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Affluent Christian Investor | October 18, 2017

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Your Help Is Hurting: How Church Foreign Aid Programs Make Things Worse

Hope International

Recently I interviewed Peter Greer via skype to talk about philanthropy, and why it often makes things worse. Peter is the President and CEO of Hope International, which is a microfinance organization. If you don’t know what microfinance is, then this is your opportunity to learn about it. I think it is probably the most important phenomenon in international philanthropy right now, and in economic development. Peter Greer and the work that he’s doing with Hope International is I think taking this idea of microfinance to a new level, so it was an honor to spend time with him. You can listen to the entire interview by clicking here.

Transcript:

Jerry: “Peter, thanks so much for joining us.”

Peter: “It’s a privilege. Thanks, Jerry.”

Jerry: “Peter, this area, microfinance, is probably the area of philanthropy and alms-giving that gets entrepreneurs more excited than any other area. When an entrepreneur writes to ask me a question about philanthropic matters, they are almost always more intrigued by microfinance then they are by any of the more traditional approaches to philanthropy. This podcast is kind of aimed at that investor class and that entrepreneurial class, so I think that’s why we’re focusing on this and bringing this to them today. But just in case somebody doesn’t know what that is, let’s just start from the basics: What is microfinance?”

Peter: “Sure. Well, really interesting that you say that because that actually is the history of Hope. There’s an entrepreneur named Jeff Rutt, and after the fall of the Soviet Union he had a desire to go over with his church and help. So, initially they did what people so often do, which is see that people don’t have food and then send over food, and see that people don’t have adequate clothes for the harsh Ukrainian winter and then go in their closets and send things over. And all of that is good, all of that is appropriate, all of that is needed in response to a crisis. But as Jeff did that, after a couple of years it was the team in Ukraine that eventually said—“

Jerry: “Your help is hurting.”

Peter: “Exactly, yeah. 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. And so, microfinance turns that model on its head, and instead of going in and just saying, “We’ve got a lot of things you don’t, so we’re just going to give it to you,” it turns that model completely on its head and says, “Every single individual is created by a God who loves them, and that means there is worth and there is dignity and there is ability.” So we go in and say not, “What don’t you have,” but, “What do you have? What are you dreams for your kids? What are your aspirations? What are your hopes? What is it that is in your hand to do?” That changes everything. Microfinance then is the belief that everyone has ability, everyone has capacity, and it asks the question, “What is required to unlock that potential in that community to get them in productive employment?” And so, just real quick, just what that means is we do training, we do financial literacy, we do a place for people to save money, and then for people that are ready, we give them access to small loans so they can invest in their business ideas.”

Jerry: “’Your help is hurting’ is an incredibly powerful four-word sentence. And I’m just kind of wondering, why is it that the philanthropic world is so slow to see this, because I think—I don’t think Jeff Rutt’s philanthropic endeavors just in Ukraine were hurting, I think a lot of philanthropy is hurting. A whole lot of well-intentioned help is hurting, and yet global philanthropy is a huge, huge business. So why isn’t this whole industry of helping people picking up on the fact that in many cases, their help is hurting?”

Peter: “Yeah. I don’t want to be too cynical or negative. Maybe just a little bit.”

Jerry: “Just as much as truth requires.”

Peter: “Yeah. Right. So there’s a challenge here, right? Because there’s the wrong constituency oftentimes in how organizations are rewarded. So let me unpack that little more: So, in a business setting, you’ve got to provide value to your customers so that they pay for the goods and services that you’re providing. Philanthropy is unfortunate in that the people that your customer base is made of oftentimes are the people that are writing the checks to support you. The people that are writing the donation checks are what keep organizations in business oftentimes. The people that are receiving the services, then, are oftentimes not paying for the services, and therefore their voice is not heard. And so within the nonprofit space, we’ve created a system where he/she who tells the best story is the one that’s rewarded. There’s an incentive to push down the stories that are not of positive impact. There’s the incentive to pretend that there are no negative things that happen, there’s the incentive to make sure that our failures are never made public, and there’s the disconnected between who’s paying for the service and who’s receiving the services. When you disconnect those two aspects, you do not have accountability that acts in the best interest of the people who are receiving what we are all trying to do, which is just to help in places of great need.”

