Philanthropy

Sean Stannard Stockton, who writes the blog Tactical Philanthropy commented Kiva.org’s problem finding enough people to borrow all the money that people want to give. He rightly points out that there are probably many people who would like to borrow, but aren’t able to for lack of microfinance access - leaving Kiva and its partners with the challenge of building that access. This supply-demand balancing act is to be expected.

I’d like to add that this may be another case in which philanthropists should be more open to what they are willing to support. It may be more emotionally rewarding to give money directly to a microentrepreneur in Chile than the NGO that transfers the money, but it may not be as effective in the long run. Microfinance institutions can’t expand their client lists without resources.

There are a lot of interesting things to hear in this Forbes.com Video interview with Robert and Lucia Duvall. They are talking about the Latin American microfinance institution Pro Mujer. As their name suggests, Pro Mujer is specifically aimed at providing loans to women entrepreneurs. They also provide business training and healthcare. Neither of those things is unique, but Pro Mujer is known for doing a particularly good job with its assistance activities.

The Duvalls are donors to Pro Mujer, and are also using Robert’s fame to get the word out about the organization. I’m interested in the way Robert described Pro Mujer as “not really a charity”. This is a common way of looking at microfinance - it isn’t charity because people have to pay you back. You are really just helping them help themselves. Why do we feel the need to differentiate? What is wrong with charity? These are central questions in the field of philanthropy, as charity is one of the principal reason for philanthropy to exist.

The questions are also extremely complex, and I’m not going to be able to do them justice in just one post, but I hope to come back to the subject over the next few months, because we don’t confront it enough.

Today I just want to understand why Robert Duvall doesn’t want us to think that Pro Mujer is a charity. To start, my assumption is that he doesn’t have a problem with us believing him to charitable.

I think he doesn’t want us to picture Pro Mujer’s clients as the recipients of charity - as beggars. The perception, I believe, is that those who receive charity are wretched, or somehow culpable in their poverty. Also, they are powerless and dependent on philanthropists for their salvation. They are not active participants in their development process.

To just give someone money under these circumstances is almost oppressive. It puts them in a position of weakness. But I don’t think it has to, because the perceptions I just wrote about are completely ridiculous. I see nothing wrong with accepting help from those who have much when the same luck of birth gave you so little. There are some traditional charities that infantilize their beneficiaries, but the good ones do not. At least, that is what I would like to believe.

I will leave the question, “Is microfinance ‘not really a charity’?” for another time.

When the President spoke last night he categorized most foreign aid under the heading “compassion”. He specifically mentioned 1) Food Aid Reform, 2) HIV and Malaria Control and Prevention, 3) Basic Education Assistance, and 4) the Millenium Challenge Account.

Compassion was also mentioned briefly as a side note to “Keeping America Safe by Fostering the Freedom Agenda”. (One interesting thing, when you go to that link, notice that the URL still refers to the “Freedom Agenda” as the “Global War on Terror”, or “GWOT”).

I’m most interested that the President is still pushing for his food aid reform. This is a rational policy that I hope he is able to get through Congress this time. All the President wants to do is use some of the Food Aid budget to buy food from farmers who are close to the beneficiaries.

The way we do it now is to buy from US farmers and ship the food around the world using US shipping companies. It costs as much as 2-3 times more to do it this way and depresses local food prices (sometimes that might be a good thing, but falling prices discourage local farmers to grow food.)

Before when the administration tried to change to a mixed approach they were blocked by lobbying forces in the food and shipping industries. The Center for Global Development posted on this issue when it came up in 2005.

The Gates Foundation got some more insults today. It’s a little depressing that something as fundamentally positive as the world’s richest man giving away billions of dollars to benefit the world’s poor gets so much negative press and so little positive. All the positive articles I turn up for Gates Foundation are obvious press releases, and therefore not all that interesting to read. It isn’t that I think the world has it out for Gates, but I do think that it is somehow more fun to point out the negative.

The criticism this time has to do with a series of public service announcements that Gates supported to raise awareness of HIV in China. The entire campaign is under the slogan, “Life is Too Good”. One of the PSAs features Jackie Chan. It is a good ad, from an entertainment perspective. It features a well-choreographed fight seen  and some nice camera work. Unfortunately, this analysis in the Guardian has got a really good point on the PSA’s effectiveness - or lack thereof. The ad doesn’t give the viewer any information on the threat or tell them what they can do to protect themselves. Instead it just gives a vague rallying cry.

