How do you define poverty?

How you define poverty makes a big difference in how you respond to poverty. Do you think poverty is …

• Lack of money?
  
• Lack of education?
  
• Lack of health?
  
• Lack of voice?
  
• Lack of security?
  

Is lack of money a lack of cash flow (income) or cash stocks (savings)? Is lack of education a lack of trade skills (sewing) or human capital (ingenuity)? Is lack of health disease or malnutrition? The point that follows from these questions is that there are many pieces in the poverty puzzle.

If we have an idea that we need to do something about poverty, then we also probably have an idea what we mean by "poverty." If it's just a lack of money, well, let's send money. The last 50 years of sending money, however, has proven poverty more complex. Bill Easterly, a critic of foreign aid (Amartya Sen critiques his criticism here), describes in The Elusive Quest for Growth some economic growth panaceas that have failed chronically poor countries over the last 50 years:

Capital accumulation: there is insufficient savings and investment, but if foreign aid supplies investment for machinery and factories, then what about human capital plus the incentives to make capital productive?

Education: schooling is just part of human capital (think information networks for entrepreneurs), and does more education funds mean better education or increased national income? Sometimes it means educated people leave the country or learn to redistribute existing wealth instead of stimulate the economy.

Loans conditional upon policy reforms: how do you measure true reform instead of encouraging shifty adjustments, and does this still reward neediness instead of growth?

Debt forgiveness: perhaps poor countries want to grow but we've saddled them with too much debt … let's wipe the slate clean, right? Data from 41 high-debt countries from 1989-1997 shows that these nations were forgiven $33 billion in debt, yet in the years thereafter these same countries incurred $41 billion dollars of new debt.

Bono and the ONE Campaign have argued for debt forgiveness (somewhat as a Judeo-Christian "jubilee" concept) and have taken a lot of flak for such a bad idea, but they have worked with Jeffrey Sachs, noted economist and UN advisor, and have coupled their strategy with policy reform conditions for better future results. Philanthropists and scholars are working toward better responses - especially after years of seeing Africa grow poorer - but the lesson learned is that poverty requires nuanced strategy, holistic approach, noting that we treat poverty by how we perceive the poverty problem.

As Chalmers describes it, poverty is a mix of material poverty, isolation, physical weakness, powerlessness, and vulnerability. HOPE International applies Chalmers materials in our Savings and Credit Associations (SCAs) because our view of poverty is spiritual, physical, and social; poverty is a condition of the whole person and all of her relationships.

Read here how a Rwandan HOPE staffer describes the purpose of our savings groups.

SCAs are empowering at a micro level, they do not encourage dependency, and their results are more than just savings. SCAs are supporting renewed communities that believe in their ability to end their own poverty; progress that may well lead to a more sustainable development for economic growth.

For more reading:

Stuart Rutherford, The Poor and Their Money (FREE DOWNLOAD)