By Tim Chai
<[email protected]>

The story is always the same. Seeking to improve the lives of the impoverished, well-intentioned engineers and consultants bring millions of dollars of new infrastructure to developing countries. Fast-forward 10 years: abandoned mills, flooded croplands and overall lower standards of living.

Since 1960, the World Bank has spent roughly $1 trillion on giveaway programs in the developing world, but most of these countries are no better off today than before. More startling is the $200 billion, according to research, that has been squandered by corruption. After almost five decades, it’s clear that most long-term recipients of aid are still not achieving sustainable development.

It’s a fact of humanity that people seek dignity, not dependence. The problem with many well-intentioned aid programs is that they treat people as passive recipients of charity and not active participants in their own futures, promoting that very cycle of over-reliance. While traditional charity may often meet immediate needs, it fails to enable people to solve their own problems over the long term.

Market-based approaches have the potential to nurture when charitable dollars run out, and they are integral to solving the big problem of poverty. Business is a powerful way to bring control and precision to philanthropic solutions that could instill a greater feeling of independence and choice among people too often regarded as invisible. In many ways the developing world needs more “patient” capital above anything else to stimulate its would-be capitalists. Patient investments have all the discipline of venture capital—demanding a profit, and therefore precision in how it is deployed—but has a more socially-conscious bottom line. Rather than the 35 percent return that venture capitalists typically expect, venture philanthropists look for the 5 to 10 percent range over an even longer payback period, buoying portfolios’ return on investment with measurable social impacts.

The Tanzanian manufacturer A to Z Textile Mills is an exemplary paradigm of what happens when you combine philanthrocapitalism, talent and innovation. After an initial investment of $325,000, A to Z has grown to become one of Tanzania’s largest employers, producing over 20 million mosquito nets per year and employing more than 7,000 women. More incredible are the social benefits from this enterprise. Not only does it directly lift 7,000 families out of poverty, A to Z also fills the critical need for affordable nets, one of the most effective means of preventing the transmission of malaria, for the nearly one million people in Africa who die every year from the affliction.

Martin Luther King Jr. was on to something when he said, “Power without love is reckless and abusive (but) love without power is sentimental and anemic.” We need to combine the power and rigor of the marketplace with the compassion innately embodied within charitable programs. Only through the combination of the praxes of business and philanthropy, can those in need be empowered.