- The reduced motivation to improve their own circumstances, beneficiaries end up without any long-term savings
- The notion of self-reliance diminishes, and a sense of entitlement takes hold, hindering personal development
Sometime back, I was reading the book Toxic Charity by Robert D. Lupton and I couldn’t help but think about how much harm we cause and sustain with our well-intended acts of giving.
You would think that since we are in a challenging economic period and disposable incomes have gradually been diminishing; the increased calls for help from your relatives and friends are justified.
Unfortunately, and unknowingly, you may have created what the author terms as a Cycle of Toxic Charity.
The cycle, I believe, perpetuates poverty and dependency within our communities. This brings us to the question; to what extent does toxic charity contribute to poverty in retirement and what can we do to break from this cycle and promote sustainable financial well-being.
Reluctance to save
Continuous reliance on charitable handouts can discourage individuals from prioritising personal financial planning - including saving for emergency and long-term financial planning goals like retirement.
According to the author, when you give once, you elicit appreciation. Recipients often express genuine appreciation for the support received. They recognise the immediate benefit and are grateful for the help.
Upon repeated assistance, however, the recipient begins to anticipate and expect future assistance.
They may come to rely on this aid as a consistent source of support, rather than exploring avenues for self-improvement or financial growth. To put it bluntly, the giver becomes the recipient’s ‘emergency fund’ but unlike the actual emergency fund, they don’t feel obliged to make any deposits.
The reduced motivation to improve their own circumstances, beneficiaries end up without any long-term savings and consequently financial insecurity during retirement years.
Entitlement
The reluctance to save slowly erodes an individual's sense of personal responsibility. At this point, the beneficiary enters into the last stages of the toxic charity cycle characterised by entitlement and dependency.
During these phases, recipients no longer see assistance as a privilege but as something they deserve.
The notion of self-reliance diminishes, and a sense of entitlement takes hold, hindering personal development and preserving dependency.
It creates a culture where financial independence is undervalued, further reducing their drive to take control of their own retirement planning.
Tragically, most African households are at the last stages of the toxic charity cycle which is further (negatively) reinforced by societal expectations. For example, a sibling who continues to tend to their livestock while their elder brother lives in the city is considered abandoned.
The village people may express concerns about why the city dweller does not help their sibling. This is regardless of the elder sibling’s financial situation.
While young graduates may have a budget allocated towards their siblings, their situation might change as they start a family or encounter tragic incidences such as incapacitation or losing their jobs.
In such cases, a sibling who was highly reliant on their brother or sister may fall into abject poverty.
Eliminating dependency and poverty
To eliminate the need for charity (and consequently toxic charity) in our society, we must empower the beneficiaries through education and skill building. Effort for a mindset shift is also critical.
This equips individuals with the knowledge and tools necessary to become self-sufficient and financially literate.
Mentorship and financial coaching are also helpful. Family meetings should now have an agenda on personal financial management. Mentors and financial coaches can guide individuals on their path to financial independence during such forums.
They can help with personal financial planning such as budgeting and provide ongoing support and accountability.
They can also work with the individuals to tailor retirement plans where individuals are advised to have a clear picture of their expenses in retirement, have a post-retirement medical cover and perhaps opt into an income drawdown fund to avoid outliving their savings and subsequently, relying on family for assistance.
To conclude, I am yet to see a nation, family, or individual that rose out of poverty through a sustained mindset of dependency. We most likely exchange and sustain poverty through free things. In earning is dignity and wanes off dependency and entitlement syndrome.
Free things deprive the recipient of the dignity that comes with earning financial freedom through work. When everyone wins everyone is free of each other’s burdens.
Simon Wafubwa is the CEO of Enwealth Financial Services Ltd