The Way to Help the Poor

Money and good intentions are not enough to fight poverty effectively. We also need data about what works and what doesn’t.

  • Philanthropies often give away their money to projects without really knowing if they are successful.
  • Microloans, for instance, are not effective at increasing income on average for the poorest people on the planet.
  • Social scientists have begun to marshal the tools of big data to find out what works and what doesn’t. The goal is to turn philanthropy into a science, where money gets directed to programs for which there is strong evidence of their social effectiveness.
  • Evidence-based programs are no panacea for poverty, but they are an important step forward.

You can’t make money without money. That was the exciting and intuitively obvious idea behind microloans, which took off in the 1990s as a way of helping poor people out of poverty. Banks wouldn’t give them traditional loans, but small amounts would carry less risk and allow entrepreneurs to jump-start small businesses. Economist Muhammad Yunus and Bangladesh’s Grameen Bank figured out how to scale this innovation and won the 2006 Nobel Peace Prize for their work.

The trouble is that although microloans do have some benefits, recent evidence suggests that on average they increase neither income nor household and food expenditures—key indicators of financial well-being.

That a program could be celebrated for more than 20 years and lavished with money and still fail to help people out of poverty underscores the paucity of evidence in antipoverty programs. Individual Americans, for instance, spend $335 billion a year on charity, yet most people give on impulse or a friend’s recommendation—not because they have evidence that their giving will do any good. Philanthropies also often give money to projects without really knowing if they are successful.

Fortunately, we are living in the age of big data: decisions that used to be made on instinct can now be based on solid evidence. In recent years social scientists have begun to marshal the tools of big data to ask the hard questions about what works and what doesn’t. The goal is to turn philanthropy into a science, where money gets directed to programs for which there is strong evidence of their effectiveness.

I learned about microloans in 1992, on what was supposed to be a short detour from a career in hedge funds. As a 22-year-old intern in El Salvador for one of the largest microlenders, I was struck by how little the organization knew about their effect on clients—usually women—and the local economy.

They knew that many customers were coming back for more loans and saw “client retention” as proof of their success. Why else would customers keep borrowing if it was not helping? But the microlenders did not have any serious evidence that the loans were helping women get their families out of poverty. When I asked about evidence on impacts, I was directed to a perfunctory questionnaire. I wondered: maybe repeat borrowing is not good if the client’s business does not continue to grow. Perhaps true success would be to provide one loan to help someone in need and then down the road to discover the borrower to be stable enough not to need another.

Here was a huge nongovernmental organization pulling in large grants to help the poor, with no real measurement of whether their efforts were working. For-profit businesses have benchmarks to know how they are performing, but most donors are not accustomed to asking charities about their results. Sometimes they ask what proportion of money goes to overhead, but that number is mostly meaningless. The question that needs to be asked—and that needs to be asked every time someone writes a check to a charity or a government commits to a multimillion-dollar aid project—is, Will this actually work to alleviate poverty? In other words, how will people’s lives change, compared with how their lives would have changed without the program?

This question knocked me off my Wall Street track and into graduate school for economics. One of my professors, Michael Kremer, had just started conducting randomized controlled trials to learn what programs work to help kids stay in school and improve the education they receive. He was borrowing this method from health and other sciences—randomly assigning schools to either receive a particular resource (the treatment group) or remain as they would have been otherwise (the control group) and then comparing school performance across these two groups.

His approach gave me an idea about how to return to the microlending questions that had brought me to academia in the first place. When I presented my questions and described a simple experiment that could address them, I thought that I was proposing a side project, not a dissertation. I had just finished reading complicated papers for two years, papers that often tackled empirical questions with fancy econometrics, and I assumed a dissertation must do the same. But I still remember Kremer’s response: ask an important question and do not worry about whether your method is complicated and demonstrates “smarts.” Just worry about answering the question well.

