Philanthropy

It was pointed out to me offline that I neglected to mention the controversy that surrounds (RED). The campaign has been accused of spending too much money on marketing, and not enough on donations to the Global Fund. (RED) disputes the estimates, believing that their critics count the marketing budgets spent by their corporate partners. As my earlier post suggests, this isn’t necessarily unjustified. Gaining brand recognition is a large part of the point of (RED). Still, the people buying their GAP t-shirts should know how much of their money is going to buy AIDS meds, and it is wrong to mislead them.

(Product) RED has now raised $50 million dollars from the sale of specially-branded, socially-conscious merchandise. This money has gone to the Global Fund to Fight HIV/AIDS, Tubercuosis, and Malaria to help with their projects in Rwanda, Swaziland, and Ghana. If you haven’t given (RED) a look, you should, because it’s an interesting idea. Yes, the parantheses are annoying, but the project’s goals make up for it. The idea is to raise money by giving consumer’s the option of buying something they were going to buy anyway, but instead of showing brand loyalty for no good reason, they should show brand loyalty because the money goes to a good cause.

Did (RED) come up with this idea? Of course not. Newman’s Own has been doing it for 25 years, and I doubt they were the first. But (RED) is expanding the concept in at least two ways:

First, (RED) is trying to start a revolution. Newman’s Own wants to benefit some charities while selling you some pretty good salad dressing. (RED) wants to change the way you shop. They want you to always have the option of buying something that gives back.

Second, (RED) is putting a lot of effort into strengthening the Global Fund’s brand. Do you know what charities Newman’s Own supports? Neither do I, and I just spent five minutes reading their website. (RED) wants consumers to know what they are supporting, and for that consciousness to be a driving factor in their purchases.

Both of these are good things. Personally I see more potential in the second, because so far we aren’t talking about a lot of money. (RED) raised $50 million in 20 months. That’s fantastic, but even if they had raised that in 12 months it wouldn’t get them into the top 10 national governments donating to the Global Fund in 2007 (look for the linked Excel file on the left). The US alone gave over $500 million.

It’s going to take a while for consumer power to be a driving force in the funding of HIV/AIDS control around the world. But by improving the Global Fund’s brand - making people aware of it and public support it - (RED) might be able to help keep political support for the Global Fund high. Keeping governmental support for foreign aid high would be a major contribution, one that would far outweigh (RED)’s direct financial contribution.

I just watched a video at Quimera.tv about the global USAID healthcare project, Private Sector Partnerships (PSP-One). This video is about 15 minutes long (I didn’t time it, though) and is pretty clearly a PR piece meant to calm fears about public-private partnerships, but does an overall fair job presenting the issues.

Two thoughts:
- If it has a thesis, it seems to be that NGOs and governments should get over their habitual anti-profit mentality. One speaker notes a common reaction to public-private partnerships that says “yes, we’ll work with private companies, but not if there is anything in it for them.”

I agree with the video’s argument, but I don’t think it is possible to convince the other side. It seems more like a question of worldview. Some people believe that foreign aid should be charitable, and that profit motive is counter the charitable impulse. I don’t think this worldview is centered in judging the effectiveness of programs - or at least that isn’t the overriding priority for them.

- One problem I have with the video is that it confuses a few types of private sector involvement that I see as separate:

1) Private companies producing public health commodities for the use of people in poor countries and marketing them independently.

2) The same thing - only instead of doing their own marketing, private companies sell their products to aid agencies.

3) Private healthcare providers taking over public health responsibilities.

4) Non-health related international companies giving money for CSR.

All of these can potentially be public-private partnerships, but they give completely different responsibilities and risks to the public and private parties. They also entail different moral hazards. The first item on the list is relatively uncontroversial, but numbers 3 and 4 can be dicey (not bad, just trickier). It’s important to be clear which we’re talking about.

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There are a lot of XO laptop reviews out there. David Pogue’s in the New York Times is very good, as is the one in Laptop Magazine (which features commentary by an 8-year-old). Either of these reviews will give you an excellent rundown of the XO’s technical capacities. My son’s has been in the house for a week now, and I think it’s a wonderful machine. I’m impressed with the attention to detail in the physical utility of the device like the spill resistant keyboard and the low power consumption screen that is easily read in sunlight. The software is also intuitive and easy to use - with the exception of a game called Turtle Art that I can’t understand at all. My son is too young for the XO (he isn’t two yet, and infants are NOT recommended as users) but he loves it just the same. The XO logo that looks like a child fascinates him and the overall design sucks him in. It’s a smart piece of technology designed purposefully for children in the developing world. Projects like this don’t come around often enough.

