Rethinking Development Aid

by | Mar 4, 2021 | Approach, Background

Impacc was born in 2019 out of a frustration with the standard project approach to development aid: Money is used to start a project; when all is spent, the project ends and a new project starts with new money, often in the same place. 

We believe that there is a better way: Invest the money in social businesses that generate returns and keep the engine of development running, paying for themselves long term. When markets work, we are not needed: you have an idea, get a credit from a bank, and off you go. And often, markets are the wrong solution: Girls shouldn’t pay to go to school, for example; this is where classical development aid is necessary and beneficial. But, we believe that there is an area in the middle where markets could work for the poorest, yet they don’t. And that’s where we come in: We go where investors don’t because markets don’t (yet) offer a return. As aid workers, we address barriers to development – education, access, female empowerment etc. Then we put our entrepreneurial hats on and identify those business ideas that can work in the toughest environments, empower local partners and create joint ventures with them that generate green, local jobs. And by converting donations into equity for our social businesses, we make sure the money isn’t spent only once but gets reinvested time and again to overcome the project approach to development.

The history of aid has seen many phases from colonial exploitation to today’s development cooperation. As the saying goes: don’t give a man a fish but teach him how to fish. More recently, debate has moved in a new direction: give him access to the fish pond. We believe it’s time for a new chapter: Help him build a responsible fishing business, feeding his family and letting the whole village thrive.

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