Poverty: Its Effects and Its Solutions

Nongovernmental organizations (NGOs) operate with support from private citizens and foundations, volunteer workers, and government grants. Developing countries themselves run some NGOs. Other NGOs operate out of developed countries and are often associated with large church organizations. International NGOs that work to alleviate poverty in the developing world include Cooperative for Assistance and Relief Everywhere, Inc. (CARE), Oxfam International, and Catholic Relief Services, all of which sponsor programs that provide health services, food, education, and economic support. Doctors Without Borders and the Red Cross both provide medical assistance in poor countries, especially during crises such as famines, wars, and disease epidemics.

Private development banks provide loans on favorable terms to governments or citizens of developing countries. They do not give grants or charitable donations. Like NGOs, some of these banks operate within developing countries. Bangladesh’s Grameen Bank, one of the best-known small private development banks, has made small loans to thousands of citizens experiencing hardship, including women who would otherwise have difficulty accessing funds because of their social status.

The World Bank (see International Bank for Reconstruction and Development), the best-known large private development bank, operates internationally and has its headquarters in the United States. The World Bank makes large loans to governments of developing countries to finance projects intended to strengthen the economies of these nations. World Bank-financed projects have included building roads, dams for power generation, and industries.

U.S. Anti-Poverty Programs

A number of U.S. government agencies use poverty statistics to decide how much to spend on welfare programs and transfers of money, goods, and services to help the poor. Federal programs that aim directly at helping poor people in the United States include Temporary Assistance for Needy Families (TANF), which provides short-term cash benefits to many unemployed adults with children; Supplemental Security Income (SSI), which provides extra income to poor people who are elderly, have disabilities, or are visually impaired; Medicaid, which provides health care to those unable to afford to buy health insurance; the Earned Income Tax Credit (EITC), which reduces the amount of federal tax owed by low-income working families and can result in a refund check for those who owe no taxes; and the Child Tax Credit, which provides tax credits of $600 per eligible child and may result in a refund check for poor families. The U.S. government also has invested heavily in strengthening the child support enforcement system, resulting in increased collections of child support from parents not living with their children.

In addition to the Census Bureau’s official poverty thresholds used for guiding welfare programs, the U.S. Department of Health and Human Services (HHS) publishes a set of poverty guidelines. For 2002, in the continental United States, HHS poverty guidelines allowed targeted (restricted) benefits to go to individuals with incomes below $8,860 and families with incomes lower than that figure plus $3,080 for each additional person in the family. These guidelines are simplifications of the Census Bureau thresholds and are used for determining eligibility in a number of programs targeted to low-income groups. Such targeted programs include Head Start, a supplemental education program for young children of poor families; Food Stamps, a program that provides vouchers for the purchase of food; the National School Lunch Program, which pays for poor students’ meals in public schools; and the Low-Income Energy Assistance Program, which subsidizes the expense of electric and heating bills for poor people.

In addition to government programs, many NGOs in the United States provide aid to the poor at local, state, and national levels. One of the largest national NGOs addressing the problems of poverty is the United Way, which provides a variety of types of assistance to people in need. Habitat for Humanity, another NGO with programs throughout the country, recruits volunteers to build affordable housing for the poor.