Philanthropy

This online Op/Ed by David Dickson originally comes from scidev.net, but I found it on an interesting blog called Gates Keepers. It keeps an unbiased eye on the Gates Foundation, as is worth a read if you have interest in what Gates is up to.

The Op/Ed makes a sound argument that the Gates contribution is welcome, but that they shouldn’t become so dominant that they completely drive the development agenda. Among his reasons I am particularly drawn to the critique that Gates seems drawn to technical fixes, and the belief that science can solve all of our problems. Science can do a lot, and a good deal more research is needed in a lot of areas. But there continues to be a need for the less exciting long-term work like education.

Even as a I say this, though, I wonder if Dr. Dickson and I are just shouting to stop the sun from coming up. Gates and Google are in the development field now, and they will bring their technology/business perspective with them. There isn’t anything we can do about it. But I also think that there may be something good in this change (in addition to the money).

As business people and computer guys they are used to problems that can be solved, and seem to be treating development in the same way. That’s a pretty radical departure from the way we normally think about development - as a situation to be improved, not fixed. I still think that Dr. Dickson and I are right and not all problems have solutions, but it is going to be fun working with the newcomers and their frame of mind.

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.

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.

The Islamic Development Bank transfered a $130 million anonymous donation to assist vicims of the November cyclone in Bangladesh. It is the largest private donation ever to Bangladesh.

There are a lot of reasons to donate money to a cause: tax write-offs, guilt, religious beliefs, security, and compassion are just the first the come to mind. Some reasons are self-serving and others are not. Here is a case of what looks like the self-serving kind.

It appears that Bill Clinton traveled to Kazakhstan with a mining executive, met with Kazakhstan’s authoritarian president, said really nice things about him, got the mining executive a hugely profitable uranium mining contract, and then received a $131 million  donation for the Clinton Foundation.

It’s tough to know the details, Clinton has been to Kazakhstan before to discuss cooperation on HIV, so his relationship with President Nazarbayev is based on more than just politics. But the whole thing looks pretty skeezy.

Most NGOs don’t have the political muscle to do something like this, but the ethics of how far you go to please private and public donors is one that everyone faces. This is pretty clearly over the line. The Clinton Foundation should be trying to stand for something, and not just rest on the personal connections and charisma of its founder.

At the same time, I don’t know how much harm was done. All Clinton said was that he supports Kazakhstan’s bid to be president of the Organization for Security and Cooperation in Europe (OSCE). He doesn’t make that decision. As far as I know he has no direct influence on that decision. He might have given Nazarbayev some domestic credibility, but he’s got Kazakhstan so tied down I don’t think that makes much difference.

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.

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.