Why Nonprofits Will Never Solve Poverty

The unintended consequence – victims

600 million people came out of poverty in China in just 20 years. Nonprofits (and giant corporations) weren’t the reason. It was all ugly, evil, horrible, and very local, capitalism.

Between 1981 and 2004, Chinese poverty dramatically and suddenly fell from 85% to 9%, the majority of it happening long before western companies started building there. And not a single non-profit or giant corporation can take credit. Africa, a hotbed of nonprofits, is quite a different story.

For many decades Africa has been the focus of every major nonprofit and the financial aid of most nations. When China’s poverty was 85% in 1981, Africa’s was 40%. Today it’s still 40%, except that 150+ million more people make up that percentage than in 1981 because of population growth.

We can debate whether free aid and nonprofit money is THE cause, A cause, or not a cause at all, but one thing is sure, it is not a solution. Why?

The Downward Spiral of Victimology
It all starts with a nonprofit “gift”. Gifts are a wonderful thing because they are not expected, and when applied to crises, they can lift the human spirit and get people over the hump, which brings immeasurable value. Nonprofits are great on the front end of short-term crises such as famine, pestilence, natural disasters, epidemics and war. But they stay too long.

A gift given often enough and regularly enough, becomes an expectation. Given more time, an expectation eventually becomes dependency, which eventually becomes an entitlement, which turns me into a victim when it’s no longer there.

The Upward Spiral of Ownership
In 1980 the Household Responsibility System was enacted, allowing the rural Chinese to dissolve the collectives that produced entitlement and victimology, and allowing them once again to own land and businesses, and take responsibility for their lives – to become capitalists. An astonishing 40% of the reduction in Chinese poverty came in the first three years after the HRS created local ownership, and long before giant corporations swooped in or exports started to roll out. It was local, small capitalism, millions of small and local businesses springing up, that took 600 million people out of poverty in the wink of an eye.

Rwanda’s largely corrupt government opened their borders to American and UK business people a couple years ago and have made it extremely easy to start and own a small and local business. Somewhere between 1-2 million people have come out of poverty in that very short time.

The answer isn’t government aid. It isn’t giant corporations pulling the value out and taking it to the west. And it isn’t nonprofits staying in an area for decades creating dependency, entitlement and eventual victimology by their continued presence. The answer for Africa is the same as it has been for China, India, the United States and any other economy – millions of small and local businesses are the only thing that will solve long-term, systemic poverty.

The answer is in the willingness to build businesses in Africa – real businesses, not micro-financed lifestyles, but businesses with 5-50 employees, that can be bought and sold and inherited and expanded. There is enough socially conscious money flowing into Africa right now to do it, it’s just going to things that won’t solve poverty. And when the money starts flowing into businesses, it MUST be accompanied by training. In Africa (and everywhere) training to run a business is even more important than loans to build them. As one African said, “As harsh and counter-productive as it might sound, don’t send us your money; use it, rather, to pay your doctors, engineers, farmers, businessmen and the like to come to Africa for at least a year at a time to teach us how to do things for ourselves.”

I believe there is a whole new wave of business owners coming up who will, instead of giving money to nonprofits, will risk investing $10-$50,000 in building businesses in Africa and, more importantly, invest time there (and on Skype, etc.) training others to run and eventually own those small and local businesses.

600 million people came out of poverty in just 20 years in China through ugly, evil, horrible capitalism, and none of it was intentional. What if we did it intentionally in Africa? I believe with that approach we can do something nonprofits haven’t been able to do for over 100 years, solve systemic poverty among the 500-700 million impoverished Africans. And we can do it in under 20 years. – coming soon.

Dodd-Frank is devastating the Congo right now.

The collateral damage is unacceptable.

We have a social enterprise in the DR Congo to end systemic poverty. The opportunities to solve it are at our fingertips. Global Witness and Enough Project, human rights advocacy groups who should be aligned with us, are doing everything they can to stop us.

UPDATE: I originally wrote this in August and updated it in November. Just this week a UN Panel of Experts report came out that verifies the depth of the problem Dodd-Frank is causing for the Congolese people. So far Dodd-Frank has not even been implemented and the result has already been devastating.

We need to continue to put the pressure on groups like Enough Project, Global Witness and the SEC to admit how destructive Dodd-Frank is in the Congo. We need them to stop supporting what everyone else has deemed an abject failure and get behind repealing that 1502 clause in Dodd-Frank that has been so injurious.

See the summary of the UN Panel of Experts report here , then read how you can help change this below. Original post follows:

DR Congo is the 12th largest country on earth with the 8th most mineral wealth in the ground. With 70 million people as a workforce and all this latent wealth, it could easily be a first world leader in a very short time.

