Market Based Strategies For Povery Alleviation

New Approaches to Old Problems: Market‐Based Strategies for Poverty Alleviation
Author(s): Kate Cooney and Trina R. Williams Shanks

Source: Social Service Review, Vol. 84, No. 1 (March 2010), pp. 29-55
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New Approaches to Old Problems:
Market-Based Strategies for
Poverty Alleviation
Kate Cooney
Boston University
Trina R. Williams Shanks

University of Michigan
The landscape of social welfare policy and practice is marked by new approaches that use
business and market mechanisms to combat poverty. This article reviews four such anti-
poverty strategies: microenterprise, individual development accounts, social enterprise,
and bottom-of-the-pyramid (or base-of-the-pyramid) schemes. The study provides a syn-
thesis of the empirical research on the effectiveness of these approaches to date. It ex-
amines the effect of each of the four antipoverty strategies on barriers to market inclusivity
and, when possible, considers the role of the institutional environment in shaping the
strategies.
Recent decades have witnessed an era of unprecedented economic growth

and new approaches to poverty alleviation. These approaches focus on
removing the barriers that prevent the poor from participating in markets,
both as producers and as consumers (Boyle and Boguslaw 2007; Mendoza
and Thelen 2008). At the individual level, these strategies include efforts
to increase access to credit and asset-building vehicles through microen-
terprise and individual development accounts (IDAs). At the neighbor-
hood and city levels, they include projects to create jobs and boost local
economic development through social enterprise. At the global level,
these are represented in initiatives to end world poverty by expanding
consumer markets at the so-called bottom (or base) of the pyramid (BOP,
i.e., those who earn approximately $2–$4 or less per day). Although these
strategies largely developed independently of one another, they are in-
Social Service Review (March 2010).

䉷 2010 by The University of Chicago. All rights reserved.
0037-7961/2010/8401-0003$10.00
30 Social Service Review
creasingly used collectively (Beckwith 2007; Budinich 2007) and are un-
folding quite differently in the United States as compared to other
countries.
This article assesses what is surely one of the most fundamental shifts
in the approach to poverty alleviation since the 1960s. It aims to do two
things. First, it seeks to provide an overview of the development of each
of these trends and a synthesis of the empirical research on their ef-
fectiveness. Second, the study attempts to examine how each strategy
endeavors to include the poor in formal market activity and to note
variation in how these strategies are implemented across institutional
contexts.
Expanding Access to Markets to Fight Poverty

All four of the four antipoverty strategies mentioned above attempt to
alleviate poverty by engaging markets for social ends and by encouraging
market-oriented behavior in the poor. These approaches presuppose
that participation in markets provides substantial benefits and that mak-
ing the market more inclusive for the poor will “enhance their economic
empowerment and human development” (Mendoza and Thelen 2008,
427). Further, these initiatives contain assumptions about the sources
of the barriers to market inclusion. Specifically, barriers that hinder the
poor from acting as producers in labor, product, and service markets
are attributed to lack of access to credit, low investments in human
capital, and geography.1 The ability of the poor to participate in markets
as consumers is limited because nonpoor business actors lack familiarity
with the unique externalities of the low-income environment and be-
cause low-income populations are unable to exert steady demand sig-
nals. Such factors accelerate market failure (Mendoza and Thelen 2008).
As this article shows, microenterprise, IDAs, social enterprise, and BOP
initiatives all target one or more of these barriers to market inclusivity.
Although grounded in private sector innovation, these strategies have
taken root across institutional contexts. The contexts influence the roles
of the government, nonprofit, and business sectors in bringing these
innovations to scale. As this article highlights, differences in national
contexts create very different platforms for market-based antipoverty
strategies to develop. This article examines the effect of each of the
four antipoverty strategies on barriers to market inclusivity and, when
possible, considers the role of the institutional environment in shaping
the strategies.
Microenterprise
Microenterprise entered the international spotlight through the work
of Muhammad Yunus, founder of the Grameen Bank in Bangladesh.
Market-Based Strategies 31
Yunus’s analysis of the causes of entrenched poverty focuses on the role

