Blending the Line Between Business and Charity

The original (and very basic) $300 house design, showing the necessities that must be included in a valid entry into the competition. (Source: theglobeandmail.com)

I was recently listening to the Economist’s All Audio podcast (which, by the way, I would highly recommend), a fantastic source for news and analysis. In a (fairly) recent report, published on April 28, I heard about a wonderfully simple yet novel idea: A $300 house for the poor.

Living quarters are often given secondary importance in the fight against poverty by many. Things like the provision of food and medicine usually take the front seat, leaving living space as a kind of secondary concern when stacked up against what may seem like more important goals. But when one stops to think about it, living space has a direct effect on nearly every other aspect of life.

What’s safer, a mansion or a broken-down shack? Which has more reliable clean water? Which offers more protection from bug-born and other diseases? The places we live in are integral to our health. But an alarmingly large part of the world’s population isn’t afforded these “luxuries” by the places in which they live. A decent house, apartment, or other living space can act as a stepping stone to a better life for individuals and families in devastating poverty. But, according to a 2010 report by the UN, there were about 827 million people living in slums around the world in this year.

Here’s where the $300 house comes into play. A professor of international business at Dartmouth named Vijay Govindarajan issued a challenge of sorts to the business minds of the world: Turn your talents to housing the poor. Who better to find an economical solution to a global problem? Govindarajan and a consultant started an online competition to create a house that is sturdy and secure, and also provides basic necessities for its inhabitants, such as electricity and clean water. The winning design will then be discussed and improved, and ideally, will be invested in by global companies. In this way, the world’s poor can be aided without draining other parts of the world economy; businesses can reach a new kind of customer, and those customers can receive the support and shelter they need for day-to-day life at a price they can afford. As Govindarajan’s consultant, Christian Sarkar, put it, “We’re trying to encourage companies to look at the bottom of the pyramid, at the poor, as customers. What you’ve got to do is make it a business and make it to scale.”

Normally, I tend to draw a line in the sand between business and philanthropy. It’s an easy dichotomy to make: We think of business as the pursuit of personal gain, and philanthropy as the pursuit of others’ wellbeing. I have to admit that I tend to separate the two as well; in fact, I always used to tell myself that I could never go into business, because it would be too self-serving. But this idea, among many others, has proven me utterly wrong about this.

It’s true that in many cases, businesses do tend to be self-serving. The purpose of a business is to make money, so it can be very easy for those in the business world to become so focused on money-making that they lose sight of the great potential the business world has for helping the poor in a cost-effective way, something many charities couldn’t say. The $300 house idea is a great one, not only for its provision of safe and secure housing for the poor, but for its fusion of care for the poor and economic thinking. Many great ideas to help the poor have been held back by monetary shortcomings and lack of funding. But if the business world can continue to get involved in this kind of low-cost business to and for the poor, for everything from water filters to houses, then perhaps cost-effective charity could be much easier than we think.

I used two major information sources for this post: The Economist audio story I mentioned above, and a great article I found here, on The Globe and Mail.

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Filed under Economy, Human Rights

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