So off I went in my fourth year of graduate school to South Africa to set up my first experiment on the question of whether microlending is effective. I trained a team that would seek individuals who wanted a loan from a microlender. Of the ones who qualified, I randomly assigned them into treatment and control groups and provided the lender with the list of those assigned to treatment. The lender would approach them and offer them loans. It seemed fairly straightforward.

Instead the research project failed miserably. Each time I passed names to the lender, it would take months for them to find the potential client, and sometimes they never would. And then the lender poached my best team member, killing my best shot at gathering more people for the project.

It turns out to be difficult for academics at universities to carry out studies far away with the level of detail that good scientific trials require. You need reliable staff on the ground who understand the science but who also have the social skills to work with partners and manage field operations.

By 2002, as I was starting out as a professor, I founded a nonprofit called Innovations for Poverty Action (IPA) to help fill these knowledge gaps in finance, health, education, food, and peace and postconflict recovery. IPA connects my curious number-crunching academic colleagues at the Massachusetts Institute of Technology, Yale University, and the like, with a trained staff of more than 500 people working in 18 countries on randomized controlled trials. We have now conducted upward of 500 trials. A chief insight has been that simple interventions that take human behavior into account can have outsized effects. Putting chlorine dispensers right next to water sources, to make it easy to remember and publicly observable, increases use of clean water sixfold. Adding a simple bag of lentils to a convenient monthly immunization camp for families in India roughly sextuples rates of full immunization for kids (while making the entire process cheaper because more families show up). And cheap and simple text message reminders can be effective in helping people accomplish their goals, from saving money to completing their medication regimens. Naturally not everything works. We must figure out what works and what doesn’t.

We have also learned that information is only part of the solution. Having strong relationships with local governments, nonprofits, businesses and banks keeps the academic experts working on questions that matter and gets answers into hands of the people who can use them.

Over the years microloans kept nagging at my colleagues and me. Fifteen years after my first study attempt in South Africa, we now have seven randomized trials completed on traditional microloans and one on consumer lending back in South Africa. The seven projects are spread out around the world and have been conducted by different researchers with similar research designs: in Bosnia and Herzegovina, Ethiopia, India, Mexico, Mongolia, Morocco and the Philippines. These studies found some benefits of microloans, such as helping families weather hard times, pay off goods over time and even make small investments in businesses. But there was no average impact on the main financial well-being indicators—income and household and food expenditures. To the chagrin of microloan critics, there also were no big negative effects.

So what does work to increase income for the world’s poorest?

We just recently studied another program that addresses some of the shortcomings of microloans. One sad failure of many programs (including microloans) has been in reaching the poorest of the poor—known in the field as the ultrapoor. They live on less than what $1.25 would buy in the U.S. a day, and they account for more than a billion people, or one seventh of the world’s population. The things keeping them poor are usually complicated enough that no one individual fix is going to help, but one program being run in Bangladesh by BRAC, the world’s largest nonprofit organization, and a few other places stands out. It saw extreme poverty as a complex problem deserving of a complex solution. Its “graduation” approach, designed to move the extreme poor out of their current conditions, offers a package of six items:

  1. A “productive asset,” that is, a way to make a living (livestock, beehives to make honey or supplies to start a simple store).
  2. Technical training on how to use the asset.
  3. A small, short-term regular stipend, to meet immediate needs for daily living so the individual does not have to sell the asset while learning how to use it.
  4. Access to health support, to stay healthy enough to work.
  5. A way to save money for the future.
  6. Regular (usually weekly) visits from a coach, to reinforce skills, build confidence and help participants handle any challenges they encounter.

The Ford Foundation and Consultative Group to Assist the Poor in Washington, D.C., came to me with an ambitious idea: test an identical program, implemented by different organizations in multiple places. We ended up conducting similar studies in six places: Ethiopia, Ghana, Honduras, India, Pakistan and Peru. What we found was unprecedented—everywhere the program worked, it worked well. When we came back a year after the program had ended, we found the impact had lasted: people had more money to spend and food to eat. When we calculated the costs (labor, asset costs, transportation and overhead) as compared with the benefits, the overall returns were positive in five out of six countries—ranging from 133 percent in Ghana to 433 percent in India. In other words, every dollar invested in India yielded $4.33 more food and spending for ultrapoor households.