of moneylenders, whose exorbitant fees impede true economic advance-
ment and contribute to a cycle of debt for participants in subsistence-
level village economies. A microenterprise strategy is based on the prem-
ise that participants, if given the opportunity to borrow in small amounts
at low interest rates, will be able to break the cycle of debt by using the
borrowed funds to invest in small businesses and build wealth.
Yunus’s Grameen Bank spearheaded the use of a new product (micro-
loans) and a new model of borrowing (peer support groups; Yunus 1999).
Upending assumptions that the poor are unreliable borrowers, the bank
achieved a repayment rate (95 percent) far higher than is typical for
mainstream commercial banks anywhere in the world (Prahalad and Hart
2002). According to this model, the poor borrow in small groups and
the structure uses social ties in these groups to encourage repayment.
Microenterprise bankers engage in what has been described as “high
touch” lending practices (Schreiner and Dellien 2005, 2). In contrast to
the distant paperwork-dominated transactions that typify mainstream
banking, microenterprise transactions are characterized by frequent face-
to-face interactions in the villages and at the homes of the borrowers.
The social mission of the work and the widely accepted correlation be-
tween the improvement in the status of women and broad societal gains
led Yunus to target women as customers.
As a result of the success of Grameen Bank and Accion International
(another early experimenter with microenterprise), more than 7,000
microlending institutions now serve over 25 million poor clients
(Chemin 2008). Primarily an international development, this activity is
centered in Latin America and Asia but also occurs in Africa, the Ca-
ribbean, and Eastern Europe. The crowded field is made up of both
nonprofit and commercial microlending institutions. Microlending has
historically relied on donor funds from development organizations, such
as the U.S. Agency for International Development, and large nongov-
ernmental organizations (NGOs). However purely commercial institu-
tions, such as Indonesia’s Bank Rakyat, Ecuador’s Bank Pichincha, and
Brazil’s Unibanco, have also entered the field (Rhyne and Busch 2006;
Karnani 2007).
In the United States, microlending pilot programs emerged more
slowly. These programs are encouraged by the 1996 Welfare Reform Act
(U.S. Public Law 104-193), which gives states the flexibility to incor-
porate microlending into their policies. Microlending in the United
States also emerged through demonstration projects led by the U.S.
Department of Health and Human Services. The discussion below sets
out to answer the question, what is known about the effect of the mi-
croenterprise strategy on poverty alleviation?
United States
By the turn of the past decade, an estimated 300–400 microenterprise
programs (MEPs) were set up in the United States to promote self-
employment among the poor, fill a credit gap, and boost community-
level economic development (Servon 1999; Sanders 2002). Many U.S.
MEPs began as replications of the Grameen Bank program, but the
group lending model was not found to be successful and has been largely
replaced by individual lending (Taub 1998; Schreiner 1999). Many stud-
ies evaluating the microenterprise programs in the United States use
pretests and posttests that run the risk of overestimating the effect of
the programs; the absence of a control group makes it difficult to es-
timate how much self-employment would have occurred without the
program.
In one of the few comparison group studies on microenterprise in
the United States, Sanders (2002) compares data from the Self-Em-
ployment Learning Project (SELP), which sampled participants from
seven of the oldest U.S. microenterprise programs, with data from low-
income wage workers and from self-employed individuals not attached
to microenterprise programs. Data on both comparison groups are
drawn from the Panel Study of Income Dynamics. Individuals are
matched according to age, education, race, gender, marital status, and
the number of young children. The study finds that, across the sample
(n p 431), a majority (58 percent) did not move above 150 percent of
the poverty line, and the three groups do not differ to a statistically
significant degree in the odds for moving out of poverty. These findings
suggest that the enthusiasm for microenterprise as an antipoverty strat-
egy in the United States may be overstated (Sanders 2002).
The only other U.S.–based study on microenterprise to use an ex-
perimental design uncovered in this review, the Unemployment Insur-
ance Self-Employment Demonstration (Benus et al. 1995), randomly
assigned workers eligible for unemployment insurance benefits in two
states (Massachusetts and Washington) to a treatment group that was
exposed to microenterprise assistance program activities or to a control
group that was not. The findings suggest that participation increases
the likelihood of self-employment, increases the total time in employ-
ment, and reduces the length of unemployment in both states. Jacob
Benus and colleagues (1995) report, however, that participation in the
Washington demonstration does not statistically significantly increase
the likelihood of employment or the level of earnings from employment,
but participation in the Massachusetts demonstration does. Benus and
colleagues (1995) argue that self-employment programs should be in-
corporated into policies for addressing unemployment and economic
development. But Mark Schreiner (1999) points to the low absolute
number of new businesses started (less than one start per 100 partici-
pants), the low wage rates for those who are self-employed, and the
inconsistency of results across settings to conclude that microenterprise
programs are “unlikely to help many people a lot” (Schreiner 1999,
501) and therefore may not be the best investment of limited antipoverty
program dollars. Further, compared with their counterparts in the con-
trol group, participants in the UISED demonstration study are more
likely to be white, to be male, to have some college education, and to
have recent work experience (Schreiner 1999).
In addition to the experimental studies discussed above, research has
evaluated demonstration projects that target disadvantaged communi-
ties and welfare recipients. The Self-Employment Investment Demon-
stration (SEID; Raheim 1997) provided a group of welfare recipients
with group business training, personal development workshops, tech-
nical assistance, and links to financing. Participants were recruited from
local welfare departments. Of those recruited for SEID, less than 1
percent completed the training and started a business (Schreiner 1999).
A second study, the Self Employment Learning Project (SELP; Raheim
1997) followed 405 participants enrolled in one of seven MEPs. The
vast majority of those who started businesses through SEID were still
operating those businesses 2 and 1/2 years later and were building
economic assets (Raheim 1997). These results suggest that the self-em-
ployment strategy may provide a way to leave welfare. The self-employed
are able to generate earnings for the household and have a flexible
schedule that accommodates the work-family balance (Taub 1998). How-
ever, nearly 10 percent of SEID participants reported doing worse fi-
nancially at the end of the program than when they started, defaulting
on loans, or experiencing business failure (Raheim 1997).
Although there is evidence to suggest that participants enrolled in
MEPs spend less time on welfare than a matched group of participants
enrolled in a welfare-to-work training program, the evidence is based
on comparisons made between those who voluntarily enrolled in the
MEP business training and those who did not (Raheim 1997). In the
SEID, the rate at which participants volunteered for training and sub-
sequently started a business suggests that the self-employment strategy
will be of no help to 99 percent of the welfare population (Schreiner
1999). In fact, the research shows that microfinance programs in the
United States work best for those who are members of families with
other earners, such that the self-employment endeavor generates sup-
portive and not primary income (Taub 1998).
The SEID evaluation calculates the number of jobs created by new
microenterprise businesses, but as Richard Taub (1998) points out, the
estimates cannot distinguish jobs that represent new employment in the
community from those that represent a substitution of one job at a new
shop for another at a shop that closed. Case study research indicates
that microenterprise strategies are being abandoned as a means to stim-
ulate economic development on the scale of the neighborhood or com-