Jerry: “So, in some sense, the philanthropy, the global-development philanthropy industry, is an industry that trades stories for dollars. Now if it’s an honest operation, the stories it tells are true and the dollars it receives it uses as intended. I’m assuming that the vast majority of it is honest. But still, at basis, it’s the trading of a story for an amount of money, and the story that makes the giver feel best is the story that attracts the most money, even if it’s not the story that actually does the most good for the recipient.”

Peter: “That’s right. And think about someone that goes on a short-term trip. Them going over and being involved in building a house is a beautiful, beautiful thing, and that week probably changed their life. But there always is the challenge, then, of asking, “What happens when the house needs repairs? What happens when the other community members see that this one family got lucky, and they won the charity lottery? Does that incentivize them to build and actually do more?” We were doing a study in Haiti and actually found that in this one community, every year there would be one family that would be selected, and it would be the poorest family, to get a new home from this very generous group. But what that did is create a disincentive for people to make modest improvements, and it actually disincentivized people to say, “I’m going to do something to improve my house, my home.” Because one woman said, you know, “If I do that, then I won’t be seen as the neediest, and I’ll miss out on my chance to have the extreme home makeover.” So there is a problem, where what is good in short-term and what is good for the experience of the giver, might not be what is more difficult candidly and more long-term. It’s easier to give someone something and feel good about that in the short-term, than it is to do the much more difficult work of helping someone provide for their needs so that that person can be generous to others in their community.”

How Our Help Hurts Us, Too

Jerry: “Let’s invert this a little bit. Let’s swap out direct objects. The implied direct object of that sentence, “Your help is hurting,” is us. Poor people are saying, people in Ukraine are saying, “Your help is hurting us.” How about this: “Your help is hurting you.” Is there something about the way that ministry and philanthropy is often done that doesn’t just inadvertently hurt the recipient, but inadvertently hurts the provider?”

Peter: “Jerry, this is something that I’ve been thinking a lot about recently. And I do think that it is really important to have a look at, internally, what motivates us to do this good. I think there have been clearly times in my life where doing good, you kind of get a little bit confused and almost feel that you are the great hope.”

Jerry: “Yes. The great white hope, in many cases. The ‘I’m from America, and I’m here to save you.’

Peter: “Yeah. ‘I’ve got the education, I’ve got the knowledge, and if you would just do what I tell you to do, you’d be better off.’ And that breeds pride, and that breeds further problems – further definition of poverty in the community, and it idttaking this whole idea t phenems really bad for our heart and for our soul when we get mixed up about what our role is. You know, for me, there is a very different approach. Instead of going in and saying, “I’m going to do this because it makes me feel good about myself,” — I like the line that Jesus said, that it’s more blessed to give than it is to receive. We’ve all received so much. And gratitude as being the motivator, as opposed to what it does for me or how it makes me feel. I think those things are dangerous compared to a different motive of saying, “Man, God is at work everywhere. We want to participate in that, and we’re not the only hope that the world has. Far from it.””

Jerry: “So, paternalism is damaging on both sides of the transaction.”

Peter: “Oh, absolutely.”

Jerry: “In different ways, but still damaging. I’m just thinking, sort of flashing back to many of the church stories over the years, and I remember one woman reaching out to another woman and said, “Well, I just want to minister to you,” and all of a sudden the dynamics were different. At one point it was friendship and at another point it’s a ministry. If it’s a ministry then I’m superior, you’re inferior, and now you have a choice: You can grow out of my ministry or you can play that part and get more ministry. I’m wondering…if this phenomenon that you’re talking about isn’t a good argument for your particular policy in microfinance of charging interest for loans rather than just making it a no-interest loan.”

Peter: “Man, that’s a great point. And you know, the thing about charity is it’s someone giving someone something. So it makes someone feel even more superior and it makes the other person, the recipient, feel even more inferior. Business is different. Business at its core is about exchange, that someone has something that someone is willing to pay for or trade for. And business is a great equalizer, whereas charity actually further pushes people apart. And interest—there are a lot of good reasons to have interest. Interest means that we’re able to cover the cost of providing this so we that can have sustainable entities around the world that don’t have this never-ending need for more charity dollars. It allows growth to happen on its own, but it also—there was one woman that, at the end of the day, when she repaid her loan, her final one, she had enough savings that she was going to continue to grow on her own. She said, “I’m not poor anymore,” and it was so clear that she knew that this was not charity. This was something that she had done and that she had paid for. She was not someone’s charity case. She was a hardworking, entrepreneurial woman who wanted to take care of her family, and who finally had an opportunity to do so and the pride and the dignity with which she said, “I’m not poor anymore.” She knew that her hard work had been so essential in this pathway out of poverty. It was really, really beautiful.”

