Patient capital, markets that work and ending the endless emergency of poverty

August 20, 2009 by +Marj Wyatt
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Multiply the population of the US by three. That’s how many people around the world live on about a dollar a day.

Do it again and now you have the number closer to $2. About forty percent of the world lives on $2 or less a day.

What’s that like? What happens to you when you have two dollars a day to live on. It’s almost impossible to imagine. I mean, $2 is the rent on your apartment for about 45 minutes. $2 buys you one bite of lunch at a local restaurant…

And yet, two billion people survive on that sort of income.

The key issue is ‘survive’. Subsistence income means that you have the barest possible cushion, that every penny is spent and you are on the edge at all times. It makes life an emergency.

If every single thing goes perfectly, then you and your family will go to sleep tonight healthy, not too hungry and fairly safe. But of course, every single thing almost never goes perfectly. If you are bitten by a malaria-carrying mosquito, you need to buy medicine and so there’s no money for food. If you need more water, you have to spend two hours walking to and from the nearest half-decent water spot, and those two hours are the two hours you were going to spend harvesting the food your kids need.

From a fundraising point of view, this endless emergency is exactly what a non-profit needs to find and close donors. A dollar donated today will save someone’s life. It will. One dollar, one life. That’s urgent. As urgent as it gets.

The problem, of course, is that it doesn’t save that person’s life forever, it saves it for today. Tomorrow, there’s another emergency, and yesterday’s dollar is gone. So you need another dollar. Two billion people, two billion dollars. Every day. Today, tomorrow, the day after that. It’s an endless emergency, and it never gets better.

That’s where patient capital comes in. It starts with this belief:

The difference between being one penny behind and one penny ahead is profound.

If you’re one penny behind, then every day you fall further back. Every day, the emergencies get worse, the stress gets worse, your ability to survive (never mind thrive) gets worse.

If you’re one penny ahead, though, just a penny, then every day you build a reserve, every day you are able to invest in productivity or peace of mind, and soon you are two pennies or a dollar or five dollars a day ahead. And then you can send your daughter to college. And then you can buy something from the merchant next door. And then you can plant a better crop. And then you have a stake in the community, and then the world changes.

So, how to create this micro surplus? How to prime the pump of the system to improve productivity enough that things get better?

Read the rest of the article here.

No related posts were found, so here's a consolation prize: Social norms.