies. By providing a wheelchair through a $150 donation to Beautiful Gate, one can literally transform a life.

2. Isabeth Zárate, Chief Operations Officer, Fuentes Libres Microfinance, Oaxaca, Mexico.

Isabeth Zárate, Chief Operations Officer, Fuentes Libres Microfinance, Oaxaca, Mexico.Even as recently as a few years ago, microfinance was billed by many as the silver bullet that would eradicate world poverty. Many rigorous impact studies carried out in countries around the globe have shown that microfinance has far less impact on borrowers than has been claimed by advocates. Microfinance helps people start and grow small businesses, smooth out bumps in income, and builds social cohesion, but in most cases it doesn’t appear to significantly increase family income or overall welfare. So where does that leave the world of microfinance?

Practitioners like Isabeth Zárate have long understood that the real power of microfinance isn’t in the lending, but in how it develops human beings, enhancing their social connectedness, psychological health, aspirations, and spiritual lives. In contrast to other organizations that expect big impacts from a simple cycle of loans, Fuentes Libres focuses on holistic, or integrated, development. This fits more closely with a biblical view of human nature and with recent findings in behavioral economics. Both of these view human beings not as homo economicus, but as whole people affected not only by economic incentives but also by their relationships, aspirations, and spiritual commitments, as well as their confidence to shape their circumstances.

This approach stands in contrast to larger microlenders in Mexico such as the well-known Compartamos Banco, who simply offer microloans (at the rather breathtaking average annual interest rate of 130 percent), but offer little else in terms of holistic vision for the growth of their clients. The problem with lenders such as Compartamos is that results from careful new research shows that their approach doesn’t work. A recent randomized controlled trial on 16,000 households in Mexico carried out by top Ivy League researchers reported an absence of any transformative impact on borrowers from their microfinance loans.

Isabeth Zárate’s work with Fuentes Libres among indigenous women in southern Mexico has, by contrast, taken an integrated development approach. Women meet weekly to encourage one another in their businesses. They build a network of trust that helps them build confidence as entrepreneurs. Recently my colleagues and I have begun a project with the organization to test how hope and aspirations might influence the success of microfinance. Early results hint at positive impacts both on the aspirations of these female borrowers and profits in their enterprises. As we gain a better understanding of the full nature of human beings–their social, psychological, and spiritual natures–we can help interventions like microfinance function more effectively.

Paul Niehaus, Co-founder and U.S. Director, GiveDirectly.3. Paul Niehaus, Co-founder and U.S. Director, GiveDirectly.

Many poverty organizations will transform your cash donation into different types of “in-kind” gifts to the poor: farm animals, mosquito nets, clean-burning woodstoves–the list goes on. In-kind gifts are appealing because (a) we don’t want our donation spent irresponsibly, and (b) we want to know how our money is being used. Paul Niehaus took a different approach when he founded GiveDirectly with fellow economics graduate students at Harvard: Let the poor decide how to best use a cash donation. GiveDirectly harnesses the best modern technology to transform your cash into … cash. It does this by electronically zapping internet donations into cell-phone-based savings accounts of the poor in East Africa. Direct electronic cash transfers have become one of the most innovative and effective methods of helping the extreme poor in the developing world.

Evidence has been growing that shows cash transfers to be an effective means of helping the poor. However, most of these programs have been conditional cash transfers. Cash was given to families for making positive choices, such as keeping their children enrolled in school or taking them in for regular check-ups. But what about just giving the poor cash—no strings attached? The response of many people to an unconditional cash transfer is that it seems highly susceptible to abuse. Unconditional cash transfers can be spent on alcohol and cigarettes just as easily as on school fees and repairing a leaky roof. Niehaus and his co-founders seem to be placing quite a bit of faith in the judgment of the poor. So what does the evidence say?

Researchers at Princeton University studied the effectiveness of GiveDirectly in an experiment involving over 1,000 households. Over the course of a year, about $1,000 in cash was transferred from internet donors into the electronic savings accounts of a randomly selected half of the households. The two researchers carrying out the study (both now faculty at Princeton) found a number of encouraging impacts from these injections of cash.

First, food consumption increased substantially. Recipients of the transfers bought 20 percent more food. The extra food consumption reduced by 30 percent the likelihood of a family member going to bed hungry during the week preceding the follow-up survey. It also reduced by 42 percent the number of days children in the cash transfer households went without food. Productive assets, mostly animal herds and small business investment, increased an astounding 58 percent.

What about spending on temptation goods, like alcohol and cigarettes? The research found no increase in spending on these goods at all. This parallels other findings that show that as extremely poor people become just a little bit wealthier, they become more hopeful and invest more time and effort in activities that will pay off in the future rather than medicating feelings of hopelessness. And what about cash grants reducing the incentives to work? A new paper by top economists at Harvard and MIT furthermore dispels the myth that these cash grants reduce time devoted to work by recipients.

Niehaus and his colleagues have shown us that the poor are more trustworthy than we think.