munity (Taub 1998). Instead MEPs have switched to making larger loans
used to target existing businesses that lack access to credit, enabling
them to stay in business and thereby shoring up the employment base
of the area (Taub 1998).
The research to date in the United States suggests that, for select
families, microenterprise provides an attractive alternative to wage labor
or welfare and can be an important way to diversify household income.
But there is little to no evidence to suggest that MEPs can move large
numbers of mandated participants out of poverty in the U.S. context.
Taub (1998) suggests this has to do with the advanced capitalist economy
in the United States, which requires much larger amounts of capital to
achieve market penetration than is the case in a developing economy
like Bangladesh.
International
In contrast to the research on MEPs in the United States, early studies
of microlending efforts in Bangladesh comparing clients in MEPs to
comparable residents not enrolled in MEPs suggest that lending to
women has substantial effects on household income levels (increases by
as much as 43 percent), household expenditures, and poverty levels in
both the household and the village (Hossain 1988; Todd 1996; Khandker
1998). Such studies are marred, however, by potential selection bias,
given that some control groups were drawn from nonparticipants in
villages where MEPs were active, leaving one to wonder whether there
were some unobservable difference between individuals who enrolled
in MEPs and those who were eligible but did not enroll. Selection issues
for those studies that drew control groups from comparable villages
where MEPs were not active also stem from subtle differences among
villages where control groups were drawn, such as distance to central
transportation routes (Nathaniel Goldberg 2005).
Recent empirical studies on the effects of microlending correct for
selection bias in some way. These studies find that monetary returns are
associated with individual participation in lending programs and these
returns spill over to the village level, although village effects are esti-
mated to be smaller than those for individual participants (Pitt and
Khandker 1998; Pitt et al. 2003; Khandker 2005). Much of the current
research from Bangladesh uses data from a large-scale survey adminis-
tered in 1991 and 92 by the Bangladesh Development Institute in con-
junction with the World Bank. This survey collected extensive data on
eligible and ineligible individuals, as well as participants and nonpar-
ticipants. The data come from both treatment and control villages. Stud-
ies using these data find that lending to female participants yields an
18 percent return for participating households (Pitt and Khandker 1998;
but see Chemin 2008). Using panel data from a follow-up survey fielded
in 1998 and 1999, Shahidur Khandker finds that, for program partici-
pants in the 1991 and 1992 survey, poverty rates declined by about 20
percent by the time of the second survey; spillover effects at the village
level are such that, even for nonparticipants in the program, poverty
decreased by anywhere from 1 percentage point to 1.3 percentage points
a year in villages where MEPs were active (Khandker 2005). Further,
the research from Bangladesh provides evidence that microlending to
poor women statistically increases their children’s school enrollment
(Pitt and Khandker 1998) and nutritional outcomes (Pitt et al. 2003).
Most of these results hold for women but not for men.
Although much of the research on microenterprise lending is un-
derway in Bangladesh, some well-designed studies examine the effects
of microenterprise in other locales. New experimental research con-
ducted by researchers at the Massachusetts Institute of Technology Pov-
erty Action Lab evaluates the impact of the introduction of microen-
terprise financial instruments in a new market (Banerjee et al. 2009).
The study randomly selects half of the 104 slums in Hyderabad for the
introduction of an MEP, while the others do not have one. Fifteen to
18 months out, preliminary findings show that it is those MEP clients
with existing businesses who are more likely to increase expenditures
on durable goods in comparison to those without existing businesses.
Among those participants without an existing business, it is only those
with a high predicted propensity to start a business who increase spend-
ing on durable goods. Those participants without a business categorized
as having a low predicted propensity to start a business instead increase
spending on durable goods, paying down debt, and borrowing against
future income. Further, the researchers finds no impact on health, ed-
ucation, or women’s “empowerment” (Banerjee et al. 2009, 14). While
these findings measure impact only a little over a year past the start of
the intervention, the researchers suggest that “microenterprise may not
be the miracle that is sometimes claimed on its behalf” (Banerjee et al.
2009, 21). Another experimental study conducted with small businesses
in Mexico found that the capital shock delivered by microlending gen-
erates a 20–33 percent return to capital per month, and the benefits
were concentrated in those firms that were the most financially con-
strained (McKenzie and Woodruff 2007). This study reinforces the find-
ings from the study conducted in India by Abhijit Banerjee and colleagues
that microfinance can exert significant effects for existing entrepreneurs.
The evidence is mixed regarding this strategy’s effects on the very
poor. Some studies indicate that microlending offers more advantages
to the very poor than to any other group, but other studies suggest the
opposite (Nathaniel Goldberg 2005; Coleman 2006), and findings vary
by country (Coleman 1999). Qualitative research by Helen Todd illu-
minates the debilitating role that illness and family crisis can play in
this trajectory (Todd 1996). Todd’s study of 40 participants in the Gra-

meen Bank program indicates that the majority of the members who
were still poor at the end of the study experienced serious illness in the
family in the 3 years prior to joining the program. Medical or family
crises are found to impede repayment of debt in two ways: (1) many
families that experienced illness were forced to sell assets in order to
pay for medical treatment or to make up for lost wages; and (2) many
such families entered the Grameen program with an already substantial
amount of debt and the loans were used to repay debt rather than to
invest in assets (Todd 1996).
In sum, the international research suggests that Yunus correctly di-
agnosed causes of poverty in his country; microlending loosened the
burden of compounding debt, which contributes to the endemic village
poverty in emerging economies. Evidence also suggests, however, that
early estimates of these effects were overly optimistic and that micro-
lending may not successfully support exits out of poverty for those al-
ready caught in a cycle of debt.
Asset Building
Those championing asset-based policies hypothesize that they enable
the poor to save money and build wealth if provided the same incentives
and mechanisms enjoyed by others farther up the income distribution
(Beverly et al. 2008). Asset-based policy approaches include eliminating
welfare’s asset limits, matching the savings of low-wealth households;
including the poor in any policy based on asset accounts, whether in
the private or public sector; and emphasizing saving as well as credit in
administration of the Community Reinvestment Act (Schreiner and
Sherraden 2007a). Over the course of just 2 decades, asset building has
grown from theory to large policy demonstrations. It has effected con-
crete changes in local, national, and international arenas (Sherraden
and Shanks 2009).
Asset-building policies are deployed and in some cases better estab-
lished in other parts of the world. In countries that lack a social safety
net, asset-building programs can be offered for specific purposes and
have reasonable start-up costs. In countries that have insurance-based
and income-focused safety net programs, asset-building programs offer
a set of supplementary incentives and may provide opportunities that
are generally acceptable across a range of political perspectives.
United States
Although there are historic instances in which national policy favored
asset building (Shanks 2005), these efforts were not broadly inclusive.
In the 1990s, scholars urged a reassessment of existing tax and credit
programs to make them more inclusive of the poor. They urged that
antipoverty policy be reframed to incorporate progressive asset-building
opportunities (Sherraden 1991; Oliver and Shapiro 1995; Ackerman and
Alstott 1999). They argued that cycles of entrenched poverty can be
broken by allowing people to invest in their own futures and by in-
creasing access to the institutional asset-building mechanisms that are
key wealth generators for those in the middle- and upper-income brack-
ets (Sherraden 1991; Oliver and Shapiro 1995; Ackerman and Alstott
1999). Since the 1990s, asset-building opportunities have proliferated
for those with low incomes in the United States. The most common
vehicle for asset-building policy is the IDA (Alymkulova and Seipulnik
2005).
Individual development accounts and the American Dream Demonstra-
tion.—Individual development accounts are subsidized savings accounts
targeted to the poor. They encourage savings efforts by matching pro-
gram participants’ savings with program funds (typically $2 matched for
every $1 saved). Matching funds are available to save for purchase of a
house, postsecondary education, or a small business. Since the 1996
welfare legislation included IDAs as a state option, at least 40 states have
adopted some type of IDA policy and hundreds of community organi-
zations have implemented them locally (Edwards and Mason 2003). The
Assets for Independence Act (112 Stat. 2759 [1998]) awards contracts
to fund IDA programs through the U.S. Department of Health and
Human Services, was amended in 2000 (114 Stat. 2763A-74; 42 USC sec.
604), and continues to provide money to help fund IDA programs
throughout the country. The 1998 act authorizes the first systematic
study of IDAs (112 Stat. 2764), and that study was conducted through
the American Dream Demonstration (ADD).
The ADD study took place across 14 sites over a 6-year period
(1997–2003). Of the 2,350 low-income participants, 52 percent saved
$100 or more to accumulate a net IDA savings of $32.44 per month.
On average, participants saved about $1 for every $2 available from
matching funds and made a deposit during about 1 of every 2 months
in which an IDA was open. The average match rate was 1.88 : 1, and
the average participant accumulated a total of $1,609 in IDAs (principal
and matched), which is the equivalent of $576 per eligible year. About
two-thirds of participants made at least one unmatched withdrawal (i.e.,
a withdrawal for purposes other than those specified match-eligible).
Among the matched withdrawals, 21 percent were for home purchase,
11 percent were for postsecondary education, and 12 percent were for
microenterprise (Schreiner and Sherraden 2007a). Findings from the
demonstration generally suggest that poor people can save if given the
appropriate incentives and that individual characteristics, such as in-
come, employment status, and welfare receipt, are only weakly associated
with savings outcomes (Schreiner, Clancy, and Sherraden 2002; Schrei-
ner and Sherraden 2007a). Studies of other non-IDA account programs

