Charities Try New Approaches to Helping the Needy

More and more young philanthropists are focusing on ways to build credit and labor systems in developing countries, as well as financing small businesses in such places, writes Daniel Gross, in a column in The New York Times.

For example, the Acumen Fund, a New York group, invests in for-profit and nonprofit organizations in impoverished countries. One of the most-successful companies in its portfolio makes antimalarial bed netting in Tanzania, paying its workers $1.80 a day.

While many donors in Western countries think it is wrong to sponsor such low-paid jobs, Jacqueline Novogratz, founder of Acumen, says that when people understand the alternatives, they see why she believes such investments make more sense than simply distributing aid dollars to the poor, as charities and governments typically have done.

For instance, she says, in the Tanzanian case, many of the factory workers previously held jobs as domestic workers where they made less than $1 a day. As factory workers, they are now among the best-paid workers in the country.

Small loans are also helping many entrepreneurs build businesses in developing countries, Mr. Gross says. (Read The Chronicle’s article about microfinance.)