These 7 Startups and Companies Are Empowering the World’s Poorest People in the New Culture of Charity
As a child in India, Devex founding president and editor in chief Raj Kumar witnessed desperate poverty, an experience that has fed his interest in how the global aid industry can better meet the needs of the world’s nearly eight hundred million ultrapoor children and adults. Today, with a wave of billionaire philanthropy and the rise of tech disruption in the aid industry, Kumar argues that ending extreme poverty by 2030, a United Nations Sustainable Development Goal, is increasingly possible.
In his new book The Business of Changing the World: How Billionaires, Tech Disrupters, and Social Entrepreneurs Are Transforming the Global Aid Industry, Kumar examines the aid industry at a pivotal moment—including how market forces and cutting-edge startups are pushing the industry away from big-budget, multiyear projects, run by agencies like USAID, to a retail approach, in which individuals and communities in need are viewed as customers and partners, not voiceless “beneficiaries.”
Sometimes seemingly simple but innovative approaches can have the biggest impact on poor people’s lives, observes Kumar, which means “you have to talk to them and deeply understand how they make the decisions they do.” Thus, it’s not enough to have billions of dollars to donate and good intentions. Here are seven fascinating examples he shares of small initiatives that have had big impacts.
- Unilever, understanding that even very poor people with specific needs represent a substantial market, developed the hugely popular Wheel, a low-suds soap detergent designed for those who wash clothes by hand that is sold in cheap, individual packets and is now available throughout Bangladesh.
- Tala, a loan company founded by a twenty-four-year-old former UN employee, Shivani Siroya, developed a proprietary algorithm to determine who is creditworthy and who is not. It delivers small loans (1.5 million so far) directly to cell phones of customers in Kenya, Tanzania, Mexico, and the Philippines, allowing people who could not get a traditional bank loan to develop credit history over time. In fact, for Tala’s potential customers—there billion unbanked people in the world—often the only alternative is to visit a loan shark.
- Hello Tractor, an Uber-like app developed by former investment banker Jehiel Oliver, rents tractors to farmers in Nigeria who formerly had to cultivate fields by hand—leading to huge leaps in productivity. The app provides a variety of reporting and data analysis features so that owners can check usage, schedule maintenance, and calculate income generation. It can also provide financing to help farmers purchase their own machines, which can then become part of the sharing system.
- One Acre Fund, founded by Northwestern University MBA student Andrew Youn, is an NGO operating in East Africa that provides farmers access to high-quality seeds and more effective fertilizer to increase their yields and cover the higher costs of the materials. Its main innovation isn’t software engineering but financial engineering. Youn decided to create a microfinance institution that would offer seeds and fertilizer to farmers rather than cash, because farmers did not have access to the very small amounts of credit they would need to buy seeds.
- GiveDirectly, founded by four MIT and Harvard graduate students in economics, is an East Africa-based nonprofit organization that identifies people living in poverty and sends them money. One of its most powerful innovations is sharing the voices of its customers on its website. Donors can see a steady stream of feedback from thousands of aid recipients, something heretofore nearly unheard of and unlike anything you’d come across in a glossy report from an NGO’s communications department. This direct feedback is raw and unfiltered. Aid recipients share their stories about how the donations have changed their lives.
- M-Pesa, a Kenyan mobile money platform, gives people the option to transfer money among family and friends through their mobile phones, and increasingly is used for sophisticated financial services like insurance and savings. Today, it processes transactions for at least one individual in 96 percent of the country’s households—that includes the vast majority of households living in extreme poverty.
- Kiva, an online peer-to-peer lending network founded by Jessica Jackley and Matthew Flannery, generates funding from people anywhere in the world for projects posted by entrepreneurs anywhere else. The lender doesn’t earn any interest on the loan but can follow the progress of the project and get the great feeling of helping someone, usually at no cost to the lender.
About Raj Kumar
Raj Kumar is the founding president and editor in chief of Devex, which the Washington Post compared to a “Bloomberg-style” media platform for the aid industry. A media leader for the World Economic Forum, Kumar is a noted commentator on global development. He lives in Washington, DC. Follow him on Twitter at @raj_devex and visit his website.