Ryan Loofbourrow is a recognized leader in the urban poverty field, a homelessness guru.

He is charged with directing the immense and thankless effort to combat homelessness in greater Sacramento County, California, where a disproportionate number of the homeless reside. He is also my brother-in-law.

During the holidays, we have been known to conversationally isolate ourselves from the yuletide chatter to engage in wonky conversations around what the latest evidence conveys about effective and ineffective poverty interventions. It’s a guaranteed merriment-killer at any Christmas gathering, but there is nothing either of us finds to be as interesting or important.

Much of our conversation focuses on effective giving. Christians often want to give, but unfortunately not all of our giving is helpful. Some of it is effective, some of it is ineffective, and some of it can be destructive in any number of ways.

Consider, for example, how to help the urban homeless in America. Much of the cash given on the street to homeless people in the United States is used to buy alcohol and narcotics. Doling out small amounts of cash may enable destructive behaviors, but smarter and more substantial interventions may yield positive and transformative effects.

For example, instead of handouts and other short-term fixes to homelessness, Loofbourrow and many of his colleagues have come to favor an approach called the “housing first” model to help the urban American homeless. While many other approaches use housing as a kind of economic carrot to provide an incentive for sobering up and getting off drugs, “housing first” takes the opposite approach.

While in some cases bad decisions can lead to poverty, poverty also can cause people to make bad decisions.

The model is based on the idea that the extreme stress endemic to homelessness and the constant need to find food and shelter can cause homeless people to make poor decisions in other areas; they also often relieve this stress through alcohol and drugs. “Housing first” prioritizes permanent shelter to provide stability and reliability, freeing up the mental bandwidth for people to make better decisions for themselves in other areas.

This idea that small amounts of cash given to the poor can promote negative behaviors, but that big transfers of resources can be transformative, has strong support.

Harvard behavioral economist Sendhil Mullainathan’s book Scarcity describes a series of experiments in which subjects voluntarily went without food and were asked a set of questions that required thought. Subjects performed better when they were well fed than when they were hungry—especially when they were hungry and given food-related questions (“If Bill had six juicy cheeseburgers and gave three to Larry . . .”). In another experiment, dieters who were subjects in a word search game experiment, for example, were much slower finding the next hidden word in the puzzle after discovering the word DOUGHNUT.

Christians can learn two important lessons from this research. The first is that while in some cases bad decisions can lead to poverty, poverty also can cause people to make bad decisions. Those of us who lead “respectable” upper-middle-class lives would find ourselves making the some of the same decisions made by the chronically homeless if we were constantly preoccupied with satisfying basic needs like food and shelter. Reflecting on this fact should increase our empathy toward the homeless. They are us but poor.

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Secondly, giving the poor the resources to meet basic needs is likely to significantly improve their prospects at leading productive lives. Whereas small donations of cash to the homeless are often used to self-medicate despair and hopelessness, more substantial help may create the possibility for real transformation.

So unless our goal is a literal interpretation of Proverbs 31:6–7 (King Lemuel’s suggestion to give wine to the poor so that they might forget their poverty), effective giving to the poor in the United States probably means substantial giving that fosters stability and the patient formation of both soft and hard skills. The trick is to do this without diminishing the incentives for individuals to take positive steps of their own out of poverty.

Similarly, giving to the overseas poor may be effective, ineffective, or destructive. The billions given to overseas governments have often exacerbated governmental corruption. Other types of giving may patronize the poor, make them aid-dependent, or undermine their markets, such as overseas clothing donations. It may have a neutral effect (not harmful, but ineffective), such as giving shoes or laptop computers to children overseas.

Conversely, our giving may be effective, and in some cases, it may have transformative effects, such as is the case with corrective surgeries, providing critical medicines, or internationally sponsoring a child.

As givers we need to be shrewd Samaritans—people whose actions toward the needy are guided by not only their hearts but their heads as well. I classify various types of giving into four distinct categories, each of which has important consequences for how our giving impacts the poor.

Alms-Giving

Alms-giving is charitable giving to those who are unable to function in society without the help of others, either directly, through a nonprofit organization, or through the state. It is a necessary, appropriate, and biblical response toward a category of the poor who, through no fault of their own, are unable to survive without leaning on others in society: the widow, the orphan, the mentally disabled, those with severe psychological problems, and others with little realistic or immediate possibility of being economically self-sufficient. We do not expect alms-giving to be transformative; it simply fulfills the biblical posture of mercy toward the disadvantaged that is required of all Christians and of any good society.

Ineffective Giving

While alms-giving is not directed toward empowering the poor, other types of giving seek to move people from a place of dependence toward independence. This can be done effectively or ineffectively. In general, when donors give in-kind goods that don’t line up with the needs or aspirations of the poor, it usually results in ineffective giving, but ineffective giving can take many forms.

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For instance, a program may increase a person’s motivation to escape poverty, perhaps through a genuine inner transformation but fail to equip that person with practical skills that would enable them to successfully escape poverty.

Ineffective giving also occurs when a program offers helpful skills and tools for earning a living but ignores the inward issues hindering the development of the healthy work ethic. This includes the development of soft skills, persistence, respect for authority, the ability to work in harmony with others, humility balanced by a healthy self-esteem, and overcoming a psychology of victimization or entitlement. Some especially ineffective approaches may neither increase a person’s motivation nor ability to leave poverty.

Destructive Giving

Destructive giving enables dysfunction and undermines human dignity. It occurs when misguided giving undercuts the motivation to work among people who otherwise are perfectly able to. It breeds cultures of dependence on the state or on charitable organizations. It conveys a message to the able poor that they are unable, sapping them of their motivation and dignity. Steve Corbett and Brian Fikkert’s When Helping Hurts is the go-to reference for avoiding destructive giving. By our best intentions, we can both de-motivate and disempower the poor with interventions that fail to recognize the capacity of the vast majority of the world’s poor to lead lives of dignity and self-sufficiency.

Effective Giving

Effective giving can move individuals who are “willing but unable” to a place of being both willing and able to achieve economic self-sufficiency. Countless organizations and programs fall into this category in the United States and internationally: the work of the Salvation Army, various educational and training programs in the developing world, the effective work of Compassion International, as well as cash transfer programs like GiveDirectly. Unlike alms-giving, givers focusing on effectively reducing poverty should choose a particular organization based not on heartwarming anecdotes but on rigorous studies that measure and report either the organization’s effectiveness or the effectiveness of that specific type of intervention more generally. An excellent list of nonprofits working with the poor is at GiveWell.org. By focusing our giving on programs that have demonstrated impact, we can move beyond “feel-good giving” that may be ineffective or destructive toward giving that genuinely makes a positive difference.

Bruce Wydick is professor of economics at the University of San Francisco and visiting professor and research affiliate with the Center for Effective Global Action at the University of California at Berkeley. His most recent CT cover story was “Want to Change the World? Sponsor a Child.” (June 2013).

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