4. Menchit Wong, Director of Leadership Engagement, Global Advocacy, Compassion International, Philippines.

Menchit Wong, Director of Leadership Engagement, Global Advocacy, Compassion International, Philippines.Menchit Wong began her career as a social worker in a slum re-settlement program in the Philippines. Thirty-six years later, she was standing on the platform at the international Lausanne Conference in Cape Town, addressing a large audience of global Christian leaders (from churches, ministry organizations, movements and alliances), championing the rights of children. The global church gathered at this conference recognized children as a priority in the coming decade. “It was a kairos moment,” Menchit says of her presentation. “God orchestrated a two-minute opportunity for Compassion to convince the global Church to invest in the value, potential, and priority of children in poverty.” It was a ministry model, says Menchit, “that ran contrary to hundreds of years of practice.”

She currently serves as Compassion International’s director of leadership engagement for global advocacy after having served for decades in the trenches in the Philippines in of one of the most successful organizations fighting child poverty on a global scale. Compassion’s approach has long bucked the trend followed by many larger aid organizations of investing in infrastructure. Instead, Compassion invests in children: their health, education, character values, aspirations, and spiritual growth. It is a holistic model of human development with biblical foundations that has realized tremendous dividends among children sponsored by Compassion.

Our six-country study on the impact of Compassion’s sponsorship program–which included the work of Compassion in the Philippines– found that adults who had been sponsored as children were about a third more likely to finish secondary school, a third more likely to have a white-collar job as adults, about two-thirds more likely to finish college, and 80 percent more likely to serve later in life as community and church leaders. In a new academic paper forthcoming in the World Bank Economic Review, we find sponsorship through Compassion to result in a 20 percent increase in adult incomes. Also as adults, formerly sponsored children live in better-constructed and safer homes, with better roofs and floors, and they are more likely to have electricity. Thanks to the dedication, innovation, and persistence of practitioners such as Menchit Wong, it has become clear to both academics and practitioners that Compassion’s unique approach to child sponsorship is a highly effective way to make a difference in the life of a child living in poverty.

Blake Mycoskie, Founder and CEO, TOMS Shoes, Inc.5. Blake Mycoskie, Founder and CEO, TOMS Shoes, Inc.

TOMS Shoes began in Argentina, reports Blake Mycoskie in his book, Start Something That Matters. He was taking a break from managing DriversEd Direct in 2006, an online driver’s education school he had recently founded. In Argentina, he learned to play polo, dance the tango, and appreciate the alpargata, the soft canvas shoe worn ubiquitously in the country. He also met a friend working with an organization distributing used shoes to children living in the Argentina’s barrios and impoverished rural areas. That meeting changed the course of his life—and that of many others. He eventually sold his interest in DriversEd Direct, investing his time in a new company that sold a version of the alpargata loafers to Americans while giving a similar pair of shoes to a child in need for every pair he was able to sell.

In 2011, Blake agreed to work with me to carry out a study of the TOMS Shoes giving program. We wanted to ascertain the impacts of the shoes through a controlled trial. Our study took place in El Salvador, where we randomly distributed TOMS’ donated shoes to about half of 1,578 children in 18 rural communities. We tested two questions: First, did the donated shoes damage the local shoe vendor business, and second, what was the impact of the shoes on children?

We found little evidence of significant damage to local shoe vendors. Results showed that sales of vendors declined by a single pair of shoes for about every 20 donated pairs, but even this small negative impact was statistically insignificant. And while our study uncovered no life-transforming impacts from the shoes in terms of education, self-esteem, or health, we did find that 95 percent of the recipient children had a favorable impression of the shoes and 90 percent wore them, and 77 percent wore them at least three days a week.

What most impressed us with TOMS was how nimbly the company responded to the challenges of poverty. They found that children used the shoes primarily for play and that canvas shoes tended to wear out quickly. So they began to give away a more durable athletic shoe. To accommodate the needs of children in cold climates such as Mongolia, they created a tailored snow boot for Mongolian children. When studies suggested that other types of interventions were likely to have greater life-transforming impacts than their shoe donations, TOMS began to sell sunglasses that provide vision correction for the visually impaired, coffee for which purchases help provide fresh water to villages, and handbags that fund birth attendant resources for pregnant mothers in poor countries.

Clearly the original vision for a shoe company has grown into a larger vision—a double-bottom line company whose focus is not only profit but also the improved welfare of the overseas poor. It’s a company committed to introducing new products that are accompanied by a studied and sincere effort to better the lives of the least fortunate. I salute the creativity of Blake Mycoskie and TOMS as they walk the delicate line between the secular and the spiritual, a primarily “secular” company partnering extensively with Christian organizations such as World Vision and Heart for Africa to share God’s concern for the poor.

Bruce Wydick is professor of economics at the University of San Francisco and research affiliate at the Kellogg Institute of International Studies at the University of Notre Dame. He is author of the novel The Taste of Many Mountains (Thomas Nelson).

 

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