Jerry: “If you pay back the loan with interest, then you can look the lender in the eye as an equal.”

Peter: “That’s exactly right.”

Jerry: “And if you don’t, then there’s still that stigma that this was, in fact, a transfer payment. This was, in fact, alms-giving. Which reflects a certain amount of dependency and therefore inferiority.”

Peter: “That’s right, yeah.”

Jerry: “People in the third world aren’t inferior, are they?”

Peter: “Oh, man, Jerry. In my job I lived in Rwanda, lived in Cambodia, and Zimbabwe, and travel around to the sixteen countries where Hope operates, and any notion that there is this superiority complex is not only wildly offensive but completely untrue. You look at what people have done to survive in these places, you look at how hard people work in these places where we serve, and they have my utmost respect and my admiration. I could not do what they do, and that’s not just some platitude. I believe that at the very core of who I am. I could not do what they do. So absolutely, the people that we serve: hardworking, faithful, competent. It’s just that they were born into a very different circumstance than you or I were born into.”

Jerry: “Right. The institutions under which they’re forced to operate might be inferior institutions. You know, lack of rule of law, military dictatorships, situations of chronic unrest or civil war. That’s an inferior way to run a country, to not respect peoples’ property rights, but that doesn’t mean the people there are inferior. They’ve got a system foisted upon them. It has to do with history and has to do with all sorts of factors, right? There’s spiritual factors, geographic factors; they’re in a lousy situation. But they’re resourceful, intelligent, ambitious people in a lousy situation. They don’t deserve to be hungry. They’re not hungry because they deserve to be hungry. They’re hungry because the incentives that they’ve been handed create poverty.”

Peter: “That’s right, yeah. That’s exactly right.”

Jerry: “Alright, so, let’s kind of get a sense of—I don’t know whether to move on from this, “Your help is hurting,” thing or not because it’s such a powerful theme. Let’s just do one more on that, and then sort of transition over. “Your help is hurting,” and eggs. You’ve got a story about eggs that I think really communicates how our help hurts. Can you tell that, please? That’s Rwanda, isn’t it?”

Peter: “That’s right. So, you know, you look at the world differently when you have a chance to get out of America and my view on charity and philanthropy has been radically shaped by my time overseas. But, yeah, there was one story where an individual after the genocide was starting to rebuild his community, and so he got some hens and started having an egg business, and he was growing that, rapidly expanding it. Then there was a church that decided to target his community as their area of philanthropy, and so as part of their charity they provided eggs for everyone as a source of protein. You don’t criticize that, right? That’s great that someone, a church, wanted to help. But what did that do to my friend and his business? Anyone who understands business knows that there’s no business model where you can compete with completely free or significantly subsidized goods, so, in his case, recognizing there wasn’t a market, he ended up selling his hens and getting out of the egg business. All of that is fine, the community was still having eggs, but people engaged in philanthropy oftentimes have short-term time horizons. Not surprisingly, eventually that church decided to focus its energy on another part of the world, and ended up getting out of that business. So the community ended up without the local provider, and without the charity. You look at that situation and ask, “Was the community really better off? Is that really the most effective way to help?” And I guess, increasingly, I say no, that there’s got to be a better way of helping then putting out of business the local providers of the goods and services. Even though it feels good, it looks good, it’s great to take pictures of that, there’s got to be a better way of helping.”

To be continued. Next topic how government takes the mistakes of private philanthropy and makes them even worse…

Peter Greer is president and CEO of HOPE International, a global nonprofit focused on Christ-centered job creation, savings mobilization, and financial training. A graduate of Harvard’s Kennedy School and the former Managing Director of Urwego in Rwanda.

The Poor Will Be Glad (2009), The Spiritual Danger of Doing Good (2013), and Mission Drift (2014). Peter blogs at www.peterkgreer.com. Twitter and Facebook: @peterkgreer,www.facebook.com/PeterKGreer.


Article originally published on Forbes.com.

Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.

Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.

Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.

Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.

Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.

Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.

Jerry lives in Pennsylvania with his wife, Susan, and the youngest five of their seven children.

 

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