also find evidence that match rates are positively associated with savings
(Engelhardt and Kumar 2003; Duflo et al. 2006). One of the 14 ADD
sites recruited participants using an experimental design. In reports
based on this site, rates of homeownership are statistically higher among
members of the experimental group than among their control-group
counterparts. However, evidence is inconclusive on whether participa-
tion in the experiment increases participants’ net worth (Schreiner and
Sherraden 2007b; Mills et al. 2008).
A qualitative analysis offers a rich description of how people expe-
rience participation in the ADD’s IDA program. Both control group
members, who were not offered accounts, and IDA participants reported
that they find it difficult to save consistently on a limited income. How-
ever, those in the IDA program reported that they are more successful
at saving after joining the program than they were before joining it (71
percent saved regularly after participation; 24 percent saved before).
After participating in IDAs, respondents reported increased feelings of
security, self-confidence, and hope for the future. They also reported
an increased ability to set and achieve goals as well as a greater sense
of responsibility (Sherraden, Moore McBride, and Beverly 2010).
Child development accounts.—Although IDA programs have received a
great amount of attention in the United States, other approaches at-
tempt to help low-income individuals build assets. One possibility is to
create universal child development accounts (CDAs) at birth, often with
progressive elements that allocate more funding to low-income children
(Sherraden 1991; Lindsey 1994; Fred Goldberg 2005; Mensah, Perun,
and Quezada 2007). Advocates for this approach point out that such
accounts can provide a powerful foundation upon which to build ed-
ucational and economic opportunity. They argue that the accounts en-
gage young people early in building an understanding of assets and
investments. They also argue that CDAs can create institutional mech-
anisms by which children obtain the financial resources to help create
their own future, regardless of family circumstances.
In an approach similar to ADD, several foundations and other na-
tional partners have collaborated on a demonstration to test the efficacy
of offering progressively matched CDAs. The Saving for Education, En-
trepreneurship, and Downpayment (SEED) initiative began in 2003 as
a 10-year research endeavor. The study recruits via community sites
throughout the country and examines the use of CDAs across a range
of ages and within varying state and federal policy contexts. Two sites
use experiments to assess the efforts’ effects, one of which is an impact
study of 500 preschool students and their parents. The second exper-
iment was rolled out in 2008 across the state of Oklahoma to test the
efficacy of a universal system offered at birth within a full population.2
As of December 31, 2007, there were 1,171 open SEED accounts and
a total accumulation of almost $1.8 million (all contributions, matched

savings, investment gains, and losses, minus any fees and unmatched
withdrawals). On average each child had $1,518 as an investment for
the future (Mason et al. 2009) The SEED initiative represents the most
complete empirical assessment to date of the potential effects of offering
CDAs to all children born in the United States.
International
Social policies in many countries are shifting to include individual asset
accounts (Aportela 1998; Ashraf, Karlan, and Yin 2006), and policy mak-
ers are discussing these efforts (Organization for Economic Cooperation
and Development 2003; U.S. Agency for International Development
2006). In 2001, the United Kingdom launched several asset-building
programs, including the Savings Gateway, which is a matched savings
program similar to IDAs, and the Child Trust Fund (CTF). Under the
CTF program, the United Kingdom provides a certificate for at least
£250 to the parents of every baby born in the country, and additional
funds are offered to the parents of low-income children. Parents use
these certificates to open an account on their child’s behalf.
The tax-exempt account grows and is converted to an adult savings
account when the individual reaches age 18. The government imposes
no restrictions on the use of the adult accounts. Launched in 2005, the
program included over 3 million CTFs in 2007 and about one-quarter
of these accounts received additional contributions beyond the initial
government deposit (Bennett et al. 2008).
Additional examples may be highlighted. In Taipei, family develop-
ment accounts provide the working poor with a 1 : 1 match for their
savings (Cheng 2003). In Canada, Social Enterprise Development Ini-
tiatives (SEDI 2) is conducting an education-focused research demon-
stration called Learn$ave. Since 2001, over 3,609 low-income Learn$ave
earners have held accounts in which participants’ savings are matched
at a rate as high as 3 : 1. Savings in these accounts may be used to obtain
education, acquire skills training, or start a new small business. Another,
similar SEDI 2 program attempts to use a matched savings account for
the homeless as a way to bolster transitional housing. The organization
also is designing an IDA-style program focused on housing. A pilot
program underway in rural Uganda tests the benefit of offering matched
savings accounts to children affected by HIV/AIDS. (Ssewamala et al.
2008).
Microenterprise and asset-based policies, such as IDAs and CDAs,
involve the systemic extension of individual-level opportunities to create
small businesses and build assets. The policies assume that increased
institutional access to borrowing and savings mechanisms will enable
those at the bottom of the income distribution to move out of poverty

through their own entrepreneurship and thriftiness.
Work Integration Social Enterprises (WISEs)

