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.

4 thoughts on “Do the Poor Become Dependent on Charity? The False Logic Of Charity Hurts

  1. Hello Anita, thank you for your article. There is no doubt that charity has an important, fundamental place, but I think it’s role with regard to sustainable economic development is often misunderstood. The Chalmers Center published a good piece on the difference between relief and development (http://www.chalmers.org/poverty/difference). I also recommend you read When Helping Hurts by Brian Fikkert if you have not done so already (http://www.amazon.com/When-Helping-Hurts-Alleviate-Yourself/dp/0802457061).

    Lastly, here is a short clip from our DVD Series in which people from the developing world call attention to some of the ways they have been negatively affected by well-intended charitable efforts. I’d be interested to know what you think.

    Charity That Hurts [PovertyCure Episode 1]
    http://www.youtube.com/watch?v=Ii_k_AUqo8I&feature=share&list=TLXunrHawyr1UQbD7L00SRWdM8xv92cGAk

    Certainly charity is critical in certain situations. But if we misunderstand it’s role with regard to sustainable, long-term development, we can actually end up holding people back.

    1. Thank you, Mark Weber, for your comment. My initial objection was to the way the poor are often characterized in the typical charity hurts narrative — something that your video admirably avoids. The fact that cash transfers are a completely new idea in aid programs, however, underscores the kind of stories that get told about the poor: they are unreliable, won’t invest the money well, will spend it all booze, etc. On the other hand, your video also makes the astute point that some forms of charity may have good intentions but aren’t necessarily designed to consider the longer term impact.

      Unfortunately, as a whole, encouraging entrepreneurship does not have a better long term track record than traditional aid programs. In some cases micro-loans, the method advocated by Peter Greer, have been found to hurt more than help the individuals who receive them. There has also been a surprising lack of interest in designing programs that independent researchers can later study to determine their long-term impact. The following program from NPR’s Planet Money and This American Life capture the complicated dynamics of aid and development. I think you would enjoy listening to it.

      I wish all the best with your charity.

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