My Congolese partner – a Congolese Chief, and I have committed to create infrastructure and sustainable economies in the Congo by exporting agriculture and minerals, and leaving a significant portion of the profits local, something no other company has ever done. We will also fund and train local business owners to learn how to run businesses. The net effect – we believe we can solve systemic poverty in the DR Congo in 5-10 years.

The Problem – Dodd-Frank
But now an obscure provision pushed forward by Global Witness and Enough Project and tucked into the Dodd-Frank Act (Provision 1502) could be jeopardizing much of this, and is already hurting millions of Congolese and putting thousands in immediate danger of their lives.

The provision requires tens of thousands of companies to disclose if their products use minerals from the Congo, and to prove they did not come from criminal militias. As a result of the unintended stigma this has created, the mineral trade for all of central Africa has evaporated, creating a devastating de facto embargo of the entire region.

We have been trying for months to find buyers for the minerals these Congolese tribes own and have talked to every legitimate smelter and buyer in the world. None are buying Enough Project and Global Witness continue to claim there is no embargo, but we have asked them a dozen times to give us the name of a single buyer of artisanal minerals in central Africa – they can’t.

The Negative Effect
If all Congo minerals came from criminals, then Dodd-Frank would make sense. But the fact is that a tiny percentage of Congolese minerals come from criminals in the comparatively small conflict area. The rest are from honest, hard-working chiefs and their tribes throughout the vast Congo, millions of whom, with no connection to the conflict area, have lost their income and have moved from poverty to destitution.

Only the Criminals are Benefiting
COCABI, COMIMPA and COMIDER represent 20,000 miners in the conflict area. The wrote a letter to the SEC imploring them to not listen to Global Witness or Enough Project who have never even consulted with those most affected by Dodd-Frank, the miners.

While all the NGOs and politicians are quoting each other’s support of this, we are quoting chiefs and tribes who are actually being affected by it, all of whom say Obama’s Law (that’s what they call it) has been disastrous for them and their livelihood. Doesn’t this say something very powerful to us?

The Nuclear Option is Not Acceptable
The World Bank says 10 million people in the Congo get their living from mining, most whom are in regions never connected with conflict. And even in the conflict region there are 100,000 honest miners who have been moved from poverty to destitution by Dodd-Frank.

Dodd-Frank creates the equivalent of a nuclear option because it is not targeted specifically at the militia, but at minerals.

Demonize Criminals, Not Minerals
This approach is no different than burning down every house in town to stop a burglar from stealing. Dodd-Frank has burned down the entire mining industry in central Africa in hopes that their scorched earth policy will catch a militia group or two in its path. They are willing to take down every innocent man, woman, and child who live off mining. Such massive collateral damage is not acceptable under any circumstance.

One woman said, “I used to tend my fields, but women who farm get raped regularly by the militia. My only safe job is in the mines. I don’t know what I will do now.”

The solution is simple. In an appalling show of weakness, the UN (MONUSCO) has been sitting around in the Congo “observing” the atrocities for 15 years. They need to grow a spine. The militias are small, rag-tag, poorly organized, poorly led thugs with no significant weaponry. They could be over run in a few days of concerted effort.

If there is no militia, there would be no need to demonize minerals. But if you demonize minerals, the militia will still be there terrorizing, raping and killing.

Global Witness and The Enough Project Are NOT Advocating for the Congolese
These two NGOs are directly and personally responsible for getting politicians to insert the disastrous 1502 provision into Dodd-Frank. It was well intentioned – they did not want it to have the effect it’s having. But now that they are fully vested in the political side of this provision, they have completely lost their way regarding the Congolese themselves.

They steadfastly refuse to even admit it has had a negative effect, regularly deny the de facto embargo in the face of every statistic and my personal experience, brazenly try to deflect by blaming the opposition for the embargo they deny exists, and worst of all, have now taken to recommending that the Chiefs sell their minerals to human rights violators.

The NGOs Solution? – Sell to human rights violators and smugglers
In a conference call with Enough Project’s main leadership, I was astonished to hear them recommend that we sell to the Chinese, who have one of the worst human rights records on earth and who have no regard for the human rights of the Congolese. A stunning position for a supposed human rights advocacy group.

Global Witness has also lost its way. In a response to the swell of opposition to Dodd-Frank by those supporting the Congolese people, Global also stunned the advocacy world, supporting Dodd-Frank by pointing to the smuggling of the militia as a good thing, “High levels of smuggling…reflect the reality that mining is continuing” and is “in fact substantially higher because of increased smuggling”. Truly amazing.

