3 things I learned making Poverty, Inc.

Fighting poverty is big business. But who profits the most?

This is a central question framed by the new documentary Poverty, Inc., which I had the honor of being a part of as a co-producer. Poverty, Inc. has earned over 50 international film festival honors en route to critical acclaim across the political spectrum, from Variety and Michael Moore to the $100,000 Templeton Freedom Award.

But, as we continually remind ourselves, we don’t make documentaries to win awards; we make them to expand our horizons.

After shooting over 200 interviews in 20 countries, we now get to introduce you to some of the inspiring people we met. These individuals challenged our assumptions and shaped our perspectives. Watch the film and they might just do the same for you.

Here are three things I learned making Poverty, Inc.

1. Sometimes aid is most harmful when it does reach the people.

Meet Alex Georges and Jean Ronel Noel, co-founders of the Haitian solar panel start-up Enersa, employing over 60 men and women, many from the gang-ridden streets of Cité Soleil. In a power scarce nation struggling with sociopolitical volatility induced by widespread unemployment, companies like Enersa are building the tax base and improving the landscape of opportunity by providing an invaluable public utility.

When the 2010 earthquake rocked Port au Prince, Enersa’s facility stood strong and soaring energy demand due to the downed power infrastructure presented a tremendous growth opportunity for the company. Unfortunately, the crisis had triggered a tsunami of free solar panels from donor countries that would destroy the competitive landscape of the local economy.

“It comes from a good heart,” says Mr. Georges. “People had this conception that, ‘Oh, in Haiti, there’s nothing, so I have to come with everything.’ We really suffered from that perception. From an average before the earthquake of 50 streetlights a month, from January to June we sold five.” That’s a 98% decrease in sales.

Similar stories plague local economies throughout the developing world. 

We’re tempted to think “smarter aid” involves lowering overheads and boosting efficiency to reach people more directly. But from stories like Enersa’s, we learn our “help” can be most problematic when it does reach the people. 

It’s not impersonal economics. When we undermine local employment-generating enterprises, children suffer.

2. Prioritizing parents is better for children.

Meet Shelley and Corrigan Clay. A few years back, the young American couple sold everything and moved to Haiti with the dream of adopting children and founding an orphanage. First, the Clays wisely worked in orphanages for a year to learn. That year changed everything. 

They began to realize that most children in institutional care had living parents (80% according to Haitian government estimates). In most cases it was the absence of employment opportunities for parents that was separating children from their families. “It was like this shock,” says Shelley in Poverty, Inc. “I'm spending $20,000 on this adoption to be able to raise a child that this mother wants. The injustice of that really took me.” 

Worse yet were the perverse incentive structures tempting even middle-income Haitians to relinquish their children in exchange for better schooling and the opportunity to go to America.

“After living in an orphanage for a year and really building relationships,” says Corrigan, “We began to kind of see that the system of addressing the needs of orphans was actually a system that was creating orphans.”

The Clays pivoted, redirecting their savings to start the Apparent Project and, later, Papillon Enterprise. Their two businesses now employ hundreds of formerly at-risk individuals (most of whom are proud parents) in Port-au-Prince.

“Giving power to the parents is exponential in how many kids you can help,” says Shelley. “I've estimated with 250 employees.  We are helping at least 750 children - possibly 2000 people if you think they’re supporting their whole families.  There is no orphanage to be sustainable to take care of 750 children.”

The lesson I take away here is that in trying to be the hero for a child in need, we can end up displacing parents. The Clay story is but one example of how we can flip the script.

Ok, I get it. “Teach a man to fish.” Nothing new here.

Not necessarily.

3. It’s time to go beyond “Teach a man to fish.”

Meet Joshua Omoga, a micro-entrepreneur in the infamously disenfranchised section of Kenya known as Kibera. “I left my rural area to come to Nairobi to search for a job and better my life,” Joshua recounts with a twinge of disenchantment compromising his optimistic nature. “I borrowed some money from a friend and started by selling vegetables by my doorsteps.”

Joshua’s dream is earn enough money to put his son through school. Microfinance can be minimally helpful, but most such opportunities are exclusive to women and there are more pressing structural obstacles in play. Like an estimated two-thirds of people in developing countries, Joshua’s income-generating activity is technically illegal (or extralegal), unregistered and therefore unprotected by the rule of law.

“I live in the same place I work, and this place is very small,” he explains. “The place is not mine, so I cannot expand it. It’s not easy to register the business because the government does not recognize temporary structures.”

Locked out of the formal economy, Joshua’s lack of legal status imposes a low glass ceiling under which he is vulnerable to harassment and bribery from local police or hoodlums. He cannot acquire title to his assets nor basic financial instruments such as insurance.

Joshua knows how to fish. What he lacks is access to the pond, and from there the opportunity to grow beyond the subsistence level by participating in wider circles of exchange protected by institutions of justice so basic we rarely think about them: things like clear title to his assets and the legal right to sell vegetables in the marketplace. From the shops in Kibera to the revolutions in Tunisia, this exclusion from the formal economy is among the underlying structural causes of poverty rendering many anti-poverty programs, such as microfinance, largely cosmetic in the macroeconomic picture.

Conclusion: embracing complexity.

Perhaps the most important lesson I learned making Poverty, Inc. is that poverty is infinitely complex and there are no convenient singularities. The project of Poverty, Inc. is embrace that complexity and eschew silver bullets.

To borrow wording from The Lean Startup author Eric Reis, the moral of the story here is “not a collection of individual tactics. It is a principled approach … The only way to make sense of its recommendations is to understand the underlying principles that make them work.”

Among these key principles are humility and respect. By stepping into the shoes of our friends in developing countries, I’ve come to realize that we have made ourselves the protagonists of the development narrative. It’s time to restore power to where it belongs.