Poverty as a Disease

Apples and Oranges?

Dr. Muhammad Yunus, one of my heroes and the 2006 Nobel Peace Prize winner, describes poverty in stark and succinct words as "the absence of all human rights."  Poverty is also something we think of as endemic to the "third world," conjuring up images of malnourished children, war-torn countries and slums and shanty-towns.  Yet poverty in America is real and pernicious.  Just consider this: one out of three Americans is at 150% of the federal poverty line or below...for a family of four that's  just $35,325 or less.  Even then, I can almost guarantee that most of us, when we think about America, say something like this: "Well, there's poverty in America, but it's completely different...we don't have children starving in the streets.  Apples and oranges!"

Cooking Classes: The Where, the Why & the How

Community Cooking Class Instructor Dihara Quinones Showing Families How to Make Healthy Meals!

What it Is

A few days ago we started offering three Community Cooking classes to low-income Providence families.  The classes are being funded and hosted by Whole Foods Market on Waterman St. in Providence and the curriculum is one designed by the Rhode Island Community Food Bank. The 30 participating families will attend eight (8) weekly classes during which they will partake in a cooking demonstration, learn healthy eating concepts, and receive a free bag of groceries (donated by Whole Foods) with which they can perfect healthy recipes at home.  Part of the power of the classes is that, by including the entire family in a fun environment, the kids are more likely to be willing to eat healthy foods and, in turn, the parents are more likely to make them!

(Click here to see all of the fantastic photos from the classes)

The Fundamental Question

If you're reading this I think it's reasonable for me to assume that you are interested in social and/or environmental justice and that you contribute a least a few hundreds dollars a year to charitable causes.  Given that for four years I've run a non-profit and constantly though about social change, I'd like to pose to you what I've come to see as the fundamental question in this space: if someone gives you $100 with the instruction that the funds be used for maximum impact on the issue of your choice (education, climate change, crime, etc.), what should you do with the funds?  Until this question informs our charitable giving and social policy, we can't transform social businesses--be they for or not-for-profit--into a true force for societal transformation.

Now, the decision of how to spend those $100 is typically made in one or more of the following ways (this list is obviously not exhaustive):

1. Researching what percentage of the organization's funds go toward administration, as opposed to direct program support
2. Responding to a direct mailer, phone call or other direct solicitation
3. Affinity for the cause
4. Familiarity with the organization through a friend, celebrity, advertisement, etc.
5. A kind of unconscious appraisal of the extent to which the contribution will lead to the proverbial "Warm and fuzzy feeling."

So what's the problem?  Simply put, it's that none of the above decision points get at the fundamental question, which is what is the social impact per unit of money spent.  After all, if $100 to Agency A increases educational outcomes by, say, 10%, and Agency B increases them by 3%, then the funds should go to Agency A.  Note that this is true irrespective of the percentage of administration versus program or any other potential reason for making the donation.  Of course, we know that this is not how things work in actuality.  Why is this?  I can identify several reasons:

1. Very few organizations do the kind of analysis, such as a Randomized Control Trial (RCT), needed to quantify their social impact
2. Social impact isn't always easy to quantify to begin with
3. Most people don't have time to dig deeply into the efficacy of an organization

Obviously, endemic social issues are endemic for a reason; if there were easy to solve, they would have already been solved.  That said, I firmly believe that we have all the tools, resources, ideas and business models needed to eradicate global poverty, solve climate change, and so on.  What we lack are enough people to do the implementation and a smart approach to funding effective interventions.  

Because we don't ask the fundamental question--to repeat, 'What is the most impactful way of donating/investing a unit of money?'--we end up with a paradigm in which the vast majority of non-profits continually receive funding despite having little to no evidence of effectiveness.  A provocative statement, no?  Consider this: in 1965, when Lyndon Johnson launched the War on Poverty, the poverty rate was around 19%, there were 282,000 non-profits and $91 billion was donated to charity. Today, there are 1.6 million non-profits, the poverty rate is around 16% and $298 billion is donated to charity every year. Similarly miniscule improvements in educational outcomes, reductions in crime or prevention of homeless are also seen over the last six decades.  If non-profits were truly effective, we would expect that as charitable giving and the number of non-profits went up, there would be a concomitant reduction in the social issues they seek to solve.  Unfortunately, that is not the case.