This is incredible. Global wants to stop the militias and yet points to the smuggling of minerals, a common militia tactic, as proof that things aren’t as bad in the conflict area as everyone says. Read the Forbes article and my response to it in the Comments section .

Clearly these two NGOs are no longer advocating for the Congolese miners, but for their own reputations which are now fully vested in arranging the deck chairs on the Titanic as Dodd-Frank sinks the Congolese economy.

They are also both in direct violation of the OECD Guidelines because they have done no due diligence among the miners who are most affected by the colonialistic decisions they want to impose from the outside. The hypocrisy is beyond the pale.

Advocating for What or Whom?
As Eric Kajemba, the leader of a Congolese civil-society group has said, “If the advocacy groups aren’t speaking for the people of eastern Congo, who are they speaking for?”

We’re advocating for the millions of Congolese miners and their families. Global and Enough stopped doing that a long time ago. They are so vested in their Dodd-Frank solution that to admit they were wrong now would create serious questions about their expertise in such situations. Too late – it already has. The best thing they could do is re-join us in advocating for the Congolese miners and stop pushing forth a political position that creates donors for them while Congolese people starve.

Please write or text them and challenge them to replace their political agenda with advocacy for the Congolese people:

Global Witness
Annie Dunnebacke
Oliver Courtney
Sophia Pickles
Phone: (202) 621-6665

Enough Project
Sasha Lezhnev
Jonathan Hutson
Fidel Bafilemba
Phone: (857) 919-5130

Contact Your Politician
Contact your local politician and also the following major supporters of this disastrous 1502 provision:

Senator Barbara Boxer
(510) 286-8537 (202)

Senator Chris Coons
Phone: 302-322-1140

Senator Dick Durbin
(202) 224-2152 – phone
(202) 228-0400 – fax

Use Social Media to Get This Changed
Please use your social media network to get this changed – post the above on Facebook, LinkedIn, and others. Link to it from Twitter and push people to it via email.

10 Million people are negatively affected, hundreds of thousands have lost their subsistence living, and thousands are in immediate jeopardy of their lives – all because of Provision 1502. Please help us correct it immediately. Universal collateral damage to the innocent is simply not acceptable under any circumstance.

Thanks for whatever you can do!

I had a shower yesterday… #Kenya

Finding time to blog has been difficult, but these tweets tell it all. I’ll share more tomorrow.

Day 4

  • Candle wax being melted on the table to hold our light while dinner is made. Rieva and Karina (kids) enjoying darkness. #Kenya
  • Unpainted plywood ceiling in main room of house is luxury. Stone walls, concrete ceiling in most others. #Kenya
  • @GoSocialMobile I know. But here we call it getting through the crowd in a car. Life has different rules in different places. #Kenya
  • Diesel smell everywhere. Will take weeks to get it out of my head. I have that option, they don’t. #Kenya
  • Yesterday we visited another school with 250 kids. No electricity, dark dirt floored rooms. Beans for lunch – only meal of the day. #Kenya
  • .@ColoradoFoothil No Mexican food, but Mexican soap operas translated into English – biggest hit on TV here by far. #Kenya
  • Brian was down for almost two days with stomach problems. #Kenya
  • .@barrymoltz Don’t tell Charles that (owns soap stand). He says “no problems, only challenges” #Kenya
  • .@prolificd The actors are different than India, but the play is the same. Poverty & hope together. #Kenya
  • I’ve seen hundreds of kids, only one crying. So much hope w/ so much less “proof” then in Colorado. We are spoiled. #Kenya
  • After all the desperation we’ve seen, tomorrow we go to the slums of Kibera. How could it possibly be worse? #Kenya
  • Hope is not a commodity here. There are no atheists in a foxhole. #Kenya
  • The battery is almost gone. No electricity/water. The world will get smaller in a just a few minutes. #Kenya
  • Every day I know less and have more to learn. What can I possibly say that will change anything here? #Kenya
  • I’m supposed to talk for two days straight Thurs/Fri. to tell bus. owners how to create wealth. I wonder – can they afford lunch? #Kenya
  • Church on Sunday was loudest event of my life, more than any concert. Drowning out the sounds of poverty for just 2hrs of the week #Kenya
  • Chuck – this must be so humbling RT @ChuckBlakeman: I’ve seen hundreds of kids, only one crying. So much hope . We are spoiled. #Kenya
  • .@barrymoltz I would think that, too. But Charles is just one Kenyan, and lives it out every day. #Kenya
  • .@AlanBoothCoach Adults must be disoriented to learn. I’m learning. #Kenya
  • Can you help? #Kenya
  • The battery is gone – Good night!

