July 01, 2011 by Peter Greer

Why Enterprise and Business Are Changing Our Approach to Poverty Alleviation

In the decade following the collapse of communism, churches operating in post-Soviet Ukraine could once again practice their faith openly and freely. Yet they faced great need: With the economy in shambles, laypeople struggled to find work and provide for their families. Some churches in the United States stepped forward to meet the needs of their Ukrainian brothers and sisters and rebuild their church communities, but they quickly came to realize that good intentions don’t always translate to sustainable results.

A hand up, not a handout

An active member of a church based in Lancaster, PA, Jeff Rutt, founder of HOPE International, joined several delegations his church sent to Ukraine to deliver shipments of food, clothing, and other supplies to a sister church in Zaporozhye, Ukraine.

On one of these trips, a Ukrainian pastor pulled Jeff aside and described the effect of the aid on his congregation: Although he was grateful for the help, the shipments had depressed local initiative, as many vendors within the church and community could no longer compete with the free shipments of supplies. Instead of inspiring a spirit of generosity and giving, the shipments had created a sense of dependency on foreign aid.

He said, “We need a hand up, not a handout.”

After realizing the need for solutions that came from within the community and emphasized the God-given skills and dignity of the local congregation, Jeff began offering small loans and business training to church members, and HOPE International—a Christ-centered microfinance network now serving over 300,000 clients in 15 countries around the world—was born.

Symptoms and solutions

Rutt and his fellow church members had good intentions from the start, but in overlooking some key symptoms of poverty, they limited the effectiveness of their ministry. In the West, poverty is almost exclusively viewed as a lack of material wealth, characterized by insufficient food, money, clean water, and medicine. When over 60,000 people living in material poverty were asked to define poverty, however, they did not use such straightforward terms. Researchers Brian Fikkert and Steve Corbett of The Chalmers Center for Economic Development said, “They tend to describe their condition in far more psychological and social terms. Poor people typically talk in terms of shame, inferiority, powerlessness, humiliation, fear, hopelessness, depression, social isolation, and voicelessness.” While Jeff and his church were meeting material needs, their assistance actually intensified the psychological and social symptoms of poverty.

If the symptoms of poverty are not as clear-cut as they seem, then neither are the solutions.  An accurate diagnosis precedes an effective course of treatment, not only in medicine but also in economic development. Before we attempt to solve the problem of poverty, we must first understand three factors that contribute to the problem:

1. Belief that solutions come externally: In Haiti, a HOPE staff member met a mother who said she had no desire to fix her dilapidated home. The worse her home looked, the better her chances of receiving foreign aid—both to fix her home and to send her children to school.
Abraham Lincoln once said, “You cannot build character and courage by taking away people’s initiative and independence. You cannot help people permanently by doing for them what they could and should do for themselves.”

In 2005, I traveled to Afghanistan with HOPE International and saw firsthand the damage done when we decide to help those in poverty by “doing for them, what they could and should do for themselves.” After decades of war, even remote regions within Afghanistan had grown accustomed to outside aid. When a group of donors, pastors, development practitioners, and I were helicoptered into a remote Afghan village, we were paraded around by elders who showed us their “needs.” They led us to a community center with minor water damage to the roof. Outside this building, an elder with a full beard waved his finger at me saying, “You must fix this!” He—like many in the village who were eager to show us their needs—had become dependent on outside aid, a dependency handicapping their long-term initiative to break the cycle of poverty. We must recognize the inherent gifts and talents of the poor to begin to transform communities and the landscape of poverty from within.

2. Ignoring the benefits of business: According to Bill Easterly in The White Man’s Burden, since 1970, Africa has received over $3 trillion in aid, but many of the countries’ growth have stagnated—even plummeted. Despite trillions in aid, countries in Sub-Saharan Africa still rank at the bottom of poverty indexes such as the World Banks’ Doing Business report and the United Nations Human Development Index (HDI).  Good intentions too often ignore what has historically been shown to create wealth: job creation.

Since the 1980s, extreme global poverty has been reduced from 52 percent to 26 percent, primarily through commerce and industry created in countries like China and Brazil, which are now dominating world markets. Business is revolutionizing the world to end extreme global poverty as none of our collective outside efforts and aid have achieved.

As the global church seeks to alleviate spiritual and physical poverty, we often overlook one of our greatest resources—our businesspeople. Although there has been an uneasy alliance between business laypeople and church leadership, business is vital in poverty alleviation efforts.

