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Don’t help the poor Invest in them V1 Draft

Anthony McKernan


Introduction If you are anything like me, you probably suspect that giving a handout isn’t the best way to help a person in need. Yes, we want to do something to help, and so we support one of the charities that is seemingly doing good work. We make our donations and that’s it. If we do ask questions, it’s usually about the amount the charity spends on fundraising, not about the success of their work. This booklet is simply designed to provoke. I want to raise questions about charitable giving as a means to alleviate poverty. It isn’t the final word on the matter, but it is a good place to start.

1. How to flourish We flourish when people believe in us. We flourish when we have an opportunity to use our talents. We flourish when we can do the things we are good at on a regular basis. Think of a time when you did some really good work, when you were energised in the process. Now think about your manager/parent/ teacher in that situation. What was their role? Did they force you to work late, to have all the paperwork in order or check each action with others? Probably not. Chances are, they gave you what you needed to excel - an opportunity, tools perhaps, trust certainly. It’s no different for people in poor communities. For those living on just a few dollars a day. Do we trust the poor? Do we believe they have talent to change their situation? Will we give them the opportunity they need to flourish? Or will we continue to think of them as people in need of our money, our education, our western values, our stuff? Will we continue to give them a hand out when a hand up could be far more effective?


2. Give. Don’t give Winston Churchill said “We make a living by what we get, but we make a life by what we give”. Another wise man was known for one of his favourite sayings “it is more blessed to give than to receive”. So who benefits here? Both do, the giver and the recipient. But the giver benefits more. “Giving with glad and generous hearts has a way of routing out the tough old miser within us. Even the poor need to know that they can give. Just the very act of letting go of money, or some other treasure, does something within us. It destroys the demon greed”. - Richard J. Foster, Money, Sex & Power.

We give because it is good to give. I rather like the phrase my church uses “My need to give is greater than the need I give to”. But what about the recipient of our giving? Is it good for them to receive? Well this depends on many factors. There is a particular difficulty in giving money or material goods to people we don’t know. Is it what they need? Will they use the money as intended? Will it actually help? Might it even do harm? My church community frequently embraces individuals and families in deep financial need. How should my wife and I help such a person in our ‘home group’? Giving them money might not be the best action. What if they aren't very good at handling money? So we have a conversation. We try to see if the presented issue is actually the real underlying issue. We seek to understand their situation and their thinking. What is their responsibility and what is ours? If we try to fix the situation, or worse, try to fix them - what does that say about us? What does it say about our attitude to them? Good intentions don’t always result in good actions. For poor communities overseas, perhaps giving money to a charity is the best way of doing something. Trust the charity. But just because a charity has a right heart for the poor doesn't mean it is doing the right thing for them.


What if a poor community’s receipt of help from a charity.... • creates a dependency on the charity? • denies local tradesmen an opportunity to work? • imposes a western solution not really owned by local people? • reinforces a view that they need to look to others for help? • creates local resentment or jealousies? Yet I have seen this. I have been a perpetrator of such things. It is a more common occurrence than we like to admit. When we give money to charity, buy Fair Trade or give our time on a short-term team, we have to ask ourselves tough questions. We could be doing more harm than good.

3. Who are the poor? The World Bank defines poverty as living on less than $2 a day, and extreme poverty as living on less than $1.25 a day. We still have about 2.4 billion people living on less than $2 a day# In subsahara Africa 50% of the population still live on less than $1.25 day. The United Nations defines poverty as "a denial of choices and opportunities, a violation of human dignity.... a lack of basic capacity to participate effectively in society." What we have here is something more fundamental than simple material deprivation. This wider view of poverty often points to a lack of freedoms, especially economic and political freedoms. Helping the poor then, may have a lot to do with fostering freedoms and creating opportunities.


4. The problem with aid The amount of aid to Africa in the last 50 years has been huge - some estimates put it at least $2 trillion. But economic growth has been weak. Aid doesn’t grow economies. The chart below shows the shocking truth of economic growth per person (GDP) in Africa, along with the simultaneous rise in aid.

In fact, the opposite effect has also been proved, namely that poverty decreases when GDP increases, or as economists say “Poverty seems to co-move with GDP almost perfectly.” Interestingly, the target to halve world poverty has been met three years early. But closer inspection shows that this is mainly due to China. This one country has brought 660m people out of poverty since 1981. How? Because of economic growth. Our charitable giving and help for the poor must take some lessons from the effect of economic development. But the issue isn’t just economic. Aid isn’t empowering. It doesn’t bring dignity. It doesn’t create freedom and it rarely plays to people’s strengths. It comes with strings and it comes with a wrong mindset. “Every time you do aid to Africa, you create that parental relationship. I’m helping you. You should be guided by me because I have a bag of money. The responsibility for your future is actually on me, not on you because I have the resources to develop you. It’s patronclient; it’s master-slave; it’s donor-recipient. It’s all broken.” Michael Fairbanks, co-founder of the SEVEN fund.

