Economics 101

Charity That Hurts vs. Empowerment That Helps

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The desire and motivation behind providing charity come from a good place.

We desire to see communities lifted out of poverty. We hope to provide relief to those afflicted by man-made or natural disasters.

While the intentions behind charity may be good, the West’s charity efforts are outdated and have harmful effects on the poor.

In order to change the harmful patterns of the past, we should instead look toward more practical steps for partnering with the poor in the future.

The Republic of NGOs

The documentary film, Poverty Inc., provides a case study on NGOs in Haiti in the aftermath of the 2010 earthquake.

Prior to the earthquake, there were reportedly between 3,000 and 10,000 NGOs operating in Haiti and ready to take action to help rebuild the country, giving Haiti the nickname “The Republic of NGOs.”

While these NGOs had good intentions, in some circumstances the charity they provided hurt local communities. Poverty, Inc. specifically shows the effects of NGO donations on a local solar panel company called Enersa.

According to the film’s director Michael Matheson in an interview:

[Prior to the earthquake], they are selling about fifty street lights a month. And after the earthquake, they sold I think five streetlights in six months…So, here’s basic economics, right? There’s an earthquake; the demand goes high for solar panels because electricity is out. And the local solar panel company actually loses money. Well, why? Because NGOs came…and they started ‘giving the stuff away for free.’ And they actually crowd out local business.

This is just one example of the negative impact NGOs and charities can have worldwide.

Free hand-outs harm local markets, and while they may be necessary for short-term disaster relief, they are a damaging effort on long-term development.

There are good intentions behind the organizations seeking to help the poor – but good intentions are not enough in the fight against poverty.

Two Forms of Partnership that Empower the Poor

God has created every person in his image.

As God’s image-bearers, each individual carries with them unique talents and gifts God has given them to steward.

When we refuse to change the status quo and continue in the old structure of development – one of paternalism and unbalanced power – we neglect to see the dignity and abilities of the poor. We neglect to see and honor the image of God in them.

One of my favorite quotes from Poverty, Inc. is this:

As soon as we tell a beautiful story about the African entrepreneur doing amazing work, then we will be able to shift mindsets.

One of the best ways we can have an impact on poverty is by looking past the physical poverty of a nation in order to see the unique giftedness of each one of God’s creations.

Instead of perpetuating a system of dependency based on charitable donations, those seeking to help the poor need a framework of partnership.

Partnership comes in a variety of forms. Here are two examples of partnership that have been successful in the past.


FINCA, a nonprofit microfinance institution serving low-income entrepreneurs in developing countries, quotes economist Milton Freedman, stating:

The poor stay poor, not because they are lazy but because they have no access to capital.

While microfinance does not work in all contexts, it is one powerful way to provide the poor with access to capital.

Peter Greer, president of Hope International, said in an interview:

Microfinance then is the belief that everyone has ability, everyone has capacity, and it asks the question, “What is required to unlock that potential in that community to get them in productive employment?”

Through microfinance, organizations can tap into the unique gifts of individuals and provide a strong element of ownership which allows beneficiaries to determine the outcomes.

Vocational Training and Empowerment

Not only do the poor often lack access to financial capital, they also often lack access to skills training and jobs that could help them provide for themselves.

Akola Project is just one example of an organization that uses vocational training and business to lift women in Uganda out of poverty.

Brittany Merrill Underwood, founder and president of Akola Project, said in an interview:

These women had the vision, but not the income…So we launched the Akola Project because by employing [these] women and giving them a reliable income, we could care for thousands of children.

By tapping into the God-given passions and vision the poor already have themselves, Akola Project was able to restore women’s dignity and empower them to overcome poverty.

The West’s longstanding model of international charity is outdated and has led to negative long-term impacts on the poor.

By partnering with the poor and empowering them through their God-given talents, our efforts to help will create longer-lasting and sustainable change for the future.

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