It is an important question that continues to factor in how each relief agency uses its funding: whether aid should be used mainly to stimulate economic growth or to provide for the basic needs of struggling and vulnerable people.

The history of international aid seems to have been forged by colonizers like Germany, France and Britain providing support to foster economic development in the colonies.

This system has survived to this day, but is it the right system? In other words, does it provide the most good to the most people? If aid helps build economies, in many senses it goes from the top down, as money is distributed from the private sector to employees. However, much can happen to the money as it trickles down.

It would seem that the best thing would be to cut out the middleman and give the money directly to the institutions that know the impoverished intimately and have the ability to provide for the needs of the people. Following the Haitian earthquake in 2010, only 10% of the $6 billion in aid was given to the Haitian government.

National and local institutions are essential in providing basic amenities to the poor, such as healthcare and clean water.

Instead, funding is being channeled into dead investments, such as job training for jobs without living wages. Relief agencies need to partner with local institutions with the goal of eventually handing off the responsibility of distributing the funds if they hope to make a lasting and beneficial change in the lives of the poor.

The food, medicine and supplies that are given to the world’s poor from NGOs only do so much, whereas creating sustainable healthcare and clean water establishments have much greater potential for curbing poverty. It is a reflection of the proverbial phrase ‘Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.’

However, there is much to be said for stimulating local businesses. The success of the Marshall Plan should offer us an example of what can happen when aid is invested into market growth the right way. The Marshall Plan provided loans for local businesses, which were paid back to the governments, who in turn used it to strengthen commercial infrastructure. Furthermore, ensuring local businesses could succeed was a prerequisite in qualifying for the plan. With this strategy the Marshall Plan helped rebuild the economies of Western Europe.

Although the problems faced by the world’s poor stay the same- lack of food, housing, healthcare, clean water, etc.- the potential resources that can help are different. This is why results-based programs are so important. Given proper information, relief agencies are better able to fulfill the needs of the poor. The best solutions seem to happen when donors partner with national and local institutions to attack the underlying barriers that exist in moving out of poverty.

– Jordan Schunk

Sources: Australian Broadcasting Company, Businessweek, Foreign Affairs
Photo: Giphy.com