Books like Dead Aid by Dambisa Moyo made the case that aid has trapped nations into a cycle of dependency which frustrates economic growth. 5

5. Do we really mean development? This may be a little unfair to the aid process. Communities in real difficulty tend to go through three stages of need; Relief, Rehabilitation and Development. Relief is the provision of urgent help, say in the aftermath of a natural disaster or civil war where people have limited capacity to cope. Aid has its place. It is also very difficult to do well because the troubled communities often lack the very infrastructure needed to make the distribution of aid effective - roads, security and good governance for example. We then hear stories of aid being misappropriated and not really getting to the intended recipients. Rehabilitation is the next stage when aid agencies are leaving and the communities are getting back on their feet. Here, the need is for people to work together, in partnership to rebuild what was destroyed by human or natural disaster. The final stage, ‘Development’ is a long term process of both parties learning together for mutual empowerment. Did you get that? We should be learning from one another. Too often though, development is simply a more sophisticated from of handout. There is more involvement of the ‘partner on the ground’, but not necessarily a solution owned by the poor themselves. When things don't turn out as expected, is this viewed as a failure or as ongoing learning between both parties? Imagine donating money to a charity that uses it to distribute 10,000 mosquito nets. This output looks great, but what if half of them end up being used as fishing nets and covers for crops (It does happen)? This is a questionable outcome. Do we want to understand why the nets are being (mis)used in this way? What can this teach us about the community? Dare a charity share this with donors?


6. Misdiagnosis Critics say that we should stop applying relief and rehabilitation ‘solutions’ to communities that don’t need it. We are just trying to fix people and places according to our own perspective. Too many charities and donors continue to make this mistake. Most poor communities fall into the ‘development’ category. If we correctly diagnose the need for a two-way relationship, both communities ‘here’ and ‘there’ can benefit from this approach. It needs relationship if we are to understand and help each other in a meaningful way. Many churches believe they have such a relationship. They are invited to go on trips to help build classrooms, deliver training, donate books, install second hand computers and other forms of encouragement to their partner. But this doesn’t mean that all their actions are in the best interests of the community [example needed]. Charities and donors have conspired to perpetuate a problem that frustrates this relational approach. Together they want to see results, and quickly. They want things that can be seen and photographed. They want low risk and tangible stories. Anything less is likely to be viewed as poor use of donor funds. Sometimes donors and charities want to restrict the funds for a certain use. That’s understandable. I want it too. But its not a good fit with learning and walking together over time. It says "I like the project”, less so "I believe in you".


7. Poverty as broken relationships Christians see poverty as the result of broken relationships. Well some Christians do. Corbett and Fikkert say that sin has created broken relationships - a disconnect with God, with others, with ourselves, and with creation. Poverty alleviation, they argue, “... is the ministry of reconciliation: moving people closer to glorifying God by living in right relationships with God, with self, with others, and with the rest of creation”. If they are right then this changes everything. Helping the poor becomes a work of reconciliation. It is about seeing communities learning to forgive, to trust, to serve and to steward their resources. They cast off rivalries and dependencies and recognise that local problems can have local solutions when people work together. Reconciliation will result in development. Such reconciliation should be a primary work for charities if we agree with Corbett and Fikkert. But it also means that my own reconciliation is at stake. In what area of life am I poor? Where do I need to see reconciliation? Visiting or living with a poor community overseas (or in the UK) should throw a light on this if we have a humble attitude rather than an 'I know best' approach. Helping the poor is no longer about giving then. It is about investing in relationships. It is seeking God’s help for reconciliation. A secular approach would take a different view of course, believing that poor communities can create a better future for themselves without any supernatural help.


