Philanthropy

Last week’s release of the 2008 Index of Global Philanthropy by the Hudson Institute, Center for Global Propsperity showed the power that private money is having on the world of philanthropy.  Citing that in 2006 government aid equaled less that 25% of the all economic dealings with developing countries - with private flows making up the majority of the money contributed. 

Numbers cited from ODA reflect an on-going discussion that developed countries should do more, to give more - with the U.S. giving the most in real terms in 2006 with $23.5 billion, but as a percentage of their GNI, Sweden, Luxembourg, and Norway lead the list.  The Index tributes the growth of public-private partnerships, rise of social entrepreneurship, increasing prominance of religous organizations, and effect of remittance flows to be the current driving forces in today’s global philanthropy. 

Focusing on U.S. economic engagement in developing countries, ODA equalled only 12% of the $192b in total economic engagement in 2006.  Potentially more interesting is that the traditional definition of philanthropy - foundations, corporations, universities, voluntary & religous organizations - only equated to 18% of this total.  Most of the economic engagement was found in U.S. remittances and U.S. private capital flows.

Two striking points emerge from this data:

1) Private flows are important - as many economists have highlighted in discussions over development.  Investing in developing countries is important for sustainable growth.  However, with its $23.5b the U.S. government (and governments around the world) have important roles to play.  Positive emphasis on this type of private investment does not mean that it can accomplish everything - government funding must continue (and must be encouraged to continue).

2) The Index’s correct citing of the rise of social entrepreneurship, venture philanthropy (and a myriad of other terms) is what makes this sector so interesting, right now.  Increasingly, new and innovative ways are being used to to reach beneficiaries in developing countries.  There is power behind private money - and yet, the rigors of accountability are still not firmly in place.  When you consider the very large spectrum of methods for giving, donating, and intervening - coupled with the infinite number of interest areas, it should be alarming that there are no clearly defined rules on what private money must disclose and no clear basis for how to behave.

Carol Adelman (Director, Center for Global Properity) talks about the significance of the 2008 Index in the Financial Times  -the need for this type of data and the challenge to improve the trends we are seeing.  From my vantage point, while we can’t yet claim to have the answers to solving all economic and development problems - more data in the area of global philanthropy is certainly welcome. 

And to restore any faith you’ve recently lost, the Index provides over seventy pages of the progress being made by dedicated people and organizations to solve the many areas of inequity in our world.

Read this wire article on recent congressional testimony by Oxfam and try to determine what Oxfam is actually recommending that Congress do. It’s tough. My guess is the author didn’t understand what the testimony was saying. But the testimony is well worth a read. They got it right, but probably mixed terms in a confusing way.

As I interpret it, Oxfam is saying that we need development (they call it poverty reduction, which is technically different and a group of wonks could have a fun time tossing it around, but for the rest of us I think we can just call them interchangeable. Anyway, I like the sound of development better). We need development for a llot of reasons - it is morally repugnant for human beings to be so poor, it is dangerous for the international system for humans to be so poor, and  it is a good way to get people to like Americans. All of these are reason that we need development, and I’m willing to bet that mainstream thinking at Oxfam is that we should be happy with the first one, but in the testimony they say all are valid.

But the key is that for all these things we need DEVELOPMENT - not foreign aid. Foreign aid is how we get development, not an end in itself. So every time we use our foreign aid to achieve a short-term security aim, we are actually undermining the thing we need, which is development.

I may be reading too much into it, because that is exactly what I think, but I hope I’m right and that Congress listens.

Michael Gerson argues that there is a purpose to large aid programs in this wonderful piece on PEPFAR in Zambia.

The Organization for Economic Cooperation and Development recently issued a report summarizing the foreign aid activities of its 22 member countries - which includes all of the major foreign aid donors. A group of British PhD candidates who blog on International Political Economy give a very good rundown of the main points.

They focus on the fact that the major donors are not on track to meet the aid targets they set a the G8 summit in 2005. At that time, donors agreed to increase aid to $130 billion (for all donors) by 2010. As of now they are about $38 billion short of that goal.

The report also provides this chart, which tells us how much each OECD member is gave in 2007 as a percentage of their own gross national income.

