Do the Poor Become Dependent on Charity? The False Logic Of Charity Hurts
This post has been updated on June 26, 2014. You can find it here.
A common argument regarding charity and the poor was unsurprisingly featured in this Forbes article recently: Your Help Is Hurting: How Church Foreign Aid Programs Make Things Worse
“And anyone that’s been involved in philanthropy eventually comes to that point. When you try to help, you try to give things, you start to have the consequences. There’s an author Bob Lupton, who really nails it when he says that when he gave something the first time, there was gratitude; and when he gave something a second time to that same community, there was anticipation; the third time, there was expectation; the fourth time, there was entitlement; and the fifth time, there was dependency. That is what we’ve all experienced when we’ve wanted to do good. Something changes the more we just give hand-out after hand-out. Something that is designed to be a help actually causes harm.” 7/30/13
The logic that the poor become dependent on charity seems plausible, but is it true? The evidence would suggest no. Contrary to the above anecdote, research has found that unconditional cash transfers are usually invested in vocational training and lead to substantial increased earnings. For a recent example, you can read this study by Blattman, Fiala, and Martinez (2013): http://cega.berkeley.edu/assets/cega_events/53/WGAPE_Sp2013_Blattman.pdf.
The author of the above statement, Peter Greer, has an agenda to promote his own microfinance organization. Although I like the idea of microfinance and participate using Kiva.org, unfortunately research has not found a correlation between receiving this type of loan and an improvement in income or economic conditions. For another recent example see Banerjee, Duflo, Glennerster, and Kinnan (2013): http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2250500 Furthermore, since Kiva and many other microfinance organizations rely on local lending institutions, there have been significant questions raised about oversight. There have also been issues with predatory lending practices with the local institutions handing out the loans.
My takeaway is that most of us (myself included) probably don’t give enough to charity, thus it might be tempting to justify it with statements about the poor and dependence. The truth though is that as long as the charitable organization you trust is following good practices (i.e. spending the money as it promises too) your charity has the potential to transform lives.