The purpose of this review isn’t to review the physical device, however. I want to talk about the One Laptop Per Child initiative (OLPC) and whether or not it is likely to really accomplish its goals. Set aside for a moment whether it is really feasible to get 150 million XOs to children around the world. Even if they did that, would it make much of a difference in education? I don’t think so. There are several problems with the OLPC’s project model that make it unlikely to achieve any significant changes in the developing world.

The biggest problem is that OLPC sees its role as building, selling, and shipping computers - nothing more. Ministries of education and the children themselves are responsible for servicing the computers and incorporating them into classroom curricula. These are huge tasks. How often do you call tech support for your PC at home, or get help unjamming the photocopier at work? I do all the time. New technologies generally require more tech support, because the bugs haven’t become known and the users aren’t as familiar with them. As far as I know there is no reason to think the XO won’t face the same issues. Despite this, OLPC has only a limited capacity to provide tech support for the machines they sell. After a few months this service will not be available. Without a training program to prepare local people to provide technical support, the XOs will become useless very quickly.

Teacher training is perhaps more important than technical support. Without it I have little confidence that the XO laptops will ever be seriously used in schools. The XO’s software package is user friendly, yes, and a good wiki is available to guide users through its paces, but that doesn’t really help a village teacher use it in his or her lessons. I’ve played around with the software - a paint program, a word processor, a web browser, some games, a calculator - and for most of them it isn’t really obvious how they can be used in a classroom setting. Teachers will need some guidance to get started. When my Iowa elementary school first got computers, we didn’t use them much. Even when my high school received limited internet access, none of my teachers incorporated the web into their classes. They had lessons that they knew worked, or at least that they were comfortable with, and didn’t see any reason to change them. There were some early adopters in the school who instantly had the vision to use the new technology, but they were not the norm. It took more time for the others to catch up. I’m afraid that without tech support the XO laptop won’t last long enough for everyone to see the technology’s advantages.

There are other problems with the OLPC project model. Cost is an issue. A $100 a laptop is inexpensive, but one million of them - not a hug number for large countries- would cost $100 million, which is an enormous amount of money for most Ministries of Education to spend, even with foreign donor assistance. The distribution model that relies on local governments is simple to administer from the US, but ignores capacity and corruption issues that are all too common when a large amount of money is being spent. A more diverse model of mixed government and NGO distribution would be more likely to succeed. There is no monitoring or evaluation component, making it impossible to tell if the project is succeeding in its broad educational goals. But none of these issues compares with the lack of tech support and teacher training in OLPC.

The purpose of this post isn’t to attack OLPC. They have serious issues that I think they should address, but I also think the initiative has great potential. Increasing connectivity for children in poor countries can have a huge number of societal benefits - many of them not directly related to education. In the future I’ll write about the potential for information technology to build peace, promote health, and encourage economic growth. The XO’s outstanding ability to find wifi and connect to other XOs makes it a perfect platform for these activities. OLPC, however, is not trying to use the computers that way. My concern is that the use of information technology in international development is a relatively new field, and it is likely to take some time before that side of the OLPC initiative is fully realized.

In pursuing their single, innovative, world-changing idea - a $100 laptop, OLPC seems to be ignoring half a century of hard-earned knowledge on how to implement development projects. By incorporating this knowledge they can ensure that XO laptops have an immediate impact during the innovation process.

Intel is no longer on the board of the One Laptop Per Child initiative (OLPC). They are pulling all support and cooperation with the project - meaning that the next issue of the OLCP’s XO laptop will not be using an Intel processor. The two organizations won’t be collaborating on any new educational software, either. The tech media is reporting different reasons for the split - it could be that Intel just couldn’t come up with a chip that met OLPC’s needs - but it seems likely that Intel couldn’t get along with OLPC’s founder, Nicholas Negroponte. The Wall Street Journal wrote a great piece in November on the tensions between the two organizations. I think this is a good example of the tensions inherent in increasingly common public-private philanthropic partnerships - more on that in a bit.

