Global Recession and the Work of Reducing World Poverty

From Wikimedia
From Wikimedia

As I sit here today trying to figure out how best to handle reduced funding as a result of the global recession, I remember what I have often heard during my career. People have lamented, “If only those agencies dedicated to helping the poor could be run like businesses, they could operate with such efficiency that things would be great.”  They often have in mind not small family-run businesses but large corporate entities.

 I recognize that there are many things that we in the volunteer sector must learn from business. While I deeply appreciate the insights that I’ve received from those whose vocation is private enterprise, recent events have made me skeptical of this comment when said without critical thought. 

 For instance, let’s take one of the controversial bonuses in big financial firms-a modest one of only $1 million-and look at what we do at World Concern with the same amount.

 For an entire year, we operate microfinance and village savings and loans in five of the poorest countries in the world–Kenya, Sudan, Haiti, Bangladesh and Bolivia.  There are over 21,000 participants who directly benefit with savings and small loans. Most are poor women. If we include the family members of the participants in the programs, the total number of those who benefit climbs to over 100,000. Each participant also receives additional training in business practices and many also receive training in the broad number of problems that they face in their community-health, agricultural and some vocational training. The cost per participant per year is about $47.50(thirteen cents a day–or 1/50th of the new McStarbucks breakfast offering) and, if we include all who benefit, it is $8.33 per person per year.

 The repayment rate on the loans that go to these 21,000 families-over 92%. What about the credit default instrument? If one person is having problems paying the loan on time, and those problems are legitimate, the group will often assist in repayment. And then the group will make sure that the ir group member, who may have suffered an illness in the family or other problem, eventually repays the group.

What kind of business environment do these people operate in? A tough one. And they have survived floods in Bolivia, multiple hurricanes in Haiti, ethnic conflict in Kenya, grinding poverty in Bangladesh, and clan warfare in Sudan in which their businesses and stock were burned to the ground. And still with an overall repayment rate of over 92%. 

And for the $1 million, we not only meet on-the-ground costs, including the full cost of our program staff. The million includes all our overhead and technical support costs globally as well as the cost of raising the money to support this ministry.

 And what is our bonus? How about enough left over to provide community schools to 3500 kids in Bangladesh for a year and to pay for six months of anti-trafficking and child protection in Southeast Asia?

 What can we learn from some businesses that have recently been in the press? Probably not cost-effectiveness or excellent performance. There are better ways of investing a million dollars, and our lives.

5 thoughts on “Global Recession and the Work of Reducing World Poverty”

  1. the Economic Recession has been pretty hard on us. some of my friends lost their job because of the massive job cuts. i just hope that our economy becomes better in the following years.

  2. the economic recession has been pretty hard on us. there is some good progress on the economy this year. i just hope that the economy will continue to recover in the following months and years.

  3. Recession, or no recession, it seems community involvement and commitment to the basic needs of the community with training always trumps just randomly giving money to people without showing them how it can be used to benefit the whole community and make life better for everyone.
    I have been taking a ‘Globalization and Poverty’ course, using Peter Singers book ‘The Life You Can Save’ which points to the fact that just small amounts of money can make such a big difference in situations of poverty. He suggests that giving to a cause that you can relate to on a personal level makes it easier for us to give rather than to a broad unknown cause. Just the use of the word community gives us the vision of something that is more personal and manageable and creating a more giving spirit. Thank you for the encouragement and the good news…Janet

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