Social change work is hard and frustrating and wonderful and terrible; it is also, at times, funny, quirky and just plain fascinating. With this blog we hope to capture all that goes into what we do at Capital Good Fund, and we invite you to join the conversation!

Wednesday, January 29, 2014

Teach Him To Fish - By Cameron Cunningham

We’ve all heard the age old phrase, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Perhaps the place where this proverb fits most aptly is the fight on global poverty. Poverty is a very real issue today: in the words of former Financial Coaching Fellow, Jerome Thompson, “the fight on poverty is this generation’s civil rights movement.” There are opposing theories on the best way to address the issue of poverty – give the fish or the lesson? Or, does the issue go deeper? Should we be asking which method is better, or should we be examining the way in which the methods are administered?

Pierre Ferrari, president and CEO of HeiferInternational, weighs in. He states in his blog post, Cash or Cows?, “A problem I see with the cash only approach is the belief that a single intervention—disbursement of cash without training, mobilization and so on—is enough to create lasting impact.” We see many people who are in need of assistance whose situations could be addressed with a short term, Band-Aid solution of cash. For example, if someone comes to us looking for help with their rent, and we were to give them enough cash for two months of rent, they would go about their way feeling like their problem has been solved, and we could say with pride that we helped someone avoid homelessness. This is all well and good, but what happens when that client returns two months later looking for another influx of cash?

The truth of the matter is that giving aid – cash or a lesson - without any thought towards delivery or sustainability is not effective.  Give Directly is a non-profit organization that has an innovative approach to cash transfers. Large scale programs incur many extra costs. Give Directly states the issue with these program costs on their website, “Program expenses is a vague category that includes the costs of staff salaries, field operations, subcontractors and local partners with their own administrative costs; it does not measure value created for the poor.”  What Give Directly does is seek out the poorest families in Kenya and Uganda, and “give directly” to these families. While the model still consists of an unconditional cash transfer, Give Directly designs the transfer with extra consideration. The families who receive the transfers are handpicked based on census data and poverty level; the families are required to sign up for M-Pesa, a popular money transfer system in Kenya, which will allow the families to reload this system later and keep their money more secure; and representatives from Give Directly meet with each family before sending the money.

What makes Give Directly and Heifer International different from other large scale charitable organizations is their willingness to work with clients on a case by case basis and give the support needed to make an impact. At Capital Good Fund we strive to do the same. We take pride in working with our clients on an intensive, one-on-one basis for each of our services.

Let’s return to our previous client. Rather than simply giving the client money and letting them be on their way, we would take a holistic approach, using two of our core services: lending and financial coaching. Our approach allows us to diagnose the problem, not just the symptom. There are many reasons why people fall behind on their rent: medical debt, a broken down car, loss of income… the list goes on. If the client has been unable to get to work because their car has broken down, we could give the client a loan for a new car, so that they can return to work. We would help the client negotiate a graduated repayment of the backed up rent with their landlord. We would also work with the client to avoid this type of problem in the future, through building an emergency savings and budgeting more deliberately. This type of approach will not immediately lift our client out of poverty, but it gives them a fighting chance at becoming self sufficient.
The debate over the fish and the lesson is multifaceted; it includes many theories, players and successes and failures. We will continue to explore this question as we strive to find the most effective and respectful methods to work with our clients in need.

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