How do social institutions contribute to the problem of poverty?
You can argue that social institutions contribute to the problem of poverty by creating a system that perpetuates that problem. Let's look at this from two ideological perspectives.
A liberal might say that the public schools contribute to poverty. Liberals would say that public schools are underfunded (especially in poor areas). They would say, therefore, that underfunding leads to poor students getting an inferior education. This education makes it harder for them to escape poverty.
A conservative might say that the social institution of big government helps to cause poverty. Such a person would say that our big government gives welfare type benefits to people and thus encourages them to avoid work and to avoid behaviors that would be likely to bring them out of poverty.
So our social institutions of education and government can be said to contribute to the problem of poverty.
Take for instance the social institution of banking. In almost all countries banks lend money only to the already rich and well to do people. The ostensible reason being that only these people will be able to repay the interest and the principal amount. Consequently, wealth and capital become the privilege only of the already rich and wealthy and they continue to become richer day by day. Not infrequently some of these wealthy and rich elite are not able to repay their loans resulting in the complete collapse of the bank which lent them the money in the first place.
The frugal poor people who have deposited their funds with these banks bear the brunt of this economic collapse when these banks fail to refund their deposits. In this manner the already poor people become poorer.
Social institution can add to poverty or help to reduce poverty depending on the nature of the role played by them. For example the old system of aristocracy that played such an important part in government of societies and kingdoms, tended to favour the well to do class of people a the cost of the common farmers and labourers. In contrast, governments of most of the civilized countries try to combat poverty by encouraging economic development, protecting the interest of the weaker sections of the society, and more equal distribution total national income by differential taxes.
Social institutions contribute significantly to the problem of poverty because of stereotypes and norms. It is true that there always have been poor people. Poverty continues in America, in large part because of the distribution of power. The people who control the wealth are among the most powerful, whereas the poor are among the powerless in America. Another problem relates to the location governmental and nongovernmental agencies that help the poor. These agencies are not always found in the areas where the need is the greatest. In addition, the political structure is detrimental to the poor because of the multiple decision-making centers (federal, state, and local government levels). Given the multiple decision-making centers and the class composition of government, it is no surprise that the middle and upper classes benefit far more from government programs than do the lower class generally and the poor particularly (Lauer & Lauer, 2008, pg. 176-177).