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Disrupting the Pervasive Cycle of Poverty: How Do They Do It?
Kelly Allen (Georgia)

It is possible that in 30 years we can eliminate poverty at a micro- or individual level, but it is nearly impossible to eliminate poverty at the national level within that time frame. Fighting poverty on a national scale requires removing or altering the political and cultural forces that promote poverty and have developed over decades or even centuries. Also, large philanthropic organizations that tend to take on large-scale programs to fight poverty often require more than 30 years to become acquainted with economic traditions and patterns of fraud. However, at the micro-level individuals have hoodwinked these forces and pull themselves out of poverty within 30 years. How do they do it?

One example: while in Mongolia I frequently went to the bazaar (or “Black Market” as it was known) which was notorious for pickpocketing, sometimes by knife. Despite the bazaar’s reputation for violent crime, a man I met there was volunteering to keep up a small educational and recreational room for the young boys in the market who had been vindicated for these crimes. He knew each boy personally and was using the funds provided by an international philanthropic organization to make a visible difference in their lives. Although jobs were not guaranteed, his program was gradually encouraging these boys to find reputable jobs. Even if only one boy gets a reputable job and lives on his own above the poverty line, this would seem a success to this man. This is a basic principle of eliminating poverty that reasonably can flourish within 30 years.

Micro-coops in Uganda are another success story for helping individual women overcome poverty. Nyaka, for instance, is a program in Uganda whose main goal is to disrupt the cycle of poverty in families affected by HIV/AIDS. Mothers of children who die of HIV/AIDS often end up with 3 to even 10 grandchildren after their parents die or leave. These grandmothers, who are unable to save up or safeguard their money, find themselves unable to support their grandchildren with food, water, or shelter. Micro-coops provide a way for these grandmothers to pool their money together and make a small loan to one of their trust-worthy and entrepreneurial members. Over the course of years, this woman’s thriving business provides her the excess profits she needs to pay back her loan. These women are eliminating poverty in a 30-year span one person at a time.

What these two examples have in common is that the directors of the programs are intimately acquainted with the needs and cultural history of those they are trying to help. Additionally, since they are working on the ground in a case-by-case basis, they are able to closely regulate the appropriation of funds. Amazingly, grassroots programs like these are present in every country. They are not designed to quickly eliminate poverty on a large scale, but they are still extremely effective at their level.

On the other hand, large programs intended to reduce poverty levels cannot expect to do so on an equally large scale within 30 years. An example that might be familiar to all of us is Medicare. Since 1965 Medicare has helped thousands of low-income elderly Americans pay for their healthcare. At its conception, it operated mainly on the “trust system” with very little regulation of how funds were being appropriated by doctors. In 2007, 41 years later, the government set up a strike force to combat the $34 billion in losses due to Medicare fraud by unlicensed doctors and average swindlers. In the past 5 years, the government has increased regulation of Medicare coverage. As a side-effect this made it much more difficult for truly impoverished elderly to receive healthcare assistance. Now, many elderly Americans, due to healthcare costs (and no doubt other reasons), have to choose between paying for their medications and buying food. While Medicare did alleviate poverty within the elderly in America, it did not eliminate poverty.

Similarly, when Mongolia experienced a democratic revolution in the 1990’s, countless foreign aid organizations flooded Mongolia with financial assistance (about 50% in loans and 50% in grants). Most of these projects were intended to reduce unemployment and assist the government to make a transition to a market economy. Still, the programs were replete with baffling business and project failures. One example of this occurred when the World Bank encouraged the Mongolian government to install water meters on homes (a project that the government had already attempted). All of these meters were subsequently stolen. Organizations like the Asian Development Bank and the International Monetary Fund were unacquainted with Mongolia’s acceptance and tradition of nepotism. Thus, at least some of the funds were undeniably diverted to projects that were poorly run or simply didn’t exist. Although these programs to reduce unemployment and poverty were conceived with good intentions and did make some headway in combating unemployment, knowledge of Mongolian culture and adequate oversight of the appropriation of fund were lacking.

That does not mean, however, that effective programs that efficiently reduce poverty rates cannot be large. For example, I observed in Mongolia a confused array of small philanthropic organizations that were running very similar projects. Without cooperating or even aware that each other existed, they were spending twice as much funding as was necessary and were unable to disseminate information among themselves. Paradoxically, in this case a larger yet consolidated organization would reduce the cost of running the program and allow them to divert funds towards actual poverty alleviation. In sum, projects that intend to eliminate poverty on a nation-wide scale within 30 years are holding a “pie in the sky” dream. In fact, they are in some cases causing more harm than good. Experience has shown that philanthropy must be intimately acquainted with those it is trying to help in order to be effective. It must also acknowledge that even one life is a success; one bird in the hand is worth more than two in the tree. That’s how they do it: one life at a time!

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Sifiso Ginindza

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