The one exception was Honduras, where the productive asset most used by the local organization—chickens—was an outside breed that was not resistant to local disease and so became sick and died. This was a humanitarian failure, but it demonstrated that the asset is an essential component of the program. Remove that component, and the other five components did not generate positive impacts on their own. As the programs are expanding in Ethiopia, India and Pakistan, we hope to learn more about how to make this program work better, either by reducing costs or by improving the services.

There is no panacea in the fight against poverty. Even a graduation program for the ultrapoor, which is ready to scale and yields an excellent return for a charitable buck, is not going to transform the ultrapoor into car-buying middle-class households. The vision statement for Innovations for Poverty Action is appropriately modest: more evidence, less poverty. We are not going to end poverty, but with proper evidence we can make important strides.

This article was originally published with the title “More Evidence, Less Poverty”

Discover the many ways you can help those in need.

 

Does it seem like you’re always having lessons and discussions about how you can help the poor and needy? You know it’s important, but as a teenager you don’t have much money to give to the poor, and you’re always stretching to find ideas for service projects. After all, there are only so many widows in your ward who need help weeding or mowing the lawn!

When we think of people who are poor and needy, we often think about those who have temporal needs—things like a lack of food or clothing or the physical ability to take care of themselves or their things. But there are also people who are poor in spirit or who have other needs. President Thomas S. Monson says that we are “surrounded by those in need of our attention, our encouragement, our support, our comfort, [and] our kindness” (“What Have I Done for Someone Today?” Ensign or Liahona, Nov. 2009, 86). So helping the needy is not just about giving people money or raking their leaves.

Young man walking on sidewalk with old man

Sometimes the best way you can help someone is just by listening, smiling, or sharing the gospel. The person you may be best able to serve could be that young woman in your class who is feeling alone or the young man in your quorum who needs to be invited to an activity.

One young woman decided after reading her patriarchal blessing that she wanted to do something grand to help the poor and needy. After unsuccessfully trying to give aid to some people she saw on the street, she thought she’d failed. Then she got home and found her brother crying because he’d been teased at school. After taking him out for ice cream and listening to his troubles, she learned a lesson. “The poor are just as likely to be in your home as on the streets,” she says. “There are all sorts of needy people in the world—those who need food and shelter, of course—but also those who need love, counsel, and encouragement.” (Read the rest of her story.)

Have you had experiences like that? President Monson says that those needing our help can be “family members, friends, acquaintances, or strangers” (“What Have I Done?” 86). Is there a person who could use your attention, encouragement, or other help? How can you know who it is and when help is needed? And what can you do to help?

Elder M. Russell Ballard of the Quorum of the Twelve Apostles suggests: “In your morning prayer each new day, ask Heavenly Father to guide you to recognize an opportunity to serve one of His precious children. Then go throughout the day with your heart full of faith and love, looking for someone to help. … If you do this, your spiritual sensitivities will be enlarged and you will discover opportunities to serve that you never before realized were possible” (“Be Anxiously Engaged,” Ensign or Liahona, Nov. 2012, 31).

Those opportunities to serve may include helping with financial or temporal needs, but they may also include simple acts of kindness. The important thing is that you have a sincere desire to serve and that you keep your eyes, ears, and heart open so that you can recognize your opportunities to help the poor and needy, whatever their needs may be.

Share Your Experience

How have you helped the poor and needy? Share your experience with other youth by commenting below.

How to Help Improve the Lives of the Poor

Poverty is a major issue in the world and should be solved as quickly as possible. However for that to happen, all of us need to work hard to help the poor. There are a variety of practical ways you can contribute to alleviating poverty. Remember that you could be in their situation one day, relying on and appreciating others for their help.