First, a little background on OLPC and its relationship with Intel. Negroponte (who yes, is the brother of John Negroponte - the current Deputy Secretary of State and former Director of National Intelligence, UN Ambassador, and Ambassador to Iraq.) started OLPC in 2005, with the goal of producing $100 laptops (called the XO) for schoolchildren in the developing world and getting 150 million of them out the door by 2008. He believes that computers will help children to learn more, learn outside of school, and connect to one another better. OLPC hasn’t achieved anything like those ambitious goals - the XO still costs $188 and Negroponte has only managed to sell a few hundred thousand of them to developing countries. Personally I think that’s still doing pretty well, but the real accomplishment of OLPC has been to inspire other companies to try the same thing. Intel started making their own version (the Classmate) shortly after OLPC got going. The two bickered for a while about whose was best, and then decided to make friends six months ago. Intel joined the OLPC board, but the relationship continued to be rocky. Intel didn’t stop selling the Classmate, which a lot of countries prefer because it is more powerful than the XO and can use Windows operating systems while the XO operates on Linux. Negroponte apparently demanded that Intel stop selling their own proprietary machine and make room in the market for the XO. Intel didn’t appreciate his tone, and the two split up.

It’s difficult to tell who’s wrong here. Intel’s point is that the Classmate isn’t making them any money right now - they just want to maintain market share for their processors and maybe take advantage of new markets as they open up. Why should OLPC get a monopoly on the cheap, developing-world friendly laptop business? Why shouldn’t education ministries get to choose which machine they want their children to use? But OLPC is facing a nasty problem in the market. The XO won’t get down to $100 until production is high, and production won’t be high until they get enough contracts to pay for it. The competition from Intel may ruin their chances of making the entire venture work. Emotion also plays a role here, at least for me. Intel is a giant, scary corporation, while OLPC is a plucky NGO with only 20 staff and no profit motive.

What I find interesting in all of this is that the reporting would be completely different if both organizations were companies. If Apple and Intel were both trying to make computers for children in poor countries, nobody would expect them to work together. Companies in competition with each other generally don’t work together, that’s just life. Somehow the fact that OLPC is an NGO is supposed to change the calculus, but it doesn’t. Regardless of their tax status or beneficent ideals, OLPC needs to sell computers to accomplish its goals. That puts them in competition with Intel and anybody else who tries to sell computers in poor countries. This isn’t a new problem; social marketing NGOs that sell condoms and anti-malaria bednets frequently come into competition with for-profit firms.

This competition isn’t a bad thing. As the Wall Street Journal points out, Intel wouldn’t have bothered developing the Classmate if OLPC hadn’t threatened its global chip-production dominance. By providing a credible threat to Intel’s bottom line, OLPC ensured that a major corporation with high production, development, and distribution capacities had to do something beneficial for poor children. Like it or not, NGOs and corporations are often in competition. This means that the proponents of public private partnerships for development have to not only identify opportunities for for-profit firms and NGOs to work together, they also have to negotiate between the parties to produce deals that benefits both and recognizes that they both have something to lose.

Note: I should say that I am an owner of an XO laptop. My wife and I gave one to my son this Christmas, and I think it’s a great little machine. I have personal reservations on its use for educational development that I hope to discuss in a future post, but I think OLPC put together a terrific piece of technology and respect them a lot for it.

Welcome to the Great Decisions 2008 Foreign Policy Blogs. Over the next year I’m going to be posting on global philanthropy. Although the primary purpose is to discuss the increasingly private nature of foreign aid, a full treatment of the subject has to include government Official Development Assistance (ODA).

Foreign Aid is a broad topic that covers a lot more than who is giving how much money to whom - and I hope to cover the scope as well as taking the opportunity to delve into the weeds of a few of the key issues. I’ll be discussing some of the fundamental questions such as “why do/should we give foreign aid? But I feel strongly that these questions accomplish nothing if we don’t also look at how aid is given, what it finances, and ultimately what effects it has on beneficiary societies.

This can also be a controversial topic. We’re talking about people’s lives here, and it should evoke emotions. While I will try to give multiple sides to the issues, I’m going to try to get over my stage fright and occasionally say things that may make people angry. I hope you’ll comment in these cases, because in foreign aid there are rarely simple answers, and frank discussion is the only way to get anywhere.