Social enterprise covers a broad range of socially conscious, business-
minded projects. The current focus falls on one social enterprise strategy
that attempts to alleviate poverty by using business to create employment
and work-training opportunities. Such efforts are most commonly referred
to as work integration social enterprises (WISEs). These efforts involve a
particularly “embedded” form of social enterprise (Alter 2006, 212), in
that the business activities are an integral aspect of the social intervention.
In the case of WISEs, the intervention focuses on workforce development,
job creation, and community economic development.
In this strategy, employment is seen as the primary activity that will
move the poor out of entrenched poverty. These social enterprises create
jobs with social supports and fill the jobs with client populations with
a history of unemployment and other individual vulnerabilities like sub-
stance abuse, recent incarceration, limited job skills, and low human
capital (education and work experience). Work integration social en-
terprise programs offer supportive work-transition environments in
which those at the end of the labor queue receive training, work ex-
perience, and (depending on the WISE model) assistance connecting
to the labor market.
United States
Nonprofits that use earned-income business ventures for job-training
purposes have existed since the turn of the twentieth century. Such
ventures typically take the form of sheltered workshops for the devel-
opmentally disabled (Rosen et al. 1993). Since 1980, social enterprise
initiatives to integrate business practices with a social mission have em-
phasized an entrepreneurial, business-minded focus (Adams and Perl-
mutter 1991). In the United States, nonprofit organizations operate
WISEs in a wide range of industries, including restaurant and food
services, organic agriculture, manufacturing, street cleaning, mainte-
nance, pest control, retail, and furniture upholstery. These programs
target a broad range of populations considered disadvantaged in the
labor market. Such populations include formerly incarcerated adults,
homeless people, at-risk youth, developmentally disabled individuals,
people in recovery from substance abuse, welfare recipients, and un-
deremployed individuals with low incomes (Massarsky and Beinhacker
2002; Dees and Anderson 2006; Cooney 2010).
The current research base for evaluating WISE activity consists pri-
marily of a handful of surveys that focus on the extent of business
venturing in the nonprofit sector and case studies examining the op-
erating tensions within these hybrid models (Crimmins and Keil 1983;
Perlmutter and Adams 1990; Adams and Perlmutter 1991; Massarsky
and Beinhacker 2002; Cooney 2006; Garrow 2009). For example, Car-
olyn Adams and Felice Perlmutter (1991) find that 21 out of the 25
nonprofit enterprises self-reporting that they operated successful ven-
tures reported experiencing tension between commercial goals and mis-
sion goals. Further, although social enterprise is often framed as a route
to self-sufficiency for organizations, their research suggests that WISEs
in the United States remain strongly embedded in the broad social
service arena. Adams and Perlmutter (1991) found that the nonprofit
organizations operating successful business enterprises were large or-
ganizations that also relied on substantial social sector grants and con-
tracts for large percentages of their revenues.
This location at the crossroads of market, government, and civil so-
ciety provides a margin of extra support from the public and philan-
thropic funding streams that allow nonprofit business ventures to absorb
the social costs of employing workers with a range of disadvantages while
competing in the marketplace. However, this resource mix can generate
internal tensions as the organization struggles to respond competitively
in two different organizational fields: WISEs must compete in the busi-
ness field on price and quality for customers as well as in the social field
for grants and donations (Cooney 2006). To act competitively in both
fields, nonprofits operating WISEs must recruit staff with the requisite
business expertise. As they do so, tensions between business and social
institutional logics can set the stage for the dissolution of an organi-
zation’s mission-centered culture (Garrow 2009).
Mission slippage can also occur as the organization repositions within
the social service field to recruit new (paying) consumers and as board
membership changes to expand the array of stakeholders (Adams and
Perlmutter 1991). Finally, some organizations may need to continue to
subsidize business enterprises. This may result in an ongoing drain on
general nonprofit operating funds and prompt engagement in risky
borrowing practices (Crimmins and Keil 1983; Cooney 2009).
These concerns withstanding, WISEs have proliferated in the United
States over the past 15 years as the era of welfare reform focused public
policy on workforce development for disadvantaged populations. Led
by foundations and a growing sector of venture-capital funds, a number
of funding intermediaries are emerging to provide start-up capital and
training to WISEs (Kerlin 2006). However, capital and training typically
come with expectations of a return on investment. These returns may
come in the form of loan repayment, but they also may take the form
of increased independence from local government or foundation fund-
ing streams. At this stage, nonprofit WISEs in the United States balance
the need to maintain sufficient levels of social sector funding to subsidize
the employment costs associated with employing disadvantaged client-

workers with the need to maintain competitive positions in the service
and product markets where they sell their goods.
International
Social enterprise is also emerging internationally. The track record is
longer in Western Europe than elsewhere, but social enterprise is also
growing in Central and Eastern Europe, Latin America, the Caribbean,
and Asia. Social enterprise in the European Union has benefited from a
specific set of public policies aimed primarily at WISE efforts. A recent
systematic study of WISEs in 11 European Union countries finds that
WISEs vary in the form of vocational rehabilitation that they provide, in
the relative importance of public subsidy for their operating budget, in
market orientation, and in the support received through volunteers and
donations (Nyssens 2006).
As is the case among WISEs in the United States, the oldest group
of WISEs offers clients open-ended work contracts in sheltered work-
shops (typically for the handicapped). In the European Union, these
WISEs are permanently subsidized by government, foundations, or both.
Although these organizations are exposed to market and business risk,
this exposure is buffered by the permanent subsidies they receive for
working with the specific population. Current research focuses on newer
WISE models, for which subsidies are less stable. These range from
organizations that open their business to provide permanent jobs to the
able-bodied, long-term unemployed to those that offer transitional pro-
gram of short-term work opportunities and thereby attempts to place
clients in permanent jobs (Davister, Defourny, and Gregoire 2004). This
group of WISEs typically recruits low-skilled youth and able-bodied
adults facing long-term unemployment (Defourny and Nyssens 2006).
The European Union case is interesting both for the variety of re-
lationships between the state and social enterprises and for the changing
legal environment in which these work-oriented social enterprises op-
erate. Across the European Union, the public support to WISEs takes
many forms (Laville, Lemaı̂tre, and Nyssens 2006). As part of activist
labor market policies, WISEs in the European Union receive subsidies
to employ specific classes of disadvantaged workers. In some cases, direct
public subsidies provide start-up funding. In other cases, such subsidies
accompany an eligible individual’s participation in a WISE-specific pub-
lic scheme. Such subsidies are usually temporary and available to for-
profit as well as nonprofit organizations (Laville et al. 2006). European
WISEs also benefit from contracting practices that are motivated by
social goals and that direct the public to purchase products and services
from the organization.
Many European countries are developing new legal frameworks to
govern the unique position of WISEs as socially oriented businesses.