Day 6

  • The rooster next door that woke me up at dawn the last 2 wks. did not sing this morning. Dinner. #Kenya
  • Here I am just “Mzungu” (mah-zoon-goo). #Kenya
  • Electricity back on today. Water still off. Just another day in #Kenya
  • Saw my first refrigerator in 6 days today. The Other #Kenya
  • Visit Kean Blixen estate today (Out of Africa author) – 600 acres. The Other #Kenya
  • Filmed orphaned elephants today 3 mths to 3 yrs. They sleep under a blanket in single rooms. Not so in Kibera. The Other #Kenya
  • @drjoyce_knudsen Visited the wealthy side of Nairobi today. Their water works just fine. The Other #Kenya
  • Govt. coalition falling apart. Kofi Annan called in to hopefully stitch it back together. Locals here in Nairobi are concerned. #Kenya
  • Open door to Room 1 – 30 5yr olds in dark (no elect) happily learning ABCs. Room rt. beside? 100 chickens in dirt/crap laying eggs. #Kenya
  • Locals here in Nairobi say President Kibaki is creating instability and is “nuts”, “crazy”, and other more descriptive phrases. #Kenya
  • Had tea in an upper middle class home in Nairobi today. Vastly different than the lower middle class home I’m staying in. The Other #Kenya
  • Saw my first microwave today in a week – left Kayole and traveled over to the wealthy “Westlands” and Karen, Nairobi. The Other #Kenya
  • ZnaTrainer RT @ChuckBlakeman: Electricity back on today. Water still off. Just another day in #Kenya {{{ WOW!
  • Steep, rickety wooden stairs (almost ladder) to 2nd flr of grade school wouldn’t have been safe in a tree house. 100’s of kids #Kenya
  • @drjoyce_knudsen Especially in #Kenya. The roads are quite good leading to the President’s house
  • Great conversations on sustainable business for the Kibera slum yesterday. #Kenya
  • @drjoyce_knudsen No, it’s in a bit of chaos right now-coalition falling apart; Kofi Annan back to try to fix it; locals say Pres. is “crazy”
  • .@drjoyce_knudsen FYI – Someone from Nashville built a school for my host’s wife who is now School Director for 300 kids. #Kenya
  • C7Design @ChuckBlakeman – welcome to Mother Africa! Once her dust is in you, you will always want to go back. #BornAndRaisedAfrican
  • .@C7Design The diesel fumes are in me & the dust is soon to follow. Bugs bite here, but so does Africa herself! Magnetic people. #Kenya
  • #Kenya has two halves – the “haves” and the “have nots”.
  • 8 yr old Andrew came back to school today. Refugee from Rwanda via Uganda. Our host has a safe house they fund themselves. #Kenya
  • Tomorrow we go to “the other #Kenya” to do biz owner wrkshops w/ shipping magnates, CEOs/college grads – wealth. The other #Kenya
  • My host’s wife has asked me to kill a goat. I told her it was woman’s work. She laughed. I got away with it. #Kenya

Buy my book for a small business owner in Kenya. I’ll take it to them.

February 7-20 I will accompany The 1010 Project to Kenya to explore ways to break the cycle of poverty by developing sustainable business models. Brian Rants, the Director of The 1010 Project asked me to work with them to think big and go beyond the typical craft-making and handwork solutions. We’ll be looking for ways to fund real businesses that work for the local economy – it’s an exciting and daunting opportunity.

We’ll be working in the Kibera slum with a population density of 1,250 people per acre. We lived on one acre in Farmington, CT for years, backed up against 75 acres of state forest. Kibera will be a different world. We’ll also meet with some nationally connected business leaders to involve them in the solution.

The size of the problem is overwhelming. Our solution will be simple – change everything; one person and one small business at a time.

What can you do?

Three things:

  1. Sign up for The 1010 Project Newsletter here – and keep updated about our trip and what we plan to do to.
  2. Make a donation to help fund the trip by clicking here. I will be funding my own travel costs; your donations will go to fund the in-country costs of the trip and the travel costs for Brian Rants, The 1010 Project Director, and to support the in-country permanent presence of The 1010 Project headed up by Keith Ives.
  3. Buy a copy of Making Money is Killing Your Business that we can take with us to Kenya and donate to a small business owner. I wrote this book as a comprehensive reference book for starting and running a small business, and I believe the principles work in any culture. It is normally $28.95, but if you want to buy one specifically to send on our trip, we’ll take it with us (it will be shipped in advance), and the cost will be only $15. This will pay for the printing, handling, shipping and for having your name placed in the book (address info will not be provided).

To buy a book to send with us to Kenya and present in your name, go to our pre-order site and click on the Book for Kenya button. We’ll present the book on your behalf to a small business owner in Kenya. We’ll only be able to take 150 books, so please order your Book for Kenya right away.