Philanthropy

Slate published a series on philanthropy today. The cover story is about what they call the “Slate 60″, a list of the 60 largest charitable contribution in the US. It is an annual series with a stated goal of inspiring the wealthy to compete for the top spot. Why 60? I have no idea. Maybe 50 would be too predictable. If you want to read about the lucky givers, you’ll find a little bio for each, there is also a database.

To accompany the list they published some interesting essays on philanthropy. I’ll post on those when I’ve had a chance to read them. But you can find them by going to the first link in this post.

Another Economist article caught my eye this week, it discusses a conditional cash transfer (CCT) program in Brazil, Bolsa Familia (Family Fund). CCT programs give poor families money if they meet certain conditions, usually participation in public health programs or educational sessions. Programs like the one in Brazil have been tried in many Latin American countries, and I believe the first was Progresa in Mexico. They have been shown to have very positive effects on poverty.

A web search for “conditional cash transfer” gives an enormous number of studies on the subject, all with varying levels of good things to say about them. I think they’re a terrific idea. The economist gives three potential concerns, to which I would like to add one.

1. Fraud, the money may not go to the right people

2. Dependence, the CCTs could become a part of the state-citizen relationship, rather than a catalyst for economic growth.

3. Corruption, CCTs may be a simple case of vote-buying

My concern is related to these, and I freely admit that it may be alarmist. But I’ve worked in too many states that did not have the best interests of their people in mind to really trust this kind of program without strong assurances that what is going on is ethical.

So much depends on what conditions are set. Get your child vaccinated? That seems fine. But what if China set a CCT for abortions or permanent surgical contraception? This isn’t a reason not to love Bolsa Familia, just a concern for where the movement could go if we don’t pay attention.

This week’s Economist contains two articles that discuss leapfrogging technology - when a society skips a generation in technology. The usual example is the cell phone, which a developing country can adopt without ever having had widespread landlines. Both Economist articles refer to a World Bank report on Global Economic Prospects. Leapfrogging is usually seen as a hopeful indication that developing economies can quickly establish modern technology-based industries that are both profitable and more environmentaly friendly. The Economist throws a some cold water on that optimism.

Their conclusion is that there are relatively few technologies that can be widely adopted without the expensive and resource-intensive infrastructure investments like electricity and roads. They also point out that all of the more social development sectors (education, governance, economic policy) are also required for new technologies to come into common use. So, although data supports the argument that technology absorption in developing countries will happen on its own, technology diffusion will require a little more effort.

The Christian Science Monitor ran on op/ed by Ian Wilhelm last Friday. He contends that US-backed policies to control charitable giving in the Muslim world are making it more difficult for wealthy Muslims to donate money.

Since 9/11 the US has been understandably concerned with Muslim charitable foundations - some of which are suspected to  support extremist groups. But when countries like Kuwait and Saudi Arabia begin to restrict philanthropy, it becomes difficult to encourage a culture of giving.

If we accept the prevailing wisdom that global development is an essential factor for national security, it is clearly in our interest to see that those in the Muslim world with the resources to help are able to do so.

This paper written for the UN Research Institute for Social Development reviews empirical studies on the effects of remittances in developing countries. The conclusion is that they have the potential to spark overall development, but that social policies and economic reforms are required to allow this potential to be realized. It sounds like common sense when you say it like that, but a lot of good points sound obvious after somebody says them.

The paper explains that because remittances only directly benefit those with family members who are willing and able to migrate it is difficult for them to have broad societal impact. In order for the money to affect development, new policies are necessary, but those targeted at remittances are necessarily limited in scope. You can make it cheaper and easier to remit money, for example, but this only increases the quantity of remittances to that same limited group of people. Plans to collectivize remittances are, in the words of the paper’s author “rather naive”.

Therefore the only policies choices left are “general development policies aimed at restoring political trust, creating a stable investment climate and offering social protection to people.” In other words, remittances can create synergy with traditional development projects, but they can’t replace private philanthropy, ODA, and local government/community action.

The paper isn’t terribly long, but it also isn’t written in a style intended for a broad audience. (Example sentence: “The significant empirical and theoretical advances that have been made over the past several decades highlight the fundamentally heterogeneous nature of migration-remittance-development interactions, as well as their contingency on spatial and temporal scales of analysis, which should forestall any blanket assertions on this issue.”) If you’re willing to slog through this kind of prose, I recommend giving it a look.

For the most part I don’t notice when the dollar is weak or strong. Unless I’m travelling it just doesn’t register with the prices of things I buy. Economics isn’t my best subject, so I can’t really say why. Maybe it is the pegged Yuan, or the fact that oil is priced in dollars? Maybe I’m just unobservant?

