Is child sponsorship ethical?

More than nine million children around the world are sponsored by Western donors and a major new report on the work of one aid agency has found that sponsorship does improve children's lives. It has reopened a long and fierce debate over whether this hugely popular form of giving to the poor is either ethical or effective.

There has been very little previous research into whether the $3bn (£2bn) transferred from the rich world to the poor through sponsoring children actually has a measurable impact.

So academics from the University of San Francisco decided to undertake the most wide-ranging study yet in six developing countries - Bolivia, Guatemala, India, Kenya, the Philippines, and Uganda.

They interviewed more than 10,000 adults and looked at the lives of those who had been sponsored as children by the agency, Compassion, and compared them to their peers who hadn't been sponsored.

Dr Bruce Wydick, professor of Economics, was surprised at the findings (recently published in the US Journal of Political Economy): "As a development economist I am used to seeing very modest outcomes from aid programmes, but we were amazed at the size of impacts on kids."

The results showed that the sponsored children stayed in school longer than their non-sponsored peers, were more like to have white collar jobs and were more likely to be leaders in their communities and churches.

In Uganda the impact on education was particularly striking. The sponsored children were 42% more likely to finish secondary education than those not part of the programme, and 83% more likely to complete university.

These results don't come as a shock to Peace Ruharuza.

She grew up in rural Uganda, as one of 14 children. As a small child she worked as a domestic helper. At the age of nine, she was chosen to join a Compassion programme and was sponsored by a Canadian family. She now lives in the UK and helps run a charity (Fountain of Peace) for poor children back in Uganda.

She has no doubts that sponsorship gave her the boost she needed: "It gave me a new lease in life, helped me become what I am and to change a generation."

Peace argues that you have to invest in a child if you want to change a community. She says she was also able to help her siblings and the children of friends.

But critics of this form of child sponsorship argue it is unfair and discriminatory; while one child is helped others in the community are left behind.

Most agencies, like World Vision and Plan International, now steer sponsorship money more broadly to development projects like water supply, nutrition or schools.

Originally the San Francisco researchers had hoped to do a comparative study of different agencies' programmes, but for this project only Compassion chose to take part.

Justin Byworth, chief executive of World Vision, the biggest child sponsorship charity in the world, said that they did not participate because it's harder to evaluate their projects.

"The way we do sponsorship, everyone in the community benefits equally, so this piece of research wasn't appropriate for us. In 2012 our impact report showed clear reductions in child mortality and malnutrition and improvements in education across sponsorship programmes."

Compassion has often been criticised for proselytising, with its sponsored children being selected by local churches and given an evangelical Christian education. But Dr Wydick, who has worked as a consultant for World Vision and Compassion, found the spiritual aspect of sponsorship might be intrinsic to transforming children's lives.

In a follow up study of children currently being sponsored by Compassion, he found they scored better than their peers on happiness and hopefulness. He argues that building children's self-esteem and aspirations could be as important as providing financial help and schooling.

He said: "'Bringing hope to children is a trite phrase but it actually may be a profound and little researched aspect of development."

For Compassion's CEO, Ian Hamilton, the research vindicates their one-to-one model.

"We've always believed there's a huge psychological benefit for a child to know that someone on the other side of the world really loves and cares about them," he said.

"This research has reinforced that message. Unfortunately all aid has to be selective and we can't help everyone."

But this issue will still be hotly contested, as long as so much money flows into aid agencies from child sponsorship and so many children's lives are affected by it.

Update 30 July 2013: This story has been amended following a complaint.