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Alejandro A. Chafuen / March 15, 2013

From Aid to Enterprise: Intelligent Poverty Cures

Editor’s note: A version of this article first appeared at Forbes.com.

We will always have the poor among us (Matthew 26:11), but over a billion living on less than $1 a day? It is natural for well-meaning individuals to work to change this situation. Intellectual entrepreneurs are no exception and endeavor to apply the best ideas to poverty alleviation.

A new multifaceted initiative, called PovertyCure, provides abundant materials and resources for those who want to create lasting solutions to poverty. The program is founded on the conviction that each human person can be a source of great creativity. It highlights the incentives needed to unleash the entrepreneurial spirit that fills the developing world.

When Adam Smith wrote his famous “Inquiry into the Nature and Causes of the Wealth of Nations,” he helped shift the terms of the discussion. Centuries earlier, work focused on different aspects of poverty. Jurists and city authorities analyzed whether the poor should be allowed to beg freely and move to other cities. Charities were set up to help the destitute. The great Florentine Saint, Antonino Pierozzi (1389-1459), even set up a charity to serve the “shameful poor” – formerly rich people who were impoverished by government attacks and injustices, but would rather die than beg. It is easy to be poor; it is harder to understand how wealth is created. Smith changed the approach.

PovertyCure tries to create a similar shift among those who work in this field. It seeks to move efforts from aid to enterprise and from paternalism to partnerships. We often ask how to alleviate poverty. But the real question is: How do people in the developing world create prosperity for their families and communities?

Almost 200 organizations from over 140 countries have become partners of PovertyCure. They include churches, missionary groups, charities, universities, non-profits, and businesses committed to a vision that recognizes the dignity and capacity of people to create value and prosperity for their families and communities.

Some of the best-known experts who collaborate in this effort include Oxford’s Paul Collier, Peruvian Economist Hernando de Soto, Rwandan genocide survivor Immaculée Ilibagiza, the World Bank’s former Managing Director Juan José Daboub, Ghanaian Economist George Ayittey, Harvard’s Marcela Escobari, and Hope International CEO Peter Greer. The initiative also includes numerous political and religious leaders, entrepreneurs, small-business owners and missionaries fighting poverty on the grass-roots level.

One of the most prominent members of this network, Partners Worldwide, works in over 20 countries. It promotes partnerships for job creation. Working closely with churches and business leaders, Partners Worldwide helped to create and retain over 33,000 jobs in 23 countries last year.

Some of the solutions are disseminated through a recently launched six-part, documentary-style DVD series on human flourishing, along with an active presence in social media (approaching 1 million likes on Facebook). These include opening doors of credit for the poor, simplifying and reducing barriers of entry, liberating education markets, expanding access to clean water, and improving the rule of law. These indirect solutions to poverty can benefit all, but special care is required to implement them in those areas of the economy where the poor live and try to enter into the market. Moving from aid to enterprise projects helps them become more sustainable and help develop an entrepreneurial mindset. The solidarity that underlies poverty-relief efforts becomes more effective when coupled with true empowerment.

Many intellectual entrepreneurs and some of their donors and “angel investors” tend to be single-product champions. They focus on only one element in the road to reduce poverty, e.g., women rights, property titles, vaccines. This could lead to neglect of the fundamental problems that impede successful outcomes in their area of work. Pervasive corruption, for example, can have devastating effects in health, education, and economic reforms. A fruitful dialogue among participants in PovertyCure can increase the chances that poverty or “human flourishing” programs will be structured with the proper incentives.

Well-intentioned efforts can also go wasted for neglecting the basic lessons of economics. PovertyCure highlights not only what has worked well but also what has failed. Two stories from Haiti come to mind: During the 1970s, Haiti used to be self-sufficient in rice. U.S. subsidies to the rice industry led to surpluses, which were then shipped to Haiti as free aid. Haiti’s rice farmers then suffered a big blow. Private charity can also have unintended consequences. A church from Wisconsin also shipped gobs of peanut butter, forgetting that Haiti has a pretty good climate for growing peanuts and a viable peanut-farming sector. The free peanut butter hurt local producers.

Most religions share the view that there should be a “preferential option for the poor.” In framing a policy solution, one should always ask “how will this affect the poor?” With its abundant policy and educational resources, and its growing network, PovertyCure promises to help many intellectual entrepreneurs exercise this option.

Dr. Alejandro A. (Alex) Chafuen ‘84 is president of the Atlas Economic Research Foundation and a member of the board of advisors for The Center for Vision & Values at Grove City College. (The opinions expressed by the author are his own and do not necessarily reflect those of Grove City College, Atlas Economic Research Foundation, or their boards of trustees.) Chafuen is trustee of the Acton Institute, which is one of the lead sponsors of PovertyCure.

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