How Can Businesses Reduce Poverty

 Businesses can reduce poverty by 

  • Contribute to Sustainable Infrastructure

Sustainable strategies have the added advantage of not only providing one-time support but providing the tools necessary for people to empower themselves and break the cycle of poverty altogether. Businesses who invest in programs or initiatives designed to build sustainable infrastructures, which the poor can utilize to better their financial and social circumstances, inevitably end up having a much greater impact.

  • Pay Attention to Ethical Supply Chains

Earning a living wage in working conditions that respect human rights is essential to alleviating rates of global poverty. However, in today’s globalized economy, it’s hard to know where exactly the product you buy is being made and in what kind of conditions it was produced. There are mechanisms available for businesses to identify supply chains behind the products they purchase to ensure the fair and respectable treatment of the workers who produce them.

  • Work with Local NGOs

Businesses who work with local NGOs (local, as in where their product is manufactured) have a higher probability of not only adhering to sustainable practices but also actually addressing the most pressing problems of that region.

  • Innovate Sustainable Business Model

Find the areas of "shared value" where the business profits AND the community benefits. If you don't know how to do this, there are excellent consultants available even for small businesses.

  • Become a part of their community

If your company does business in an underdeveloped region, become a part of the community change. Sourced locally and responsibly while building community ties. Get to know your neighbors and their skills. Help them to develop on a personal level. 

The incentive for businesses to play a part in reducing poverty

Michele Carchman, who has spent nearly 25 years focused on marketing, sales operations, enterprise software, and software as a service and has served in a variety of executive and marketing positions at AT&T, Lucent, ChemConnect, Enviance, and NTN Buzztime, pointed out 2 key reasons for businesses to alleviate poverty:

  1. Poverty can have adverse effects on business operations. Poverty is often associated with illiteracy, which can affect productivity. Employees with poor literacy skills may struggle to fully understand workflow instructions. Consequently, they are prone to making work-related mistakes, resulting in lost profits and reduced customer confidence. 
  2. Poverty can also have a profound impact on the community in which businesses operate. The lack of stable income in the lowest incomes may drive people to turn to illegal activity to survive. In addition, areas with rampant criminality can render a location unsuitable for business, which may cause companies to move to safer areas, perpetuating the cycle of poverty and crime in a community. 

This negative cycle can be countered with a positive one: businesses can avoid these scenarios by helping to alleviate poverty. 

Companies that have dedicated efforts to help the world’s poor

  • Nestlé

Nestlé, which has half of its factories situated in developing countries and rural areas, has made sustained efforts in introducing programs and facilities that benefit local communities. 32% of their factories provide clean drinking water to locals, 58% contribute to local educational facilities, and 41% invest in other local infrastructure.

  • Starbucks and Oprah Chai

Starbucks offers a drink called the Oprah Chai. A portion of the money earned whenever a drink is purchased will go directly to Oprah Winfrey’s charity, the Leadership Academy Foundation. The foundation pledges to bring education opportunities, especially opportunities for higher education, to girls in South Africa. 

  • World Crafts

World Crafts operates in several countries around the globe empowering the artisans through fair trade initiatives. A number of the artisans are women who produce their goods as a means to raise their families out of poverty, such as the Miao women of China. Through embroidering beautiful designs onto various bags and such, the women are given the chance to raise their economic status and send their children to secondary school.

  • Hand in Hand

Hand in Hand creates artisan soaps that have a one-to-one donation ratio, which means that buying one bar of soap allows the company to donate one bar of soap and a month of clean water to people in Haiti. Clean water and proper hygiene through the use of soap will, in part, help cut down on diseases in the area. The company is also committed to sustainable and environmentally safe ingredients for its soaps.

  • Ornaments 4 Orphans

Ornaments 4 Orphans operates on several levels. First, ornaments are created in areas stricken with poverty to boost the economy, and second, the proceeds from selling the ornaments are used to help children in need. Orphans in areas of poverty are prone to illness, sexual exploitation, and lack of access to education. By using the proceeds to help orphans, the children are given a chance to create a brighter future than they might have had otherwise.