  1. Educate yourself. There are many ways that poverty is linked to reproductive rights, to workers’ rights, to environmental justice. By educating yourself, you will figure out where your time and energy is best spent in helping the impoverished gain the skills and the power they need to help themselves.[1]

    • There is a good deal of research that shows how the cycle of poverty is linked to the criminal justice system, which does little to re-educate its felons. Especially in a country like the U.S. the downward spiral of prisoners fuels their poverty and is a system that must change. This toxic feedback loop is especially difficult for people of color, who are already usually disenfranchised by poverty and the structure of society.[2]
    • Reproductive rights are linked to poverty. Access to reproductive control, especially for women, means fewer children, which typically links to higher education and higher opportunities for work. Reproductive health programs mean fewer teenage pregnancies and better education for women.
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    Donate. Donations to your local and global organizations are incredibly important. Many of these organizations rely on donations to survive and serve their communities. Make sure you know where your money is going if you’re donating money. You want to be sure that the organization is actually helping people.

    • Make a pledge to give up some treat for a month (like fancy coffee, or chocolate, or clothes shopping) and use the money that you save to donate to a local or global charity or non-profit.
    • Other than money you can donate food, clothing, toiletry items, old furniture, toys and books to local shelters and programs. These donations help people in straitened circumstances.
    • There is a variety of books for prisoners programs in various cities. See if your city or town has one. If not, maybe try to start one. Making sure that prisoners are getting the education they need (and often, have been denied) will help them to become productive members of society rather than stuck in the criminal justice system for the rest of their life.
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    Volunteer. There are tons of ways to help out in your community through direct action. Ask at your local religious organization, or non-profit. Check out programs at your local library and see if they need assistance.

    • There are many different groups that you can work with: children, the elderly, the mentally ill, the homeless, women. You’ll need to decide which group you want to focus on.
    • You can do things like teaching a course in resume development, computer skills. You could start up a local community garden and teach courses on how to grow sustainable food. A large number of people who are poor cannot afford to buy much produce, so teaching them a sustainable and cheap way to grow their own food, could help alleviate some of that vitamin deficiency.
    • You can work in shelters, soup kitchens, community centers, at after-school programs, and employment centers.
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    Help an individual. Even helping one individual can make a small change for the better. If you see someone who needs help, talk to them. Give them some money, even a few dollars can help. Offer your help without being condescending or judgmental.

    • Try to help them find a place like a shelter or a soup kitchen.
    • Ignoring the poverty around you, or making judgment calls about the people in poverty, is a surefire way to do nothing to help. You don’t know how that person got into poverty and you don’t know what they are going to use their money for.
    • If you are afraid of what they are going to use your money for, you can offer them something (e.g. to buy food, give them a job, buy clothing, etc.). This way, you can make sure that they get what they need without using your money for something bad like weapons or drugs.

Part 2

Helping the Poor Through Activism

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    Start or join an organization. Gather like-minded individuals and pick something to do with poverty to work to alleviate. Start up a group to help educate community members on poverty, or create an after-school program for low-income kids.

    • Use your group to have a benefit concert. Put flyers around your town or city and try to get the local paper to cover it. Have the proceeds to towards helping people in your community.
    • Start a petition in your community to help low-income students have more nutritious food, or to make your school system adopt a better sex-education program.
    • Programs like Results[3] and Children’s Defense Fund[4] work locally and globally to support legislation and practices that particularly help children to overcome poverty.[5]
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    Take legislative action. Get involved in your local government and in your country’s government. Pay attention to laws and bills that are being passed that impact programs to help people who are impoverished.[6]

    • Support a health care system that protects and helps the people who are part of it. Many people, especially in the U.S. are forced into poverty because of a medical situation that they cannot afford.
    • Support better education for your community and your country. Better education means people who have the life skills and the knowledge that help them realize their full potential and to become productive, interested members of their communities.
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    Help create a dialogue about poverty. Simply opening up discussion in your local community, and on a global scale, can help work towards alleviating it. Challenge your friends and family’s assumptions about poverty.

