Private companies recently have been making global poverty a priority, squeezing their way into the realm where charities and governments once operated alone. Corporations fight poverty on a much larger scale and with greater resources. 

Western countries like Britain and the United States, as well as Australia and other countries, have started to put their faith in the private sector to develop economies and alleviate global poverty. IKEA is the largest donor to the United Nations refugee agency.

“There must be a major role for the private sector in the development sphere,” Julie Bishop, Foreign Minister of Australia, stated a few weeks ago. She said that a sturdy private sector promotes more jobs and growth and helps to reduce global poverty.

Private individuals, especially those who are wealthy, can play a large role in reducing global poverty through impact investment and philanthropy.

“The profit motive is viewed by many to implicitly mean ‘exploitation’. But that is not necessarily the case,” says Mark Ingram, owner of Business for Millennium Development, an organization that links big corporations with small markets in developing countries. “Business engagement with the poor can be designed with intentional mutual benefit.”

Impact investing, which is investing in socially responsible offers, funds poverty alleviation efforts and other social projects that may not be funded otherwise.

Impact investing needs to offer incentives to potential clients if it wants to encourage global poverty reduction. Mark Haefele, global chief investment officer at UBS Wealth Management, suggests using stronger policy and tax incentives, education-related initiative and social impact bonds.

Considering how much wealth is concentrated among individuals, the scale of poverty-related philanthropy will probably increase in the next years. Haefele also points out that corporations need to recognize that attempts to fight global poverty are more effective when funds are invested sustainably, and when they partner with other corporations or the government.

Banks also play an intermediate role between capital and social programs that can help alleviate global poverty.

As long as investors’ standards continue to shift towards reducing global poverty, the fight against poverty will strengthen even more as social and financial profits become more aligned with each other. At this point, no investor will be able to afford to ignore socially responsible investing.

– Colleen Moore

Sources: Sydney Morning Herald, FTAlphaville
Photo: Foreign Policy