The answer is not more non-profits, nor is it necessarily more donations.  If we ask the fundamental question, we will be forced to re-allocate funds in the most judicious manner.  What's more, the increasing popularity of social enterprise means that organizations are more and more likely to use earned-income strategies, thereby reducing the need for overall charitable giving (or at least meaning that it can stay constant while still significantly increasing impact).

I'm not saying that Capital Good Fund has the right model or is the best place to donate those $100.  But I do know that every night I ask myself that question, and we are one of the few organizations in America running an RCT to look for the statistically significant impact of our products and services.  Just some food for thought!

The Randomized Control Trial Begins!

After nearly a year of hard work developing and modifying the Financial Coaching + Schools model and planning to run a randomized control trial (RCT), we finally started signing parents up for the study.  The goal of the RCT is to determine if the FC + Schools program--which provides our products and services to low-income families of kids in grades 2-5--will have a statistically significant impact on the financial and health status of the parents, as well as on the educational outcomes of the children.  For the study, we will randomly assign 375 families to a treatment group (they will receive our Financial Coaching service) and another 375 families to a control group (they won't receive the service and we will track their outcomes as a comparison point).

One of the concerns was how we were going to recruit 750 families for the study.  In order to ensure strong parent recruitment, we have brought on six (6) full-time AmeriCorps VISTAs for the summer, and clearly the investment is bearing fruit: we already signed up 20 families!

This study is extremely exciting for us.  If we can show that, for $400 per family per year, we can improve educational outcomes by, say, 5%, then we believe that school districts across the country will hire us to deliver the Program at their schools.  We are also one of the smallest organizations in the US to run an RCT, something of which we are most proud: after all, it's one thing to tell feel-good stories about impact, but it's another to show statistically significant data on your impact.

Onward!

Our New Financial Coaching Fellows!

Today our fifth cohort of Financial Coaching Fellows completed our 3-day training institute.  The seven Fellows learned about banking, budgeting, credit, debt, goal setting, savings and taxes--a lot of material to cover!  Our Head Financial Coach, Cameron (top right of the photo), did an amazing job running the training.  We are excited to have such a great group of Fellows--they come from Bryant University, Providence College and Brown University, and are extremely motivated, passionate and eager to serve the community.  For the next three weeks Cameron will be working with them one-on-one--and they will also be practicing coaching with each other--before they beging providing coaching to clients.

When we started our Financial Coaching Program in 2011 and decided to use university students to serve as coaches, many people doubted the feasibility of the model. Now, two years and over 60 student coaches later, we have demonstrated that, when properly trained and well managed, students can deliver a life-changing service to the community.  During the coming months these Fellows will be serving dozens of clients and demonstrating what's possible when passion is married to strategy and diligence. 

The Marketplace of Ideas

There is a marketplace of ideas, one in which the winners shape public policy, make funding decisions and launch programs that affect the lives of millions.  Not only that, but the more time I spend in this marketplace, the more I see that the ideas that spread do so because of the money and power behind them.  The consequences of this dynamic are profound: global warming deniers, deficit hawks and pugilistic lovers of war continue to drive the direction of this country.

In short, if we are to better the world, if we are to overcome injustice, we must ensure that good, just and righteous ideas spread.  But doing so is easier said than done.  If I had a million dollar budget, I could run a robust advertising campaign online, in print, radio, tv.  And If you don't think a large advertising budget matters, remember that the first Gulf War started with an ad campaign, John Kerry's 2004 presidential bid failed, in part, because of the Swiftboat ad campaign, and on and on and on.

A Must-See Video

If ever there were a video that captured why we are so obsessed with scale and growth, this is it.  This is such an important video to watch for anyone interested in the non-profit sector--especially those that believe it can and should be doing a far better job at solving the serious social and environmental challenges we are facing today.  Enjoy and please share your thoughts and ideas in the comments section of this post!