The Foreign Policy Association already has a blog on the 2008 elections. But as we get them narrowed down, I’ll also be keeping track of what the candidates say about foreign aid. The One campaign asked all of the candidates to explain their plans to address global poverty. Many replied with video as well as written explanations of their specific inititatives.
The New York Times commented yesterday (registration required) on the problem that humanitarian NGOs such as the Red Cross are having with earmarked donations. When too many donors say that 100% of their money has to go to a specific cause, NGOs aren’t able to react to sudden issues or less-publicized crises. They also have trouble paying their non-emergency bills - like headquarters salaries. Like anyone whose every worked with an NGO, I have experienced this debate, and it isn’t just private citizens who do it. Governments can be just as bad about forbidding institutional spending.
It is understandable to want our money to go to those in need, not NGO staff. Also there some NGOs that charge unconscionable indirect costs to their projects. But some indirect costs have to exist and provide value to activities. As just one example, any analysis of a failed humanitarian effort will tell you that a key problem was lack of sufficient planning. Unfortunately, most emergencies happen fast enough that planning is seen as a luxury. Indirect costs from projects help fund positions in headquarters and field offices to monitor potential crises, allowing them to plan ahead and put a quality project on the ground.
Choosing where to give a charitable donation is a tough choice. Like choosing a stock you need a lot of information, and then just use your gut. like to use Charity Navigator to learn about NGOs before I give. It doesn’t tell the whole story on the NGO, but it is a great start.
Yesterday, Google.org announced the five core activies that they will pursue for the next five to ten years. All are intimately connected to technology. The dollar amounts announced today are small when compared with those the Gates Foundation throws around - only $25 million in new grants and $175 million over 3 years - but that isn’t a fair comparison. Google sets as its goal to donate 1% of their total equity and 1% of annual profits to philanthropic purposes.
The five core activities are:
1. Technology to predict and prevent crises such as epidemics
2. Information sharing and analysis in public services
3. Small and medium enterprise investments
4. Cheap renewable energy
5. Commercialization of Plug-In vehicles
According to new research published in The Lancet, early childhood nutrition has even more impact on an individual’s lifetime health, education, and earning potential than previously thought. The journal published a series of five reports on the topic. They are available for free download. I recommend the executive summary, which is only 12 pages long and gives most of the key findings.
The fourth and fifth articles discuss the global and national systems for improving early childhood nutrition. They are worth reading, but don’t expect to find anything earth shattering. The four recommendations to the international community are: 1) stewardship of national programs, 2) mobilization of financial resources, 3) direct provision of nutrition services when local organizations are unwilling or unable to do so, and 4) human and institutional resource strengthening. All of these things are already happening, and make up a large part of overall health sector development activities.
To be fair, The Lancet isn’t claiming that these are original ideas, they are all apt suggestions, and it is reiteration of important points is often justified. Two things that struck me:
1) The journal argues that increased resources are due to nutrition. A particularly useful point made is that the world community spends approximately $250-300 million each year on nutrition, but $5.7 billion on HIV/AIDS, even though they are approximately equal in terms of Disability Adjusted Life Years (DALYs) lost. (A DALY is a public health statistic used to compare the relative severity of health problems.)
This argument isn’t enough to justify equal emphasis of HIV and nutrition, but the disparity between the two funding amounts is staggering. As a small step towards correcting it, the Gates Foundation has donated $38 million to the Global Alliance for Improved Nutrition to increase public-private partnerships for nutrition.
2) The third recommendation (direct provision of nutrition services) is accompanied by a caveat that it is a distant second choice to national governments handling the problem with their own systems. I doubt they will get much disagreement there. But if the articles have a central argument I think it is that childhood nutrition deserves to be treated as a health emergency. That means vigorously addressing immediate problems while laying the groundwork for sustained activities.
Doing this will require a large scale service provision by the international community in many of the countries named in the report. If their systems were up to the challenge they would be doing better. Making this balance is a tricky thing and aid agencies are pretty bad at it. The decision to go ahead can be justified, but it isn’t as simple a call as The Lancet makes it out to be.
The Guardian reports that many multibillionaires choose to give their money to charity for the sake of their children. They feel that to inherit such vast fortunes would ruin their children’s lives in a Hilton-esque way. This feeling is behind William Barron Hilton’s recent donations as well as Warren Buffet’s. Buffet gave a great quote: “A very rich man might leave his children enough money to make it possible for them to do almost anything they want, but he would be a fool to leave them so much money that they ended up doing nothing at all.”