Examples of these new frameworks include the Belgian social purpose
company established in 1995 and the community interest company
(CIC) in the United Kingdom and Finland (Laville et al. 2006). These
are for-profit models that build in mechanisms for protecting com-
munity interests. Two prominent mechanisms associated with CICs are
asset locks, which place conditions on the transfer of the assets out of
the CIC, and dividend caps, which cap dividend returns by limiting
distributable profits to a percentage of overall profits (35 percent under
current law in the United Kingdom; Mswaka 2009). The new low-profit
limited-liability corporation in the United States, now officially part of
the legal structure in Vermont and pending in other states, is modeled
to some extent on these designs.
Social enterprise is also a burgeoning trend in other regions around
the world; however, the forces shaping this trend can be quite differently
arrayed. In Latin American and Caribbean countries, the nonprofit sec-
tor now provides social services long seen as the province of the state.
Foreign aid dollars and some local philanthropic monies support these
NGO efforts to provide social services, but foreign lenders are encour-
aging organizations to develop social enterprise revenue streams. Such
encouragement is intended to assist these organizations in developing
self-sufficiency and form part of lenders’ exit strategy (McConnell 2006).
Several unique challenges present themselves in the emerging econ-
omies of Central and Eastern Europe. Because there is no historical
precedent for commercial nonprofit organizations, social enterprise or-
ganizations must orient the public to this kind of organization. In these
countries, social enterprise also must overcome cultural barriers to pay-
ing fees for services and the expectation that certain categories of dis-
abled individuals are free from work (Kapoor 2005; Lucas and Vardan-
yan 2005).
As the above review reveals, most of the social enterprise research
has focused on organizational sustainability and mission risk. At this
stage, data on client outcomes are limited, although some promising
research is underway in the United States (Bloom et al. 2007; Ferguson
and Xie 2008). The EMES comparative social enterprise research project
did estimate effects of WISE participation on employment compared
with the traditional welfare programs in the European Union. Com-
paring employment outcomes of WISE-affiliated workers 2 years after
initial contact to a control group of workers matched on key charac-
teristics from the Public Employment Service database indicates that
the WISEs produced a net effect of 47 percent given that 79 percent
of workers in the WISE programs were employed 2 years after initial
enrollment versus 32 percent of those in the control group (Nyssens
and Platteau 2006). While encouraging, more research is needed in this
vein.
Bottom (or Base) of the Pyramid

Inspired, in part, by the profitability of Grameen Bank and microen-
terprise, a final set of initiatives discussed involve corporate activity with
the so-called bottom (or base) of the pyramid (BOP). C. K. Prahalad’s
(2006) book, The Fortune at the Bottom of the Pyramid, is the most cited
work in this literature. The work lays out a justification for a new way
of doing business with the poorest sectors of the global community.
Prahalad argues that such an approach enables businesses to exploit a
potentially massive reservoir of untapped buying power. In using mi-
croloans and group lending to reconfigure banking services for the poor,
Grameen Bank proved that lending to the poor can be profitable. Ad-
vocates for BOP investment argue that a similar revolution in product
development will allow multinational companies to tap into the buying
power of those living on $2 a day. As markets at the top of the pyramid
become saturated, the sheer number of poor people in the BOP markets
(the villages and urban slums of the developing world) is seen as a new
opportunity for profitability and expansion. This is the case even if the
profit margin on each product sold at the BOP is in itself quite small
(Prahalad 2006). A further point, and the one that is most salient for
this article, is the claim made by those pushing BOP initiatives: business
activity in poor villages and slums will accomplish what decades of gov-
ernmental and NGO activity has not been able to do: alleviate poverty
(Prahalad 2006; London 2007a).
Proponents (Prahalad 2006; London 2007a) draw three hypothetical
links between business activity and poverty reduction. These links prem-
ise the arguments of the theorists who advocate BOP investment. First,
consumers at the BOP are underserved and overcharged for the prod-
ucts they buy. Therefore, multinational companies can design products
to enhance their lives (e.g., better detergents, shampoos, tiles for shanty
town floors and walls, wind-up radios and computers, cell phones with
prepaid cards, water purification tablets) at a price point that is lower
than those for the array of products currently in use. Companies can
thereby quickly achieve majority market share. Conceptualizing the
global poor as consumers, according to BOP theorists, reflects a shift
from conceiving of the poor as victims in need of a handout to viewing
them as individuals with specific needs that companies can address (Pra-
halad 2006). The basic premise of these theorists is that the poor are
given a greater degree of dignity as consumers than they are afforded
as recipients of aid. This premise also holds that the material difficulties
of poverty can be eradicated by corporate activity that focuses on de-
signing products for the poor that increase their quality of life. Second,
because these markets are essentially devoid of large-scale infrastructure,
commerce within them requires new types of business plans. Business
at the BOP requires, for example, the creation of distribution and de-
livery systems that engage a multitude of small, indigenous, BOP en-

