This week I was forwarded an article in which Jessica Jackley (the co-founder of Kiva and crowdfunding aficionado) was interviewed in Christianity Today. The article, entitled Faith Meets the Entrepreneurial Spirit, deserves a read.
That being said, I’d like to comment on several points made in the interview:
In your book, you share how the Bible verse “the poor you will always have with you” (Matt. 26:11) haunted you when you were a child. How do you think about Jesus’ words today?
This idea doesn’t haunt me in the same way today. Instead I see it as a sobering reminder that there are always people I can look for to serve and to help. At any moment in time when I have something to offer, there will be someone who has a need to receive. And roles can easily switch—we all have times in our lives when we need to reach out for help as well.
YES! This verse inspires action not passivity. Also, this video clears up some misnomers about the verse in question.
How has the microfinance industry evolved during the time that you’ve been involved in it?
People have become much more aware that microfinance can be a great tool for poverty alleviation. I’ve loved seeing an appreciation for the real power of not just one intervention: not just a microloan, but a microloan plus a microsavings account or microinsurance [insurance for health and property risks for those living on $1 to $4 a day] or other microfinance products. I think that’s where things get really powerful.
However, there’s been a backlash in recent years. But microcredit is not a silver bullet for poverty alleviation. Nicolas Kristof talks about how there are no silver bullets, but only a buckshot approach: you need a lot of smaller things to get things accomplished.
There are some studies that say microcredit hasn’t been as effective with actual poverty alleviation as many hoped it would be. But I think there is often a positive impact regardless. In my experience, I’ve seen other kinds of changes in people’s lives. I’ve visited with women, pre-loan, who speak quietly and don’t make eye contact. After they ask for a loan, they are much more confident and can see what is possible in their lives in a different way. They’ve had the opportunity to work outside the home and to build new relationships as a result. That, to me, is real change. Even when microcredit operates as relief rather than development, there is still value there.
I’ll list my thoughts…
(1) There are more than just “some studies” that say there may be better ways to spend money to help the poor than through microfinance. A more realistic characterization of this finding may be ‘almost all’ randomly assigned studies with proper control groups support this finding. In fact, J-PAL has a nice policy brief summarizing the nuanced yet largely disappointing findings of the best studies on the impact of microfinance. I even blogged about it when it was released.
(2) Most of the studies support the idea that microfinance is mostly used for purposes of consumption smoothing by providing mechanisms for savings and insurance. Rather than tapping into the so-called innate entrepreneurial ability of the poor, the evidence shows that the poor are no more entrepreneurial than the rich. Certainly some are real entrepreneurs (maybe 10%) and they benefit tremendously. But most people who own businesses in developing countries do it because of a lack of other alternatives, rather than because they are born entrepreneurs. So, yes, providing savings and insurance mechanisms may be part of a beneficial financial package, but that is decidedly different than a poverty alleviation strategy that aims to thrust everybody in developing countries into entrepreneurship.
(3) Jessica’s observation is a classic response of well-intentioned people when presented with evidence contrary to their prior beliefs – especially when the evidence suggest they ought to tweak or change the focus of their work. Egos and feelings are sensitive and sometimes we’d rather come up with a story that soothes us rather than be humble and accept that perhaps we don’t know how to best help others, alleviate poverty, and promote the development of God’s Kingdom. But here’s the thing, observations like this are prone to illusions and misunderstandings. Jessica talks about observing a difference in psychological well-being of women who participate in microfinance. If that’s true (and we may not even be so sure), we still are unable to identify the impact of microfinance on psychological well-being. Why? Because by only observing women pre-loan and post-loan we have nothing to compare these women with. Perhaps improved psychological well-being is a general trend in the region. Perhaps it isn’t. The fact is, the observation Jessica shares here does not tell us anything about ‘impact’ and is hardly a rebuttal to the evidence of the studies mentioned above. For more on this see my piece in Why Dev or Marc Bellemare’s recent post on the need for statistical literacy.
(4) Finally, what Jessica suggests: that the most beneficial impact of microfinance may be the effect it has on psychological well-being rather than financial well-being is a valid point. But we don’t have to just rely on flimsy observations with no control group and guess about how to help others, we can (and some of us are) rigorously studying this mechanism. For more see the work on aspirations and the economics of hope.
What do you wish the church would do differently to help alleviate poverty?
In my experience, churches often have calls to action that are very much intertwined with evangelism. For me, it was tough to figure out how and when to pair those two pieces and when to have them be separate things. I was never comfortable evangelizing. I just wanted to try to love people and to serve people, which I think Jesus calls us to do. And if anyone wants to talk to me about my faith, I’m happy to share about my beliefs and my personal experience.
I sometimes find that the idea of having to actively evangelize while you’re doing whatever service you’re doing can really hamper people, as it did for me in the past. We think, “I’ve got to do all this together. If I’m serving in a soup kitchen, I feel all this pressure to tell people exactly why I’m here.” For me, it made things weird. I didn’t want to force conversations or make someone else my project.
I think the question was asking about the institutional church rather than personal faith integration. The question about what the institutional church can do differently to help alleviate poverty is quite interesting. I have two thoughts:
(1) This question (at least in part) was tackled by Bruce Wydick last week on his blog: Three Things Secular Development Academics and Practitioners Can Learn from the Faith-Based Development Community… and vice versa.
(2) Faith-based development typically keeps the church at the periphery of their work – perhaps for good reasons. But there are many other reasons why centering a development or poverty alleviation program in local churches may be beneficial. I am currently thinking a lot about this question as I write up and analyze the results from my work in Kenya. So stay tuned!