New data reveals which approach to helping the poor actually works

The approach of giving cash straight to poor people - rather than funneling goods or services indirectly through the slow, diluted, and complex systems of charities or governments - is nothing new, but evidence of long-term success and sustainability are few. That's why many NGOs and governments are now coupling cash transfers with more comprehensive programs such as job training and financial counseling, as well as addressing some of the root causes that keep people poor, like lack of infrastructure and market access.

BRAC, the largest NGO in the world and one of the leaders in microfinance as an approach to combating poverty, discovered that despite its successes, microcredit did not always reach what are called the Ultra-Poor in effective, sustainable ways. So they formed partnerships and launched a new, comprehensive initiative that involves consumption support, technical and financial literacy training, and asset management to create a pathway to prosperity called the "graduation approach."

Development work is evolving beyond short-term mission trips and one-off donations into a more comprehensive, in-depth model that addresses long-term sustainability of a solution paired with empowerment of those being served. MicroConsignment is a unique branch of micro-enterprise being implemented by non-profit SolCom in Guatemala that provides individuals in rural villages the skills and resources needed to start sustainable businesses.

Microcredit can get people into debt when used poorly. A company in Guatemala is giving products to poor entrepreneurs on consignment and then charging a commission upon sale and in this way removing the entrepreneurs' risk.

Microfinance was widely lauded for decades as a surefire and promising way to break the cycle of poverty and uplift the economies of the developing world, especially when targeted for women. But hard data has shown that, on its own, micro-loans don't serve to create sustainable change without a comprehensive approach, and that there are many other factors - such as education and healthcare - to consider when leveraging these tools.

In many rural villages in Northern India and Nepal, long-standing cultural norms have relegated women to subordinate positions in marriage and minimal educational opportunities, stifling the social, agricultural and economic development of entire communities. But with the NGO World Neighbors' work to increase female literacy and help initiate locally-controlled savings and credit groups, these areas' female residents have become a more empowered component of local development and progressive change.

Researchers from Yale and MIT conducted a poverty study across various countries and found that aid can relieve poverty if it is comprehensive and gives people a productive asset.

For most well-meaning donors, it can be difficult to calculate which charities are most effective with their funding - that is those that aim to solve the most serious problems, use interventions that work, employ cost-effective strategies, are competent and honest, and can make good use of each additional dollar. Organizations like GiveWell are part of a new and welcome trend toward rigorous evaluation of social change programs, and helps people best decide where to donate based on what causes matter to them most.

A successful program in Uganda trains village women to sell medicines, fortified foods and other important goods using the Avon model, aiming to create a self-sustaining system for delivering essential health products.

New crowdfunding options can help even the smallest donor's contributions to have a meaningful impact, bolstering a sense of personal involvement, maximizing knowledge about causes, and inspiring greater participation.