trepreneurs who are connected to the capacities of companies with
world wide reach.
The juncture at which the corporation and the BOP markets interface
is a key space of opportunity for poverty alleviation. In that space, busi-
ness can provide training, support, and employment for individuals liv-
ing within poor rural villages and urban slums. Such support can enable
these individuals to function as cogs in a new distribution fulfillment
infrastructure (Prahalad and Hart 2002). Advocates of BOP investment
claim that this is not only a socially minded approach but also a necessary
one, as the BOP’s informal yet thriving market economies cannot be
penetrated any other way (Hart and London 2005). The poor are thus
targeted as both consumers and producers. As living standards and
income potential rise, theorists argue, poverty is alleviated.
The third hypothesis of the BOP strategy holds that those companies
with the highest quality product and the least exploitative approach to
business will have competitive advantage. Therefore nonexploitative,
life-enhancing businesses cocreated in consult with the poor at the BOP
will achieve scale faster than the others, and the social benefits accrued
as these business models reach scale will result in a broad reduction of
poverty (London 2007a).
The research on BOP business initiatives is very thin, as the majority
of such efforts are still in the development and testing phase. However,
Prahalad (2006) identifies several successful projects in which compa-
nies reconceptualized how they package and finance products for the
BOP market. For example, Casas Bahia, an appliance and electronics
retail company based in Brazil, developed a credit system for its poorest
customers. The system allows them to make installment payments toward
big purchases and to build credit. Cemex, a cement company in Mexico,
likewise created a package of products and services specially designed
for the poorest consumers. Cemex facilitated savings clubs in which
small groups of women save together for the bundle of products needed
for a home addition. After a year or 2 of successful savings, the funds
can be used to purchase kits for a complete kitchen or bathroom ad-
dition. These innovations allow companies to penetrate a new market
and, proponents argue, improve the quality of life for the poor.
Other projects seek to penetrate BOP markets by creating small pack-
ages to be sold at low price points. For example, Annapurna (part of
the Unilever corporate family) markets an ionized salt product in small,
low-cost packages. To saturate the BOP market (50 percent of which is
not reached by media), Annapurna trained women’s self-help groups
to sell the product door to door.
Prahalad’s (2006) case studies illuminate the central claims made by
advocates of BOP markets; namely, they claim that the BOP markets are
largely unpenetrated by major corporate actors, that the poor will con-
sume at the right price point if they have access to credit, and that selling
to the poor can improve their lives. But these initiatives promise not only
to introduce a life-enhancing product but also to build individual wealth
at the BOP by extending the supply chain into the villages and urban
slums as well as by training local people to become entrepreneurs.
To date, no systematic research evaluates the BOP poverty reduction
claims. Ted London created a tool to track the effects of BOP initiatives
on poverty alleviation at three levels: the sellers, the buyers, and the
community (London 2007b). London’s tool evaluates the effects of BOP
entrepreneurs’ involvement in corporate training programs on income
stability, skills, level of dependence on government subsidies, and con-
nectedness to networks. London proposes that BOP initiatives for buyers
be measured according to whether or not they contribute to a reduction
in the poverty penalty (i.e., the extent to which the poor must pay ex-
ploitatively high rates for credit and other services of products), an in-
crease in productivity, and an increase in status. London suggests that
BOP initiatives at the community level, arguably the most difficult level
to affect, should be assessed by the efforts’ influences on competition,
aspirations, gender equity, and cultural norms.
Whether corporate actors are willing and able to evaluate their BOP
efforts transparently remains an open question. At the University of
Michigan conference on the BOP markets in September 2007, chal-
lenges identified in implementing BOP protocols include the lack of
funding for long timetables for the development of BOP business mod-
els (De Klerk, Johnson, and Simanis 2007), legal barriers (Singh 2007),
competition from charities that offer similar services or products for
free (Singh 2007), the lack of partners needed to form the supply chain
(Urrutia 2007), trouble with product during launch and resulting dam-
age to brand name (Hajee 2007), as well as interference from vested
interests (Singh 2007). Corporations attempting to use London’s tool
report difficulty in figuring out how to measure social impact. For ex-
ample, measuring the income of the sellers and the productivity of local
producers can be difficult (Singh 2007; Urrutia 2007). Some companies
report that they uncovered some anecdotal evidence of a negative re-
lational effect on the female entrepreneurs, who became the subject of
local jealousy due to their successes (Hajee 2007; Singh 2007).
Because of the steep learning curve required and the fundamentally
different skill set involved in doing business at the BOP, a common
corporate strategy is to house the BOP initiatives as a research and
development activity (De Klerk et al. 2007). This strategy provides the
time needed to get initiatives off the ground. The BOP learning labo-
ratory at the Center for Sustainable Global Enterprise at Cornell Uni-
versity’s Johnson School is designed to support this approach. In the
BOP protocol developed at Cornell, a team of faculty and MBA students
establish relationships with key stakeholders (e.g., poor residents and
NGOs) in a BOP community. Once a business plan is cocreated with

key community stakeholders, the corporate actor takes over manage-
ment of the project. Companies engaged in this model report several
key challenges. Some report that they had difficulty among BOP actors
who have seen many initiatives come and go (De Klerk et al. 2007).
Others report clashes of culture among NGOs working in the BOP space
and corporate actors moving in (De Klerk et al. 2007). Crime, and
specifically the lack of the rule of law, is another reported concern (De
Klerk et al. 2007). Further, the initial time commitment required to
cocreate the business model can frustrate the company management,
which wants profits, and the BOP entrepreneur, who must suspend other
income-producing activities to engage in the planning process (De Klerk
et al. 2007).
Many of these initiatives seem to move back and forth from a research
and development stage to implementation. Also common are shifts from
new BOP business models to traditional public-private partnerships. The
model deployed in a given situation might even change over time de-
pending on the conditions in the country where the businesses are
operating. For example, Proctor and Gamble found that a purely com-
mercial model was not suitable for the BOP product it designed (water
purification tablets; Allgood 2007). In order to offset the required in-
vestment in distribution channels and to make a profit, the company
needed every single person in the entire country to buy the product
on an ongoing basis. Proctor and Gamble eventually reverted to the
social marketing and donor-based models more typical in development
work (Allgood 2007). In those models, a company sells the product to
the NGO or government, which distributes it through such existing
institutions as school programs. As a result, involving NGO partners
early in future BOP initiatives may become increasingly common (Brug-
mann and Prahalad 2007). Time will tell how successful these BOP
projects prove to be in delivering on their promise to alleviate poverty
through profitable multinational business ventures.
Discussion
Spurred on by a hunger for new approaches to the old problem of
poverty, business strategies for poverty alleviation have become increas-
ingly mainstream. Two key questions arise from 2 decades of rapid
growth and institutionalization of these market-based approaches to
poverty alleviation. First, market-based poverty alleviation strategies
flourished in an era marked by accelerated wealth generation and the
dominance of an ideology that ties poverty alleviation to the power of
markets. To what extent are these market-based approaches worthy of
support that is not dependent on cultural or ideological context? Sec-
ond, given that market-based strategies emerged in the United States
at a time when support for income maintenance programs waned, how

should one compare market-based approaches to alleviating poverty
with other strategies against which they could potentially compete for
revenues?
The research reviewed in this article suggests that market-based pov-
erty alleviation strategies can be fostered in very different political land-
scapes. This highlights the versatility of such strategies as policy tools.
The institutional context does, however, influence the roles prescribed
and risk allocated to government, nonprofit and market sectors.
For example, IDA-related policy in the United States has unfolded
primarily according to the neoliberal paradigm that dominated the pol-
icy environment throughout the 1990s and early 2000s. The IDA initia-
tives focus on creating incentives that encourage commercial banks to
target new financial products similar to the 401-K saving instruments
but designed for the poor. They also attempt to stimulate corporate and
foundation contributions to matching funds for these savings instru-
ments. Such donated matching funds create a saving mechanism that
mirrors the accelerated savings possible through the 401-K employer
matched contributions. By contrast, the United Kingdom rolled out
child accounts as part of an aggressive campaign to reduce child poverty.
The effort relies solely on public funds, rather than private foundation
and corporate donations, for deposits and administration, using CDAs
for redistributive and collectivist ends. Although both the United States
and the United Kingdom share the policy goal of creating asset-building
vehicles for those at the bottom of the income distribution, U.S. policy
makers thus far have avoided committing tax dollars in the way and to
the extent of the English counterparts (Waldfogel 2009).
That said, ideology can lend support even when the evidence suggests
otherwise. A growing consensus holds that microenterprise may not be
a broadly applicable strategy for individual economic advancement in
the United States and may also be ineffective as an approach to com-
munity economic growth. Support for microenterprise as an antipoverty
strategy is probably more closely tied to political ideology in the United
States than it is in the developing world (Taub 1998). However, even
the research from Bangladesh is coming under fire by researchers who
suggest that MEP have been oversold (Banerjee et al. 2009).
Social enterprise is a more complex case. Social enterprise has ac-
celerated over the past 2 decades around the world (Kerlin 2009). In
the United States, this growth is, in part, a result of government re-
trenchment to the nonprofit sector, but the growth also occurred in an
era that valued entrepreneurial, business-minded approaches to social
welfare. It is feasible that the trend might abate as the “halo effect”
(Massarsky and Beinhacker 2002, 10) dims for nonprofits’ efforts to
participate in business venturing in an era of populist outrage at business
excess. But given the increased competition for shrinking public dollars
in the nonprofit sector, commercial venturing is likely to continue to

