Why we need to be wise about how we help our impoverished neighbors

In college, a group of my friends volunteered at the new homeless center in South Bend, Indiana.

We worked in the kids’ room where we babysat for parents as they ran errands. On Friday evenings, we would work at the nearby soup kitchen.

After a while, you started to believe you were the hero of the story. The soup kitchen was packed. There was a line out the door. You could feel people’s gratitude.

One Friday night, we had just finished serving and the women who ran the place said, “Why don’t you all stay and eat with us?”

Something felt uncomfortable about eating at the soup kitchen. We were there to serve, not eat their food. We declined.

We walked down the street, in not a great area of South Bend. We found a little restaurant.

It was a wonderful little place. The owner held the door for us, and his wife welcomed us. You could see an elderly lady working in the kitchen — I assume it was their mother and the head cook.

Bustling around the restaurant were busboys and servers.

As we sat down to order, we noticed we were the only customers.

I asked the waiter, “Is it always this quiet on a Friday night?”

I’ll never forget what he told me.

“Any night that the soup kitchen is open, almost nobody comes in anymore,” he said.

I sat there puzzled for a minute. What does the soup kitchen have to do with a restaurant nearby?

Then, it hit me. The competition for this small mom-and-pop restaurant was the soup kitchen. The price they had to compete against was free.

So, when people in the neighborhood were deciding what to eat that night, they had a choice: they could pay to eat at the restaurant, or they could eat for free down the street.

The choice they were all making was clear.

This episode taught me a lesson no microeconomics class ever could. Our charity and our economics are fused.

The family had a dream at this restaurant I was sitting in. It was to serve the neighborhood with delicious food at a low price with fantastic service.

The family’s dream was at risk because of the competition down the street. Our charitable work made their business less competitive, putting the restaurant and those who depended on it at risk.

The paradox is: generosity alone does not solve poverty. In fact, there are times it makes it worse.

America has spent nearly $12 trillion since President Lyndon Johnson declared the War on Poverty. Yet our poor still can go hungry, unhoused and hopeless.

Nearby in Chicago, the homelessness population has remained relatively unchanged from 2014 to 2024. But the city has nearly tripled its spending on homelessness — from $21 million to $58 million.

If more money could have solved these problems, it would have by now.

Far and away the best path for helping others out of poverty is helping them find the dignity inherent in work. In saving themselves they find self-worth and purpose.

Less than 2.5% of Chicagoans who have full-time, year-round work experience poverty.

But in Illinois, finding meaningful work can be challenging. Illinois ranks 40th in the nation for upward mobility. We over-regulate our industries and we overtax our populace. We stifle opportunities for entry and entrepreneurship, while our education system leaves too many people without the skills to thrive in available jobs.

I have hope we can turn things around. There is no reason the state cannot become a beacon of hope and prosperity. We need to change the way we think about helping those in need. We need better policy.

In the Middle Ages, Rabbi Moses Maimonides developed an eight-tiered hierarchy of giving. The highest form of charity is one that results in the recipient becoming self-sufficient instead of relying upon others. The lowest form is forced giving: taxation. The extremes are reflected in the old adage: give a man a fish and he eats for a day; teach him to fish and he eats for a lifetime.

Seems like a good mindset to start with.

• Matt Paprocki is president and CEO of the Illinois Policy Institute.