3. Disconnecting proclamation from demonstration: Poverty is not only physical but also innately spiritual. Historically, the Church has lost credibility and impact when it propagated the lie that we could disconnect our proclamation of the Gospel from our demonstration of the Gospel. It’s time to end this deadly dichotomy. We cannot address hopelessness and brokenness without rejoining our words and our deeds. Only the Good News of Jesus Christ’s redemptive work on the cross coupled with acts of compassion brings hope for restoration of relationships—with God, with one another, with ourselves.

Journalist and self-proclaimed atheist Matthew Parris wrote in The Times of London that—as much as he hated to admit it—he saw the importance of Christianity in development work. Growing up in Africa and returning years later, he saw that aid and relief work alone wasn’t enough. Christianity brought about true heart change: “The [African] Christians were always different. Far from having cowed or confined its converts, their faith appeared to have liberated and relaxed them. There was liveliness, a curiosity, an engagement with the world –a directness in their dealings with others—that seemed to be missing in traditional African life. They stood tall.” In his article, Parris shares how the truths that Christianity teaches—that mankind has inherent worth and dignity—are the key difference in escaping poverty.

Like Matthew Parris, I came to my own realization in Africa that if microfinance institutions (MFIs) and aid work are only meeting material needs, they may increase income, but they won’t catalyze life transformation. While managing a microfinance institution in Rwanda, I met Florian, who later became my guard, gardener and friend; however, sometime later, I discovered that when I left my house, he would enter to steal money and other items from my guests, using both the money he earned and stole for alcohol. Through this experience, I recognized that Florian’s increased income wasn’t changing him: Unless his heart was changed, his increased income did not benefit him.

Contrasting Florian is the story of Milán Tapia, an entrepreneur, accomplished seamstress and activist in the Dominican Republic. Born in el campo, or in the country, she knew material poverty as a child. Through a small business loan from Esperanza International, HOPE’s partner in the Dominican Republic, she began a sewing business making school uniforms; successful, she employed several workers, but she testifies her life didn’t change until she was introduced to Jesus Christ by her loan officer. Transformed by the love of Jesus, Milán was ready to make a difference in her community: With her business profits, she founded Tu Hogar Cristiano (Your Christian Home), a school for disadvantaged children in her community. Today 400 children attend Milán’s school. One woman’s changed heart and economic situation resulted in hundreds of changed lives in one Dominican community.

A true fast

The Church today is poised to make a lasting impact on global poverty and we need a big vision for what God might do in our lifetime. Already, we have seen tremendous developments in the areas of health care and poverty reduction: Polio decreased by 99 percent, from an estimated 350,000 cases in 1988 to 483 cases in 2001; in the last eight years, the number of children dying of measles has decreased by 78 percent; and in the past six years, malaria rates have been cut in half.  As poverty has been cut in half in the last 20 years—in large part through job creation and business—we see that it is possible to alleviate global poverty as never before. The question is whether or not the global Church today will believe that it is possible to see significant physical and spiritual restoration – and then work passionately, wisely and selflessly to see Thy Kingdom come.

Poverty: the Church's Role

Sidebar by Robby Butler

The Church has a strategic role in overcoming internal and external factors in poverty. This outline is representative rather than exhaustive:

• Internal Influences must be defeated through relational biblical discipleship:
  • Fatalism: Poverty is our destiny.
  • Hopelessness: Effort will prove unfruitful.
  • Laziness: Change is too much work.
  • Lies: God hates me and wants me to suffer.
  • Identity: I am a victim, inferior to others.
  • Addiction: I must numb my pain.
  • Limited Good: If you or I benefit, the other must lose.
• Individual Circumstances may need such practical assistance such as micro-enterprise mediated through accountable relationships:
  • Subsistence: Where water acquisition consumes a family's time and energy, improved access to clean water allows pursuit of better employment.
  • Bonded servitude: High interest on even a small debt enslaves many, and micro-finance loans can create freedom to seek other employment.
  • Lack of skills: Training can empower a more profitable contribution to the community.
  • Lack of capital: Micro-finance loans enable entrepreneurs to increase the supply of existing products or services (subject to local market saturation or global competition).
• Societal Environment, best improved through local and international advocacy:
  • Corruption: The best long-term remedy is widespread Biblical discipleship.
  • Lack of Infrastructure: Advocacy can encourage governments, charities and businesses to collaborate in developing infrastructure to facilitate commercial enterprise.
  • Lack of Basic Goods, Services and Employment: The Church can encourage and assist the development of healthy, enterprises which provide employment and discipleship while serving the community.

God didn't simply address our poverty by giving us instructions and resources. Christ emptied Himself and dwelt among us. The most effective approaches to breaking the poverty cycle include incarnational ministry which develops collaborative relationships to hear, serve, learn from and influence the poor, through

• biblical discipleship,
• practical assistance,
• business development, and
• advocacy.