8. Helping each other Do we really, really believe that we need to learn from the poor? When did you last ask for their advice? What did they last teach you? My own church had been supporting the rehabilitation of boy soldiers in Sierra Leone for a number of years. A breakthrough came when we saw something that they had been doing, which we needed here in the UK. The Sierra Leonians in their poverty were initiating income-generating community projects that inspired our church. We realised they had something to teach us. The new ministry that was created in the UK as a result became a multi-million pound social enterprise, one of the largest in East London within five years. Attitudes need to change on both sides. Years of bad development and paternalistic attitudes have perpetuated the problem. All too often, our friends overseas, look first to the educated and rich westerners for help, rather than recognising first what they have and can do. There is a whole body of literature describing the richness of Africa now available. I visited the north of Uganda with a Five Talents partner as we established a new microfinance branch in a former war-torn town. The aid agencies were leaving and we were introducing ourselves to the mayor, local councillors and others such as market stall leaders. What was painfully obvious by their questions, is that my presence, as a white outsider, caused them to think of us as another agency coming with money, 4x4 vehicles and a team to provide stuff for them - just as had been the case when they genuinely needed relief following harrowing destruction at the hands of the Lords Resistance Army. But this was a community needing to move beyond relief and handouts. It was my Ugandan colleague who stressed that the microfinance services were going to be provided by a Uganda company who would be hiring local people. This was about harnessing local resources and providing a new opportunity for people to flourish in their small business. You could sense the shift as people realised that was something that they could be proud of, and have a stake in.


8. Let’s walk together Be transparent. Be honest. Have a two-way relationship. Establish a plan. Agree the steps together. Walk the journey shoulder to shoulder. This isn’t easy. It takes time. And it particularly needs humility on our part. As westerners, we need to see our own poverty - perhaps not material, but in other ways. We have quite different views from many Asian and African cultures. Just consider the way we view time, money, family, community and achievement. What about the way we care for our elderly? There is much we can learn. In a short two-week trip, we will be driven to achieve as much as possible but that quick-fix, task oriented approach might not foster the kind of ongoing relationship needed to see the poor seizing new opportunities and using their resources and talents to flourish. Back in Sierra Leone, my church had been concerned with the lack of a clean water supply for the former boy soldiers, (and we still are - we feel they need a sanitation solution), but this is what we feel. It’s a western priority, not a local one. We need to stand back and listen to what they want and why they want it. And crucially, what they don’t want (which is often hard to elicit unless there is a deep relationship). They are our friends and friends should have frank conversations and work through issues together. [Example of what Five Talents learns from our partners...]


9. Microfinance as empowerment: part 1 Earlier, we were reminded that enterprise generates wealth and there is dignity in doing a day's work. People, no matter how poor, find fulfilment in providing food for their family. Poor communities don't have big employers or social security. The options are stark - beg, steal or work. Working at your own small business, no matter how basic, is crucial if you are to move out of poverty. Moving your business from a hand-to-mouth existence to something a little more profitable makes a massive difference. Suddenly you have enough to pay the children's school fees and save a little to help when you suddenly need to purchase medicine or fix a leaky roof. This upgrade to your business requires some working capital. Done properly, microfinance can play an excellent part in development, challenging our preconceptions whist also empowering our partner communities. Microfinance isn’t a project done to the poor. Its something we do together, for mutual benefit. • it starts with what people have, not with what they lack • it encourages faithfulness with small things • it rewards diligence and consistency • it requires trusting relationships • it teaches accountability and shared responsibility • it helps foster peoples talents • it can be banking in the hands of local people • it teaches and reminds us of vital principles

Some of these principles can be seen in the Bible parable from which Five Talents gets its name (Matthew 25, 13-25): Three managers were given 'Talents' to look after on behalf of their boss. A talent was a large some of money measured by weight - 60Kg we think, an amount equivalent to many years worth of wages. The two who were commended "went at once and traded" and obtained a return in relation to what they were given (100% return). The one who was scolded and would be punished had 'looked after the money' in one sense and returned it when asked, but had chosen not do what was expected and did not put his talent to work, but simply buried it. 11

We see these principle in group-based microfinance. All Five Talents programmes are group based, whether members are saving together or coguaranteeing loans. They have an agreed constitution that governs their practices. They also have a system of record keeping and their regular meetings require a level of relationship, trust, transparency and accountability. They therefore have a vested interest in living right with one another (reconciliation) and seeing each other thrive.

10. Microfinance as empowerment: part 2 The success of microfinance has attracted for-profit entrants to the market. The poor, it turns out, make excellent customers. As a result, millions of people excluded from formal financial services have been able to access loans. By 20xx [stat here?]. Unfortunately, as we have seen with other financial services, this led to a financial bubble in some regions, which in turn led to over-zealous lending among some companies and the over-indebtedness of their poor clients. A spate of suicides in Andra Pradesh in India, almost shut down the microfinance industry overnight in 2011 as the Indian Government scrambled to change the regulatory environment. Articles and research have since appeared doubting the miracle of microfinance. The European banking and financial crisis which began in 2008 and continues to this day is largely the result of poor lending practices. Microfinance charities can demonstrate to such lenders the first principles of good lending and borrowing that have become distorted. What we find with microfinance funded by charities, is that they are driven by mission, not profit. A desire that clients are rewarded more than shareholders. That doesn't automatically mean that they have the best model, but it isn't a bad place to start. Microfinance for the marginalised is expensive but with charitable funding can reach the parts others can’t. “Donors and governments should take note of the peculiar strengths of faith-based development institutions, and should try to work with them to reach the un-reached ‌ Development, Divinity and Dharma; Harper, M., Rao D.S.K., Sahu A.K. (2008)