  • Three Avocados

Three Avocados donates their profits to help provide clean water in Uganda and education initiatives in Nicaragua. The organization grows coffee beans in both countries. The Three Avocados website reports over 20,000 people in Uganda have been impacted by the company’s involvement in providing clean water in rural communities. Consumers can buy sustainable coffee beans while helping people who need clean water and better education in impoverished communities.

While buying from these companies will directly help individuals in need, more can and should be done. Purchasing these products, as well as items from other responsible companies, will help raise awareness for the efforts needed to help fight against poverty.

The list above barely touches the scope of companies that are doing good on the global scale. For even more ideas, check out Shop With Meaning to find other companies dedicated to helping those in poverty around the world.

Why do businesses have so much potential in poverty reduction

It is easy to understand why businesses today are the key to reducing poverty. Given the immense success of multi-national corporations (MNCs), it would seem that they are in a good financial position to ameliorate poverty.

Businesses may have more financial capital than most of the very poor countries struggling with poverty rates. Any significant investment by these businesses that generate significant employment opportunities and economic development would certainly go a long way towards dragging the unfortunate country out of high poverty levels.

  • A new study by campaign group Global Justice Now has found that the world’s largest businesses raised more money than most countries in the world in taxes collected in 2016. The 10 biggest corporations, including Walmart, Apple, Shell, have a combined revenue larger than 180 countries in a list that include Ireland, Indonesia, Greece,  and South Africa. Other well-known businesses like Google (146.9 billion USD worth of revenue in 2020), Microsoft (168 billion USD worth of revenue in 2020), Amazon (386.06 billion USD worth of revenue in 2020), and Facebook (86 billion USD worth of revenue in 2020) all have immense wealth that dwarf that of smaller, poorer countries.

Furthermore, emerging businesses known as social enterprises aim to solve social problems or effect social change. By incorporating a social mission in their businesses, they give back to their community while earning profits, and in turn, slow their customers to effect positive change through them. These inclusive business models would also go some way towards addressing the problem of poverty.

Hence, the view that businesses are the key to reducing poverty today is very plausible. 

The severity of worldwide poverty

According to FINCA, here is what world poverty looks like, in numbers:

  • Over 1 billion people live on $2.50 per day or less, including 280 million people in extreme poverty who live on less than $1.25 per day.
  • More than 75 percent of the world’s poor populations live in rural areas and depend on agriculture for their livelihood.
  • In developing countries, the poor spend 60-80 percent of their income on food. Americans spend less than 10 percent.
  • Over 800 million people worldwide do not have enough food to eat and more than 3 million children die from malnutrition each year.
  • Nearly 1 billion people live without electricity.
  • 40 million children worldwide live without adequate shelter.
  • More than 750 million people lack adequate access to clean water.
  • 270 million children have no access to health services.
  • Nearly a billion people entered the 21st century unable to read or write.
  • 1.7 billion people do not have a bank account or access to credit or basic financial services 

The tragic effect of poverty is all around us despite the immense economic developments over the decades. It would seem that governments are not doing their jobs to lessen poverty despite being entrusted by their electorates with powers to enact laws and implement policies with the country’s recourses at their disposal. Perhaps, businesses today, which have grown into immensely profitable behemoths straddling many nations would be the key to eliminating poverty. 


I hope this article has inspired entrepreneurs to adopt a sense of social stewardship, and realize the power their businesses can have on positive and collective impact in the communities. In addition, realize that healthy communities can be good for businesses themselves. 

On the topic of business ethics, feel free to check out - Why Going Green Can Make Your Business More Profitable exclusively on Vertical Template.

Efforts have been made to get the information as accurate and updated as possible. If you found any incorrect information with credible source, please send it via the contact us form
Author: Sky Hoon
Website Builder. He has a Bachelor Degree in Computer Science and loved to use technology to solve the world's issue, one at a time. For now, trying to blog for a living.
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