In this paper, part of the Innovations in Aid working paper series, Owen Barder raises fundamental questions about the purpose of aid transfers. For many donors the purpose is “poverty reduction” but in the relatively narrow sense of growth that reduces poverty. In fact poverty reduction has other dimensions, including enabling the poor to live better lives through long-term, redistributional transfers while their country is developing, even with programs that might not contribute to growth. Barder’s key concern is that the focus on poverty reduction through growth ignores such key tradeoffs as that between reducing current and future poverty, and between addressing the causes and symptoms of poverty. The reality of these tradeoffs stares us in the face; this is an important paper for practitioners as well as students of the way the aid system works.