Monday, August 2, 2010

Do not 'Donate' money to the poor.

After researching on the effectiveness of 'Donations'& 'Subsidies', I have come to a conclusion: Giving away money to poor is less effective than 'making them self sufficient'.

Basically it is same as what we already know. 'Give a man a fish, and you feed him for a day. Teach him how to fish and you feed him for a lifetime'.

Subsidies/Donations reduce the 'receivers' self esteem and make them feel forever dependent.

Nobel peace prize winner Yunus's concept of 'Microfinance' is one good way to reduce poverty and bring about stability in the world.

A leveraged concept to MF is 'micro-lending', wherein people like us can 'guarantee' loans to people who do not have co-laterals. Surprisingly; all statistics prove that 'The poor almost always pay-back'. The money you provide is used to guarantee loans to poor, who then setup a business and repay the loan back. After the repayment period you can choose to get your money back or loan to someone else.

So it is like 'Re-using' the same Rupee over and over again to help multiple people come out of poverty.

My personal favourite organizations are and .

Do spend some time to guarantee a loan to help someone break the poverty cycle and become self sufficient. And you would be surprised most people need very little amounts to start a small business.

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