Thanks. You are one of the few who have answered without spinning off somewhere else.
By the way, I do not know the answer to my question -- that's the reason I asked. I'm interested in hearing people's responses. I'm dubious as to your "creating institutions" statement -- it sounds wonkish, the type of thing to come out of a study or institute without being overly practical.
From observing myself and others who have come out of poverty, it is not intelligence, or money, or luck that makes the difference, most of the time. It's having personal one-on-one examples as a child, having a good attitude, and basically trying and not giving up. 90% of life is simply showing up.
I can observe, however, that western societies are creating multi-generational poverty. LBJ sat on a porch in Appalachia 40 years ago and declared a war on poverty. Since that time the U.S. has spent trillions and has the same basic poverty rate it had before. In fact, the same place LBJ stood is still an impoverished area.
I feel like there is a long, long, long way from where the politicians and spin doctors are, and what makes a real difference. I am also dubious that you can take the things that work and scale them. In the end, I think it comes down to religiously-motivated, local groups, personally trying to make a difference one person at a time. I don't think any of that scales very well. Although some people (mainly the ones looking for funding) would like us to believe it would. But that's just my opinion. I would like to do more -- hence my original comment.
I also think that money for eradicating poverty would be better spent on scouts who can spot people or groups or communities worth being helped instead of helping them all.
Some examples that may inspire some hope: http://www.nytimes.com/2009/05/08/opinion/08brooks.html (or for a more reputable but lengthier description of the same program, http://www.economics.harvard.edu/faculty/fryer/files/hcz%204... )
If you grow up in an environment where getting good grades is actively discouraged by your peer group, your parents have poor/counterproductive parenting skills, you consequently have low cognitive abilities, and you have every incentive to drop out and sell drugs, then it's possibly too late, and no amount of cash in your pocket is going to help you. But if you have good parents, grow up in an environment that values education and that's safe enough and free enough of distractions so that you can learn, then you'll likely be in your category #2 above. Small advantages that begin at infancy accrue and snowball over a lifetime, and that's one reason why middle/upper class kids _generally_ tend to grow up to be middle/upper class adults.
From http://chronicle.uchicago.edu/970417/mayer.shtml --
"Increasing parental income not enough, according to study Increasing parental income alone is not enough to break the cycle of poverty, according to a new study by Susan Mayer, Associate Professor in the Irving B. Harris Graduate School of Public Policy Studies.
Even if their incomes increase, parents who have experienced persistent periods of poverty often have such problems as chronic illness and low cognitive skills that make it difficult for them to help their children escape poverty, Mayer reports in her new book, What Money Can't Buy: Family Income and Children's Life Chances. . . . The study shows that non-monetary factors play a bigger role than previously thought in determining how children are able to overcome disadvantage, Mayer explained. "Parent-child interactions appear to be important for children's success, but the study shows little evidence that a parent's income has a large influence on parenting practices.""
So in answer to your question, what would I do to help the poor, I'd say it'd have nothing to do with spending my money and everything to do with spending my time, say, tutoring and hopefully inspiring a child.