But the falling dollar doesn’t just affect those travelling abroad or buying European stocks. It also affects those who depend on remittances. The Phillipine peso has been rising against the dollar, and families who count on remittances for their income will lose between 3,800 and 6,000 pesos a month (about 100-160 dollars on an estimated average family remittance income of 350-400 dollars). That’s a pretty significant decrease in purchasing power.

Armenia is also complaining that the appreciation of the Dram against the dollar is hurting their economy.

This example shows that foreign assistance isn’t simply a matter of giving money. The trade, military, environmental, and basic economic choices that a wealthy country makes affect those in poorer countries as well. This is especially true for a superpower. Good global citizenship matters.

This nice overview of CSR begins with an illustrative short anecdote that shows how “creative capitalism” has been around for a while.

“Like many people in Guatemala, Dona Blanca grows crops which are exported to companies in North America and Europe. But unlike most of them, she is paid fairly for her work.

That’s because Dona grows aloe vera for The Body Shop - a leader in corporate social responsibility. The money she makes allows her to send her daughter to school, one of 200 funded by the UK-based natural beauty products company.”

Then, just to demonstrate the breadth of sources that Google Alerts can turn up, I saw this article in Furniture Style magazine. It quotes research showing that consumers really do prefer to buy from companies that aren’t evil. Good to know.

The FY09 budget request is out. Foreign aid comes under international affairs. In addition to the staffing increases I wrote about earlier, here are some highlights I picked out from the press release:

• $2.3 billion to help Iraq, Afghanistan, Pakistan and West Bank/Gaza achieve necessary economic, democratic, security and political stabilization and to advance their overall development.

• $2.1 billion for State Department and USAID programs in Africa to address non-HIV/AIDS health, economic growth and democratic governance needs and to help promote stability in Sudan, Liberia, Zimbabwe and Somalia in support of the President’s 2005 commitment to double aid to Africa by 2010.

• $4.8 billion for the Global HIV/AIDS Initiative, which directly supports the first year of the President’s new five-year, $30 billion plan to treat 2.5 million people, prevent 12 million new infections, and care for 12 million afflicted people.

• $1.75 billion to promote democracy around the world, including support for the President’s Freedom Agenda. The President has more than doubled funding for democracy, governance, and human rights programs since taking office.

• $385 million to support the President’s Malaria Initiative to reduce malaria-related deaths by 50 percent in 15 target African countries by 2010.

• $94 million for the President’s International Education Initiative to provide an additional 4 million students with access to quality basic education through 2012. The FY 2009 budget includes funding for basic education that will lead to well over a four-fold increase in funding since the President took office.

• $64 million for the State Department and USAID to support the President’s Climate Change Initiative to promote the adoption of clean energy technology, help countries adapt to climate change, and encourage sustainable forest management.

• The President’s Budget also includes $400 million for a new international clean technology fund in 2009 as part of an overall three-year contribution of $2 billion.

• $2.4 billion to improve responsiveness to humanitarian crises, including food emergencies and disasters, and the needs of refugees.

• $2.2 billion for the Millennium Challenge Corporation to improve agricultural productivity, modernize infrastructure, expand private land ownership, improve health systems, and improve access to credit for small business and farmers.

Henrietta Fore, Director of Foreign Assistance and USAID Administrator, has announced her plan for reforming the US Foreign Aid system. The Center For Global Development gives a solid analysis of what she had to say. The CGD tracks this issue closely, and just started a new project on modernizing foreign assistance. The four main points they drew out were:

• Increasing the foreign assistance budget to meet the challenges of the 21st century to ensure “that development is an equal and essential element of our national security strategy and budget”

• Rebuilding the capacity of USAID — the FY09 budget released today requests the largest personnel increase ever, a doubling of the USAID training budget and a “surge capacity” to respond rapidly in crisis situations

• Streamlining budget and planning processes, with a shifting of emphasis to the field

• Reestablishing U.S. intellectual leadership on foreign assistance

In addition to adding 1,000 new diplomats to the State Department, the President’s new budget calls for 300 new USAID Foreign Service Officers and 250 people for the Active Response Corps - a group of pre-vetted civilians to respond to emergency situations.

As someone who may one day want to take one of these new jobs, this makes me happy (although the active response corps will remain hopelessly small, if we believe the estimates of required personnel in this RAND monograph). The diplomatic capacity of the country has been in doubt for a while, and both agencies have been slowly ramping up.

The most recent, call for increased manpower for US development and diplomacy came from the Secretary of Defense. His lecture at Kansas State was fantastic, and well worth reading if you missed it the first time around.