Another thing that needs to be said is that kids develop at different levels. While on the internet everyone is John Locke and has read Plato's collected work before age 5, kids in the real world develop on their own schedule. I have an 8 year old cousin who is raised in a good family and he struggles with reading. Someone like your nephew, who has a shytty family and could easily have emotional, mental health or learning problems has the deck stacked against him. So while it is good that you are making the effort, you are the one who needs to help him. It isn't enough to download some reading software and call him a retard if he doesn't get it at first. You are the one who then needs to reexamine the problem based on the information you've collected and then try again.