It is generally agreed that spending on education and health is key to poverty reduction, but simply allocating more resources to these sectors does not ensure that poverty actually declines. On the basis of four in-depth case studies (on Indonesia, Madagascar, Peru and Tanzania) and three Technical Papers on malnutrition and primary education in sub-Saharan Africa, this Policy Brief demonstrates the need to rethink the distribution of social spending and the way these sectors are managed. Instead of simply providing services to the poor, it is necessary to meet their demand for services; instead of thinking solely in terms of resources, in the belief that increased funding will suffice, we must judge policies by their outcomes and enhance the efficiency of these sectors. Health and education expenditures need to be better targeted, and this Policy Brief recommends measures that always benefit the poor -- and only the poor. Lastly, to break the process by which poverty is transmitted from one generation to the next through the action of numerous negative externalities, initiatives must be integrated to form a coherent, long-term strategy that involves the participation of all stakeholders. (A bibliography is included. Contains 1 box and 2 tables.)