Microfinance programmes can be a great investment for donors to support the poor. To believe in their talents. To give them opportunity to flourish, free from paternalism and cultural biases. There is also an opportunity to walk together. 12

11. Why Five Talents? Christian-based microfinance has several important features: • we are motivated by a concern for the poor • we are concerned with the whole person, not just financial transactions • we have a value system that prioritises transparency, accountability and relationship • we partner with the church as a trusted, locally embedded civic organisation Committed to 'fighting poverty, creating jobs and transforming lives', this mission ensures that marginalised communities remain a focus of Five Talents. It is microfinance beyond the reach of profit-making microfinance companies. It is frontier work that tends to be a little more risky, a little more costly, a bit more innovative and certainly a lot more rewarding for all involved. Five Talents uses donor funds in the following three ways; 1. As loan capital to lend to micro-entrepreneurs 2. To establish self-sustaining village savings groups (with business training incorporated) 3. To build institutional capacity so that a small microfinance

providers, can become stronger, more self-sustaining and reach more marginalised people. In every case, the Five Talents partner is rooted in the community itself. Belshaw et al. note in their book “Faith in Development”: “Christian institutions are rooted in their communities. They have developed a credible leadership familiar with the needs of the poor, familiar with cultures, histories and contexts of its people. Religious communities approach their development work from a unique perspective that reinforces the moral and ethical values systems of these communities."


12. Conclusion My wife and I started a small business last year as an alternative to putting money into a pension fund. We had to borrow money to get going and make some sacrifices (we gave up a living room to make space for a lodger). We signed up to some training courses, linked in with a professional group and a whole new prospect has opened up for us. It required some courage yet it has been fulfilling to see a positive cash flow each month. Our asset is producing a small return and the motivation to grow the business is strong. When a villager in Burundi or Tanzania joins a local Five Talents savings or loan cooperative, a whole new prospect opens up for them also. They are joined to a group who provide encouragement and accountability. They have access to capital (either savings or loans) and they can take advantage of business training and mentoring provided by the locally employed Five Talents team. Microfinance is a wonderful opportunity enthusiastically seized by those with few options. It has a largely positive track record and now provides a whole range of financial services for poor communities. Helping the poor is really about investing in them. Believing in them. Walking with them. Providing opportunities for them to succeed with what they have. Five Talents is providing a little more resource, a lot more opportunity and a belief that the poor have the talent to flourish. Actually, it is people like you who could give them the opportunity to flourish.


13. What you can do Look more closely at the practices of your chosen charities, your church, your own giving. Ask them, and yourself, hard questions to uncover views and practices which may not be in the best interests of the local community. Consider microfinance as one way of investing in the poor, that they can flourish in their new opportunity to grow their family business. Regular donations to Five Talents are not so much a hand-out as a hand-up. Invested in local people your donation will provide poor communities with an opportunity to flourish as Five Talents walks the development path with trusted partners.

14. References Winston Churchill, source Richard J. Foster, Money, Sex & Power (Hodder & Stoughton; New Ed edition (17 Jun 1999) William Easterly, Can Foreign Aid Buy Growth? (Journal of Economic Perspectives 17, No.3, Summer 2003). The Millennium Development Goals Report, 2011. Steve Corbett & Brian Fikkert, When Helping Hurts, (Moody Publishers), 78 Harper, M., Rao D.S.K., Sahu A.K. Development, Divinity and Dharma (2008) Belshaw, Calderisi & Sugdenl, Faith in Development, (World Bank Publications, 2001)


Anthony McKernan is the Development Director of Five Talents. Previously he has been a director with US (formerly USPG, Anglicans in World Mission) and Stewardship, the Christian giving agency. He has lived in Botswanana and is part of LifeLine Church in East London.

Five Talents is the Christian microfinance agency of the Anglican Church. We are committed to fighting poverty, creating jobs and transforming lives. Web:



Facebook: fivetalentsukpage A registered charity in England and Wales No. 1113969 and a limited company in England and Walse No. 5641704


Don't help the poor: v1, draft book  

A provocation to rethink our giving to charity.

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