Effect of Charity on Poverty Reduction in District Malakand

Abstract

This paper aims to empirically investigate the effectiveness of charity as a tool of poverty reduction among poor households in District Malakand. To achieve the above objective, the data was obtained from 181 poor households of district Malakand with a well-structured interview schedule. The impact of charity on poverty is achieved in the context of the burden of poverty, specifically in terms of poverty incidence, poverty deepness and poverty severity. The above objective is fulfilled with the help of different poverty indices i-e Headcount index (HI), Poverty gap ratio (PGR), Mean income gap (MIG), and Sen Index (SI). The study also attempts to find the impact of charity on income inequality by applying Gini Coefficient and Lorenz Curve. Results of the study show that charity distribution has a positive effect on the incidence of poverty, the extent of poverty and the severity of poverty. It means that with charity the income of the poor people increases. The results from Gini Coefficient and Lorenz curve also suggest perfect income equality of charity distribution among poor households in District Malakand.