    • Write a column for your local newspaper, or a letter to the editor, outlining what needs to be done in your community to help people who are poor.

Why give to charity? A Romantic view of helping the needy

“Is it possible I could have steeled my purse against him?” the Romantic essayist Charles Lamb asked in 1822, writing about a man who sat each day by the road begging alms. “Give, and ask no questions.” Today, charities must answer plenty of questions before they can persuade an often wary public to untie their purse strings.

The charity sector as a whole is facing a wave of scrutiny. A glance at some recent scandals suggests that the root of this discontent lies in a perception that the direct connection between the individual giver and the recipient has broken down; that the charity is not acting as we would if we were delivering the aid ourselves. On an almost daily basis, we read complaints that charities are too large, or spend too much on back-office costs, or use aggressive fundraising techniques, or have become distracted by political campaigning.

‘Give, and ask no questions.’

The government’s commitment to spend 0.7% of GDP on international aid rankles with many because taxpayers have no direct control over how the money is spent, or whether it should be spent at all. And the collapse of Kids Company in 2015 sparked further questions and concerns about how charities operate.

And yet the idea that charitable giving is something we weigh up in our own minds is a relatively recent invention. Traditionally, the church taught that it was good to give to charity for the benefit of one’s soul, no questions asked. It was only after the Enlightenment and the French Revolution, when traditional sources of authority began to fall away, that individuals had to make up their own minds about when to give to charity and why. The Romantic movement, which reflected a new focus on emotion and individualism, has a lot to teach us about the questions we tend to ask today when giving to charity and the reasons why we give to charity at all.

Seeing and giving

William Wordsworth, contemplating the ruins of Tintern Abbey (once a centre of monastic almsgiving) wrote that the “little, nameless, unremembered acts of kindness and of love” that make up the “best portion of a good man’s life” could be found in the natural world, now that religion could no longer provide all the answers. For him, nature could inspire moral goodness just as Tintern Abbey’s monks drew inspiration from daily prayer.

In another poem, The Old Cumberland Beggar, Wordsworth wrote that seeing the objects of charity kindles benevolence in us and throughout the whole community. The visible presence of poverty reminds us of the good we have done and what we have yet to do.

But what if our minds are in no fit state to reshape society in our own image, asked John Polidori in his lurid tale The Vampyre? His bloodsucking villain Lord Ruthven (modelled on Byron) lavishes “rich charity” on the “profligate” and the “vicious” man in order “to sink him still deeper in his iniquity”, while the virtuous man who has suffered innocently is turned away “with hardly suppressed sneers”. Polidori’s nightmare philanthropist spends money on the worst possible causes, reminding us how individual caprices can skew charitable priorities.

Lamb’s essay, A Complaint of the Decay of Beggars in the Metropolis, tried to banish such egotism. He argued that begging was “the oldest and honourablest form of pauperis” and taught us not to value our own dignity too highly. The “all-sweeping besom [broom] of societarian reformation” is what happens when we think we know best, tidying away the emblems of poverty that act as “the standing morals, emblems, dial-mottos, the spital sermons, the books for children, the salutary checks and pauses to the high and rushing tide of greasy citizenry”.

For Lamb, the beggar was a defiant figure – “the only free man in the universe” – and it is better to be deceived by fraudsters than not to give to charity at all.

Romantic literature teaches us that many concerns about charities today, such as how effectively money is spent, are perpetual ones which, extreme cases aside, we should learn to accept. It reveals to us how important our feelings have become when we decide how to give to charity. But as Lamb wrote, we are not always in the best position to judge what needs to be done. If we had time to do everything ourselves there would be no need for charities at all. Sometimes it is better to step back, accept that running a charity isn’t easy and let good charities get on with the work on our behalf.

It also reminds us that charitable organisations are filling in for individual acts of charity that we cannot perform ourselves. By pointing out the power and pitfalls of imagination, the Romantics help us to navigate the complexities of the charitable encounter and to know when to step back and let a responsive and realistic charity sector carry out its work.