Why selling rather than giving makes a bigger difference and improves more lives

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It was common for teenagers in the upper middle class suburb where I grew up to be given a new car on their 16th birthday.

My sisters and I knew that my father could afford to buy us a car but we never expected it. You see, my dad had a firm conviction, based on his own upbringing, that people who have to work for what they receive are more successful than those who are handed a gift.

I noticed the same thing when I got to college. The students who had to work in the cafeteria or elsewhere on campus studied harder, despite having less free time than those of us who had parents footing the bill.

For decades we’ve been seeing the same thing in public housing units and developing countries. Even brand new Chapter 8 housing is often neglected and defaced but when occupants have to work for their rent, they take pride in keeping it up.  Non-profits or philanthropists who bring food, tools, and other supplies to inhabitants of developing countries often return later to see the gifts unused, misused or destroyed. But a funny thing happens when the same people have to pay for the same tools with currency or labor. They work hard to learn to use the equipment and to keep it in good operating shape.

Finally, some social entrepreneurs are getting the message and are selling rather than giving aid to their chosen beneficiaries.  Martin Fisher, a San Francisco entrepreneur, sells  pumps to poor rural farmers in Africa, through his Kickstart Program.  with the promise that they can make money with them. For a small farmer, replacing a bucket with a pump can lead to cultivating a wider variety of crops and creating work for family and neighbors.

Mark Bell who teaches international agricultural development at UC Davis, agrees with Fisher that the tradition of non profits in developed countries giving tools and equipment to poor people in third world countries — is a poor model. “If you go in and say, ‘Here’s a freebie,’ then people are going to say, ‘Sure, give it to me.’ And when you leave, who knows what happens to it. But if a farmer is given the opportunity to buy, I think that’s the real proof that this is something that’s beneficial to them,” Bell said.

Are there things you would like to do for people less fortunate? How can you set up a situation where they have to work for it so that they don’t develop an entitlement mindset? If you sell, rather than give, the equipment to them and set up a program teaching them how to use it, can you run a for-profit company that improves lives? Absolutely.

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