Philanthropy

The US Millenium Challenge Corporation (MCC) and the British Deptarment for International Development (DFID) have signed a memorandum of understanding (MOU) to increase their cooperation in Africa. The MOU specifically pertains to Ghana, Malawi, Mozambique, and Tanzania. I didn’t check, but I’m willing to bet those are the only African countries where both the MCC and DFID work.

The press release is short on specifics, but does mentioned a few areas of cooperation: data and statistics sharing and coordinated approaches to issues such as environmental protection, infrastructure projects, transparency in large-scale procurements, rigorous evaluation of aid effectiveness, future staff exchanges.

MOU’s can be very useful, or a waste of paper. A lot depends on the wording, whether coordination is compelled or merely allowed by the document. Even more depends on how much the parties are willing to work to make the cooperation happen, particularly in the field. But a good sign all in all.

A new IMF Working Paper has found an association between remittances a country receives, and the deterioration of institutional quality in that country. It seems counter intuitive but basically they are saying that if citizens have more non-taxable income, there is less incentive for the government to spend its own resources on those citizens. The government is then more likely to blow their money on private jets and whatever else it is corrupt leaders buy (diamond mines?). The authors say it works similarly to the oil curse, which says that natural resource-rich countries are more likely to be corrupt.

As Cho points out on his blog, New Zambia, showing association doesn’t prove causality, and there could easily be other factors that explain both of these phenomena.  But it’s a fascinating idea. If we assume that the prevailing wisdom is correct and institutions are a vital part of economic development, this report would suggest the match institution building programs with our efforts to make remittances easier to transfer.

As part of the Slate’s special on philanthropy the executive director of Google.org, Larry Brilliant, wrote a very good explanation of the thought process behind Google’s philanthropic funding decisions. Because most of this post will be a negative critique of his reasoning, I want to start by saying I appreciated Brilliant’s view, and think that he did a great job explaining what must have been an agonizingly difficult process. He also manages to defend Google’s ultimate funding decisions very well, and even makes their programs sound exciting.

Now, the criticism:

Brilliant discusses the eternal question of which charity to choose, when there is so much need in the world and limited resources. According to Brilliant, to answer this question Google turned to advice attributed to Mahatma Ghandi:

“Gandhi was once asked, ‘How can I know that the decisions I am making are the best I can make?’ He answered: ‘I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man whom you may have seen, and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it?’”

This seems like pretty good advice. But as a guiding principle I think it has two fairly obvious weaknesses.
First, why this assumption that the poorest and weakest should benefit? Surely there people living in poverty and risk that deserve help, but are still above the very poorest people in the world. For example, according to the International Food Policy Research Institute there are $162 million people in the world living on less than 50 cents a day. These are probably the very poorest, very weakest people on Earth. But there are also approximately a billion people living on less than $1 a day. My guess is that from Google’s perspective those two groups are lumped together, and perhaps they should be. But I think drawing that line is a tricky business.

The second weakness to Ghandi’s advice is the requirement that our hypothetical poor man should gain “anything” by it. I agree that a poverty reduction program that doesn’t help the poor is a bad program, but the poor can gain from a lot of things. The trick is optimizing those benefits. Ghandi’s advice sets an awfully low bar.

Maybe that’s Ghandi’s point. Maybe the bar should be set low, so that the time and effort philanthropists spend considering how to help doesn’t stop them from actually helping. That makes a lot of sense, but it makes more sense with the small amounts of money that I can give than the large amounts of money that Google plans to spend.

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.

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.

The Center for Global Development Global Health Policy Blog explains very clearly why they are in favor of “positive price” bednets (meaning that the end user has to pay for them) rather than distributing these important anti-malaria tools for free. They also support positive pricing through a combination of public and private distribution chains. According to most studies so far, these methods are more sustainable and more effective means of getting enough bednets into a population.

Although the CGD lists a lot of arguments to support their position, I noticed that they chose not to mention one that I’ve heard often. Namely, that people are more likely to value (and therefore use) something that they have paid for. I don’t know if there is evidence to support that claim, but it comes up reasonably often.
There is a lot of lively debate on this issue, which is obviously relevant for a range of commodities that goes well beyond bednets.

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.

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.

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.