To be fair to Gates, Chan, and UNAIDS (who were also involved in making and distributing the campaign), I can’t imagine that it is easy to get Chinese government approval for an HIV awareness campaign. They have been very timid about their HIV problems for a long time. I have some experience working on this issue in other tightly-controlled media environments, and believe that there is a value in putting out a vague ad, if only for the implicit message that the central government now approves public discussion of HIV. By airing these ads, they may be making it clear to provincial health officials, doctors, and school principals that HIV is an issue they are allowed to deal with. It still isn’t an optimal use of HIV prevention money, but I don’t think it was a waste of money either.

Here’s a pro-Gates perspective in the Herald Sun, an Australian morning tabloid owned by News Corp.

A study has shown that there is only a small correlation between corporate social responsibility practices and profitability. Particularly scandalous corporate behavior brings poor profits, though. The study authors interpret (and admit they are being cynical with this) that it pays to be good, but not too good. Put another way, profit should not be the reason for socially responsible activities.

Pranay Gupte isn’t so impressed with Bill Gates’s “creative capitalism. He rightly points out that Gates isn’t being quite so creative as the press corps thinks.

But I’m personally not convinced by the reductio ad absurdum that Gupte uses to imagine corporate CEOs tromping through the “mud of Madagasgar” with tins of foie gras strapped to their backs. We should give Gates a little more credit than that. His idea is considerably more complex than a corporate Peace Corps. I think he is more talking about changing the incentive structures that drive corporate life in order to better serve the poor.

Gupte also points out that Foreign Direct Investment has great potential to create jobs. His analysis is worth reading, but I worry that like Gates is with a new kind of capitalism, Gupte is setting up FDI as a silver bullet.

Here’s a nice video interview with Muhammad Yunus in which he discusses the changes he would make to capitalism. I tried to embed it, but something went wrong. But the link also gives a useful transcription.

Bill Gates spoke at the Davos Conference yesterday and made a call for a kinder, more creative form of capitalism that will provide services and products that the poor need. He’s absolutely right, the medicines and agricultural technologies needed by those in poor countries don’t get the attention they deserve. There are profits to be made from these services, and the poor could still benefit. I worry that Gates might think that reforming capitalism is a silver bullet, though. There isn’t a silver bullet for global poverty. Pro-poor capitalism would be another great tool, but it isn’t going to solve everything on its own.

The WSJ asked former World Bank economist (and all around dour pessimist) William Easterly to comment, and he was skeptical. “There’s a lot of people at the bottom of the pyramid but the size of the transactions is so small it is not worth it for private business most of the time.”

Finally, my favorite quote, because it could only come from the WSJ. “With today’s speech, Mr. Gates adds his high-profile name to the ranks of those who argue that unfettered capitalism can’t solve broad social problems” (italics mine). Next, Mr. Gates is going to take the controversial, forward-thinking position that the common cold is actually caused by a virus.

PepsiCo has donated $6 million to the Earth Institute and will partner with H20 Africa, an NGO trying to increase access to clean water in rural Africa. The press release wasn’t terribly specific, but I think that the $6 million donation will be supporting the Earth Institute in several sectors - water, climate, and agriculture - not just water as the release title implies. It also isn’t clear what form their partnership with H20 Africa will take.

A fun thing about the press release is the number of times it mentions that Professor Jeffrey Sachs is the director of the Earth Institute and Matt Damon started H20 Africa. A cynic would say that this press release had more to do with providing PR for Pepsi, Sachs, and Damon, than with providing useful information on an important initiative. Pepsi in particular may be trying to correct a publicity problem. Their chief rival got into the clean water game last year.

But I’m just being grumpy. All press releases are about getting good PR, and I think charitable foundations are entitled to it. Also, clean water is a big deal. As the release points out, there are over a billion people without access to safe water, which makes them more susceptible to disease and hobbles their efforts towards economic advancement. Its an issue that needs a lot of banging drums, even if the drummers do have a number of side motivations.

But I’d still like the press release to tell me more about what they plan to actually do with the money.