Donated Caskets Killed Jobs in Haiti: Are Your Donations Destroying Struggling Economies?

In February 2010, United Property Distributors donated 100 caskets to Haiti to help bury the dead.  They had good intentions. They wanted to comfort the living by providing a proper burial for the dead.  They ended up killing jobs.  Their donation of caskets coincided with the downturn of orders to Maxima S.A. – a cabinet and casket making business in Haiti.

Thankfully Maxima S.A. knew how to adapt and had international business mentors (thanks to an organization called Partners Worldwide) who could help.  Maxima S.A. received advice and training from a company in Holland, MI (PorterCorp) on how to make transitional panel housing that meets international standards for a family of 5.  The company quickly grew from 60 Haitian employees to 260 Haitian employees who have played an important role in the rebuilding phase for Haiti.  Unfortunately, the story of well-meaning donations of goods that actually kill local economies is a common tale that has crippled Haiti and handicapped almost every country in Africa.

As a college sports enthusiast, I love following every twist and turn in March Madness for NCAA basketball. March 2011 was no exception. I cheered every step of the way as underdog VCU fought their way into the tournament and then won their way into the Final Four. In the championship game, I pulled hard for Butler to win the championship this year as an 8 seed. Unfortunately, they lost and Uconn took home one more championship trophy.

A coworker in my office immediately snagged a championship hat and t-shirt for Uconn, and it reminded me of the true tragedy behind the title game. The fact is championship t-shirts and hats were made in case the Butler Bulldogs did win the championship in their second consecutive trip to the title game. However, they lost. So their championship gear has to be destroyed or packed up and sent overseas to be handed out in some impoverished community. If World Vision decides to distribute those donated goods as they do with the NFL, NBA, and MLB championships, another clothing business entrepreneur will go out of business.
 
The unintended negative consequence of donated goods has recently been highlighted by the organization Good Intentions Are Not Enough. If you have 3 minutes, you should watch a recent video that captures the depressing statistics on how donated goods destroy African economies. At first, you will want to dismiss the statistics as misleading or unreal. But the fact is: handing out free shoes puts local shoe stores out of business and handing out free shirts makes it harder for dads and moms who sell shirts to put food on the table and shirts on the backs of children in northern Uganda, central Malawi, and the shantytowns of South Africa.
 
That is why a conference was recently held in Haiti to educate NGOs on how their donated goods are keeping Haiti entrapped in poverty. Sending goods to another country that is trying to produce them on their own defeats the purpose of your assistance.  No business can competitively price its goods and services when the competition is an NGO giving it out for free.  Make sure you don’t support “good” causes that have “bad” long-term outcomes. If you want more education on this topic, read Dead Aid: Why Aid Is Not Working and How There Is A Better Way For Africa. Do your homework so that your next donation doesn’t lower the income of the poor you intend to help.