This touches on my last few posts on private giving. I’m forced to wonder if Chinese billionaires feel the same way - and I assume that they don’t. Li Yuan suggests that for them the point of having a fortune is to provide it to your family. If our super rich are realizing that sustaining their wealth for many generations is not even in their children’s best interests, why do they continue to raise such fortunes?
I’ve been meaning to post about remittances - the money that migrant workers send home - because they are specifically mentioned in the Great Decisions Show You don’t hear that much about them, because they aren’t usually used to fund giant initiatives, but they already account for more than Official Development Assistance.
But when I began my research I found that a very smart person named Thor just wrote about it on his blog, Don8 Aid, and did a terrific job covering the issue. With luck I’ll someday have something to add, but for now, Thor makes a persuasive argument that remittances should be encouraged by aid agencies through lowered transaction costs.
Li Yuan writes an interesting column in the Wall Street Journal about the Chinese perspective on American business.
Yesterday’s column tried to answer the question, “What is US-style philanthropy, anyway?” She comes up with a mixed bag, and some of the reasons she finds for why Americans give their time and money for others are quite funny. She also points out that although Americans surely are a charitable lot, we are often more willing to send it to unnamed “poor people” abroad than to our own families.
The Financial Times has published a list (registration required) of the top private charitable donations of 2007. William Barron Hilton takes the top spot by giving $1.2 billion to his father’s foundation. The top ten were:
1. William Barron Hilton - $1200m
2. Jon M. Sr. and Karen H. Huntsman - $750m
3. T. Denny Sanford - $474.6m
4. George Soros - $474.6m
5. John W. Kluge - $400m
6. Sanford I. and Joan H. Weill - $328.5m
7. Michael R. Bloomberg - $205m
8. T. Boone Pickens - $200.8m
9. Robert Day - $200m
10. Eli and Edythe L. Broad - $176m
The list included both domestic and international charities of all types - university donations, scholarships, research projects, and NGO grants. The Chronicle of Philanthropy wrote an analysis of the giving. Twenty people gave more than $100 million, and overall funraisers considered it a strong year. The article got an interesting quote from Brookings’s Gregg Easterbrook:
“You look at people who could give away half of what they possess and still be billionaires, but are hoarding for themselves — these are people society ought to view in contempt, and not feel grateful for the crumbs from the table.”
I don’t know how I feel about that, on one hand he is right. The conspicuous, ridiculous wealth he mentions is shameful in light of global poverty. But it brings up the ancient question of where we should draw the line. Is it OK to be a billionaire? A millionaire? Is it OK to be a middle class American? I honestly don’t know.
This weekend the FT wrote a nice article (registration required, but free) about Kiva.org. Kiva is an exciting tool that allows regular people to make micro-loans (generally under $500) to entrpreneurs in developing countries. In minutes you can go online, find the entrepreneur you want to work with, and make your loan. Then you can use Kiva to track your loan portfolio and the entrepreneur’s success. Kiva works through pre-existing microfinance institutions, which is another nice touch and is much preferable to them setting up their own field offices everywhere.
These are loans, and lenders are paid back (unless something goes wrong. They currently have a 0.2% default rate). One thing that may bother some lenders is the interest charged by microfinance institutions.
People receiving microloans usually pay much higher interest than Americans have seen in a long time - 15% or higher seems to be pretty common. The reason for this is that every loan carries administrative costs for the lending institution. These costs aren’t directly related to the size of loan. A $100 loan may require as much administrative time as a $1,000 loan, for example.
High interest is just part of making microfinance services available to poor communities. But some lenders may be uncomfortable that their philanthropy is being given out with such a heavy interest burden, and may want to consider giving to a more traditional charity.
The LA Times seems to have appointed itself the official Gates Foundation watchdog. Last week they printed a scathing report on the negative effects of the investments the Foundation makes with its endowment funds. To give you the flavor of what it says:
“The Gates Foundation has poured $218 million into polio and measles immunization and research worldwide, including in the Niger Delta. At the same time that the foundation is funding inoculations to protect health, The Times found, it has invested $423 million in Eni, Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp. and Total of France — the companies responsible for most of the flares blanketing the delta with pollution, beyond anything permitted in the United States or Europe.”
This is sad, not unexpected, but sad. A smaller foundation investing in less-than-ethical companies would be identified as hypocrits, but with tens of billions to invest the Gates Foundation can really muck things up if it isn’t careful. It’s big enough to face the same consistency questions that the major government donors face with their foreign policies. But Gates has the luxury that it doesn’t have to balance national interest or domestic politics with development goals. They should be able to change their investment strategies quickly.