As Muhammad Yunus said recently, “The same road will take you to the same destination, if you want to go to a new destination you need to build a new road.” And this certainly applies when it comes to looking at the programmes and initiatives that are the focus of many philanthropic efforts when attempting to create social impact in the Asia Pacific.

Too often when funding and working on causes, the tendency is to choose reductive solutions, in effect saying “if we do this for group a and b we’ll achieve c.” Typically the reality is more nuanced.

To extend another adage, teaching a hungry person fishing skills is more useful than giving them a fish to eat; but if the water is polluted, the hungry person will remain hungry. In the case of microloans, putting loans into the hands of customers with no financial skills is a futile exercise if they become overwhelmed with debt they cannot repay and financial service providers accrue bad debt they cannot recoup. Ultimately no one wins and we generate new unintended consequences if the system is left unchecked — such as the devastating over-indebtedness of some marginalised communities in Cambodia.

Social Impact in the Asia Pacific: From Deficit to Strength

By its nature, the work of philanthropists and Not-for-Profits (NFPs) tends to focus on the most marginalised groups. However, if we begin to employ overly-simplified technical solutions that are more likely to foster a deficit model, such as supplying poorly designed microloan products to agripreneurs after a period of drought, it can become a risky business.

In this case, using an adaptive solution will help to mitigate this risk. This means working with agripreneurs to ensure they understand the terms of the microloan agreements so they can avoid the over-indebtedness trap and working with the financial service providers to help them design micro loan products that are fit for purpose.

Read the full article about social impact in the Asia Pacific by Judy Foster at AVPN.