Poverty Alleviation vs Wealth Creation: A Better Approach to Change

It’s time to have an honest conversation about the social sector’s heavy focus on poverty alleviation over the much-needed focus on equitable wealth creation.

1720 was marked by the signing of war treaties, a plague in France and the signing of the Bubble Acts to avoid stock market manipulation.

In 1820, 86 free slaves left New York for Sierra Leone, a new King rose to the throne in England and slavery started to see more resistance while continuing to operate.

1920 prohibition started in the USA, the Russian Civil War thrived, the Ottoman Empire was partitioned, the Spanish Flu ended with 15-50M deaths, and the Irish War of Independence raged. In 2020, COVID 19 began.

Why the history lesson? The world has changed drastically every century - and for our lifetime, 2020 was no different. I believe we need to use this moment to change how we approach the social sector.

There is too much wrong with it, and the fragments that are correctly working are under-resourced and undervalued. The social sector has not let go of itsVictorian roots; its paternalistic, white savior complex continues to be a running theme, and although a different context, it’s still a case of learned people typically splashing uniformed cash on communities via a typically white/professional-led intermediary. These intermediaries typically intercept and slice a piece of the resource for themselves - all through a charity form that, in my view, focuses on, and perpetuates a poverty alleviation mindset to maintain its existence.

In this articleI’m going to provide data and evidence of this prism which stops us from moving to a better prism - one I call Fair Wealth Creation (FWC). FWC is alive and well and there are great examples of it, but it just needs powering up, and proliferation beyond the minority (sometimes privileged minority) that dominates it. I’m not stupid. Poverty alleviation helped me get out of poverty and live my dreams, but pursuing fair wealth creation is what helped me kick on and do even more. It’s all about balance.

So what’s wrong with the social sector?

The social sector is stuck in the 19th and 20th Century models of human existence. We are no longer serfs and Lords.The 24-hour news cycle and the internet means we are in a place where people have access to the information and resources they need to learn and understand how the world works.

It’s not a secret anymore - so it’s only in some immediate/emergency/sensitive situations is a pure charity response needed - and the use of grants in match trading shows we can use grant in better ways. In contexts where slower and more capacity building support is needed (workforce, long term health, and education and learning) - we can benefit from more enterprise-based approaches. We are seeing this in the Ed Tech space, Future of Workspace and even more so in the net Zero drive.

A focus on poverty alleviation that sells stories and pulls heartstrings rather than addressing the deeply discriminatory system that facilitated the wealth disparity is problematic. This worries me deeply. I’ve been aware of it and tried to avoid falling in the trap myself but I know I’ve probably gone there because the system forces are so strong - but it’s got to be reeled back.

Indeed, in the short term it can raise funds but in the long term it pushes the wealthy to see those communities in need as broken, damaged, and in need of charity. This is not always the case, in fact in many cases it’s about a fair opportunity, taking a risk and trusting people's intentions to build their own fair wealth while they deliver impact - Social Enterprise UK is at the heart of this work.

There is simply not enough focus on fair wealth creation such as social enterprise, ownership and a focus on transforming impact investment to be a sector that works for social enterprise rather than something that works for impact investors only.

The recent movement led by Access in response to the Adebowale Commission speaks to the need to change the social investment space in the UK - The CommunityEnterprise Growth Plan’s work is important in the UK. I have tried to have an impact on this space with some wonderful colleagues and The Pathway Fund, which is focused on black and minioritised enterprise growth.

A culture in philanthropy that focuses on deploying capital in the least efficient way e.g. Funds proven and de-risked, small amounts to new ideas, those deploying don’t typically have deep experience or enough knowledge of the cause, limited engagement with grantees (the list goes on). This is very much the work thatI will be pursuing through my work on Black Global Trust and Pathway Fund, which should generate learning for the whole sector.

The non-profit status dominates the social sector space to our detriment: often, those with wealth are less likely to get involved in our industry if there’s nothing in it for them / if they don’t receive a high rate of return. Indeed, a social enterprise is unlikely to deliver 10x or 30x because there is no market, and where there is a market the infrastructure and customer base is not there for growth.

We are seeing a little of this with the growth ofVC backed startups working with families with ADHD in the USA, or the growth of impact investment helping to secure affordable housing for refugee/migrant/vulnerable families in the UK. These are opportunistic and very much driven by where capital can drive a clear return because of guaranteed govt spending (ie health insurance for ADHD or govt rent payments for refuge housing).

My question is can we take these examples and build even bettere xamples for our sector, driven by us, social enterprise leaders?

So what could look right in a 21st Century Social Sector?

A deeper focus on Fair Wealth Creation

An approach that champions ownership and social enterprise would ultimately allow an equitable distribution of wealth whether that be through government investment into impact funds or more directly organizations with a greater social impact on local communities.

We need a narrative and language of hope and belief in communities. We need to recognize that it’s not 50 percent of us that need charity- it’s probably more like 10-20 percent. The vast majority need fair access to opportunity.

Funding new and innovative models

accepting failure and growing the newest innovations is key. The social enterprise space just doesn’t embrace this, and it’s a cultural and people issue that is enshrined in its institutions. We need new social impact institutions that are geared up to bring risk and innovative thinking to the sector.

Organizations like Nesta need to push further to play this role, as it’s their remit to do this in the UK or philanthropic organizations in the USA like Ford or Gates should be pushing more on this front.

Changing Philanthropy

‍to behave like aVenture Capital but with purpose. This increases the likelihood of greater funding within the field, therefore extending more scalable opportunities for smaller enterprises to grow. This means Philanthropy and the government are trying to build the whole ecosystem so that social enterprises can go from friends and family to some kind of IPO style exit.

Is this possible? How would it work? Who should lead this process?

Driving a mixed team approach: the involvement of lived experience and proximate leadership alongside learned experience anddata is key to exerting the most efficient and targeted social impact.

With those who have experience in the social cause participating in the designing of the solution, as well as those with a diverse and innovative thinking, there is a greater chance of achieving positive outcomes. My learning from imitative leaders with lived experience and supporting the development community research approaches is that in pursuing such approaches we also need to focus on the psychological and therapeutic investment we need to make. What we have in learnt and lived experience is two sets of helpful insights that have also come with their baggage and trauma.

This means trust can be quickly formed between fellow Lived and Learnt colleagues. However, when bringing together -trust recedes rather than grows, and genuine, authentic, and independent expertise is needed to hold space for people individually and collaboratively so that progress can be made.

The emotional labor is real. Real world work cannot be done effectively, unless the interpersonal and psychological work is done initially, throughout and on an ongoing basis. The best performing businesses are investing in their talent’s psychology systematically, so, aren’t we?

I do not claim to have the answers here. I’m really asking questions and sharing thoughts and perspectives from my experience and work. I’d love to hear others' thoughts and reflections and continue the conversation.