be viewed as an attractive revenue diversification scheme.
Given the renewed focus on achieving economic stimulus through
job creation and training, the workforce development mission of WISEs
may position them to enjoy policy support under the Obama admin-
istration. Research on the European Union suggests that WISEs have
become increasingly aligned with “activist” labor market policies (Laville
et al. 2006). However, the emergence of new for-profit social business
legal structures (the community interest company in the United King-
dom and the low-profit limited-liability corporation in the United States)
suggests that capital markets, not government support, may drive the
next phase of growth of social enterprise.
Assessing the durability of BOP initiatives is more challenging. On
the one hand, the rhetoric surrounding BOP initiatives frames them as
an anecdote to anticorporate, antiglobalization social movements, in
that the initiatives represent efforts to make globalization work for ev-
eryone (Hart and Christensen 2002). Such rhetoric suggests that the
initiatives could flourish even as the excessively probusiness era of the
1990s and early 2000s comes to an end. Further, the capitalist rationale
that BOP markets represent millions (even billions) of untapped rev-
enues, may prompt multi-national corporations to pursue these strate-
gies in a post-global recession economy. On the other hand, because
BOP initiatives typically involve long investment periods prior to market
penetration and the return on these investments is uncertain, corporate
actors may not wish to take on such risk in a shaky economy.
A second, perhaps more fundamental question, asks how market-
based approaches should be compared with other antipoverty policies
against which they might compete for support. One way to address this
question is through cost-benefit analyses. Detailed cost analyses have
been done on IDAs (Schreiner 2005) and microenterprise (Schreiner
1999), but efforts to calculate benefits have so far been stymied by lack
of consensus about how to proceed. In the field of social enterprise,
the Roberts Enterprise Development Fund has done work toward de-
veloping a measure of social return on investment that includes esti-
mates of both social and economic costs and benefits (Gair 2002). This
effort has raised as many questions as it settled, highlighting the diffi-
culties in measuring the benefits side of the calculation. Future research
is needed to address this question rigorously.
More broadly, one can compare the market-based efforts to alleviate
poverty with more traditional methods by comparing each strategy’s
construction of the problem and underlying approach to the solution.
Income maintenance programs conceive of poverty as a problem of
unemployment or inability to work and offer minimal support to meet
a basic standard of need until employment is secured (if working is
deemed possible). By contrast, microenterprise, social enterprise, asset-
building, and BOP strategies frame poverty as a problem of exclusion

and offer interventions in labor and financial markets. Such interven-
tions create opportunities for the poor to participate in the markets to
build wealth. The interventions include the development of targeted
financial instruments for saving and borrowing as well as the establish-
ment of socially motivated businesses providing quality jobs.
Further, market-based initiatives reframe public spending as invest-
ment that leverages private contributions in contrast to income main-
tenance programs, which require ongoing public expenditures. It is
important to note that, in contrast to traditional income maintenance
programs, an investment approach also increases the economic risk
shouldered by the poor. Microenterprise mechanisms alleviate poverty
to the extent that individual entrepreneurs can translate the small loans
into successful businesses. Asset-building financial instruments cast their
fate with financial markets and the expectation that any asset purchases
will maintain their value. Social enterprise and BOP initiatives rely on
a steady synergy between profit motives and social goals.
There is evidence that countries retooling their poverty policies do
not view market-based approaches to poverty alleviation as replacements
for more traditional income maintenance programs. For example, the
United Kingdom, in their renewed fight against poverty, incorporated
antipoverty initiatives that feature such market-based approaches as
child savings accounts and social enterprise for workforce development
with disadvantaged workers. But these initiatives operate in conjunction
with such traditional antipoverty policies as income maintenance (Wald-
fogel 2009). This coordination of efforts suggests that such countries
embrace a strategy to combat poverty on multiple fronts with a diver-
sified portfolio of policy tools.
Conclusion
As business approaches to poverty alleviation increasingly shape policy
and practice, it is crucial to evaluate the scalability, risk, and outcomes
(economic as well as human) associated with these initiatives. As prom-
ising as attempts might be to increase access to market activities and
build organizations that harness market forces for social ends, the recent
collapse of the global financial markets and the ensuing recession re-
mind one of the need to maintain those aspects of the safety net that
offset disruptions in the market. Many questions remain about the vi-
ability of these models, how they work best, and for whom they work.
One thing can be said for certain: the landscape of poverty work has
changed.
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Notes
1. Geographical barriers typically refer to those that stem from rurality. Most of the
global poor reside in rural locales. However, geographic barriers can also be understood
in terms of the place-based discrimination faced by residents of poor urban neighborhoods.
2. For additional information on SEED and similar initiatives, see http://seed.cfed.org,
http://csd.wustl.edu/AssetBuilding/SEED, or http://assetbuilding.org.

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New Approaches to Old Problems: Market‐Based Strategies for Poverty Alleviation

Author(s): Kate Cooney and Trina R. Williams Shanks

Trina R. Williams Shanks

Recent decades have witnessed an era of unprecedented economic growth

Social Service Review (March 2010).

Expanding Access to Markets to Fight Poverty

Yunus’s analysis of the causes of entrenched poverty focuses on the role

ulate economic development on the scale of the neighborhood or com-

this trajectory (Todd 1996). Todd’s study of 40 participants in the Gra-

ner and Sherraden 2007a). Studies of other non-IDA account programs

a total accumulation of almost $1.8 million (all contributions, matched

those at the bottom of the income distribution to move out of poverty

Work Integration Social Enterprises (WISEs)

the employment costs associated with employing disadvantaged client-

govern the unique position of WISEs as socially oriented businesses.

Bottom (or Base) of the Pyramid

livery systems that engage a multitude of small, indigenous, BOP en-

NGOs) in a BOP community. Once a business plan is cocreated with

at a time when support for income maintenance programs waned, how

in the nonprofit sector, commercial venturing is likely to continue to

building, and BOP strategies frame poverty as a problem of exclusion

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