I’ve got mixed feelings about this methodology. I recognize that it is useful to measure giving by economy size - otherwise a large country like the US will always look like it has no more room to give (the US is the largest donor in dollar terms, but the US economy is so much larger than any individual European country that the % is low).

What I don’t like is the UN target of 0.7% of GNI. That number is just so arbitrary. It is based on the assumption that 1% of GNI is the right amount for a wealthy country to give, and that most of that giving “should” be from the government (the remainder should be private aid). But why 1%? How can world need always be equal to 1% of the GNI of wealthy countries? Why are governments necessarily responsible for the lion’s share of that? As far as I know, there aren’t answers to those questions.

Don’t get me wrong. I’m pro-foreign aid, and pro-large government aid budgets. But I don’t like arbitrary figures. Giving should be based on some combination of needs and capabilities to use the money - not a number dreamed up at a UN conference 35 years ago. The “right” amount of aid may be more than 1% of GNI, in which case the US (and all but 4 other donor countries) has a lot of work to do.

A coalition of local and international NGOs in Afghanistan have issued a negative report on the foreign aid effort so far. The two major complaints were that donors hadn’t given as much as they promised ($15 billion has been obligated on $25 billion in promises) and that too much of the money has been spent through contractors - meaning that not enough actually made it through to Afghans.

These are probably reasonable complaints, but I think is important to point out some of the potential biases in the report. First, it was written by someone who works for an international NGO - Oxfam, and published by a group of NGOs. More aid money means more money for their work. Further, more money to contractors means less money to NGOs.

The report points out that 40% of the foreign obligated to Afghanistan goes back to the donor countries either in the form of indirect costs and profit (money that just stays at HQ) or as salary and benefits to international staff. Afghans are entitled to resent that figure, but I’d be impressed if they kept it to that. Indirect cost rates (which are not technically profit, because they support actual expenses incurred to run the type of organization that can implement an aid project) run between 15% and 30%, depending on the organization. Add to that the costs of running an office or offices in Afghanistan, paying a country director, buying plane tickets to get that person to Afghanistan, and paying for their housing (which are direct, program costs, even if they don’t seem like it) all add up pretty quickly. Again, I think that people in Afghanistan have a right to resent this, but it isn’t unique to profit-making contractors - international NGOs charge for these too. It’s sad, but international development projects just cost a lot of money.

As for the amount pledged versus actually obligated, donors have a habit of attending big conferences and pledging a lot of money that never materializes. I understand why they do it, but I’ve never known why the press is willing to be their enabler and print the promises. It’s good to see the media covering this one, at least.

The British Department For International Development is partnering with the Guardian to sponsor a journalism competition on international development and reducing global poverty. Only UK residents are eligible, and they have separate categories for true amateurs and freelance writers. The finalists get their articles published and some computer equipment.

This one essay contest isn’t going to change the world, but the UK government has also recently funded two programs to encourage its citizens to volunteer in poor countries. One program provides financial incentives to British public servants with relevant skills. The other is geared towards British youth from less-advantaged backgrounds. These programs together start to look like a pretty solid effort to get the British populace engaged in the nation’s international development work.

There isn’t a lot of direct impact of these efforts, but it has to be helpful for DFID to have the electorates political support when it wants to start a new program, ask for more money, or in any way challenge the existing political-economic balance in Britain. Maybe if USAID had a more programs that directly engaged Americans in development issues it would get more respect in Washington.

Of course, the UK has a stronger tradition of government involvement in private life than the US. We don’t rely on USAID to get people involved in development because we have NGOs like the Foreign Policy Association. But I think there is a place for both.

This might only be amusing to me, but today my google alerts inbox had articles with African leaders stating completely opposite views on foreign aid.  Gaddafi warned against imperialist powers using their foreign aid to buy influence in Africa. Meanwhile, the new leaders of the new coalition government in Kenya were asking Western diplomats to increase their foreign aid, in order to encourage stability. That article went on to note that a recent Human Rights Watch report accuses the two parties’ leaders of instigating the recent post-election violence.

Neither article is particularly interesting, but such divergent views being expressed on the same day is an interesting example that the recipients of aid have their own positions, and that assistance is not universally recognized as benevolent.

The White House and Congress reached a compromise on the PEPFAR (the President’s Emergency Plan for AIDS Relief) renewal legislation. I wrote about the controversies in this program last week. House Democrats have been wrangling with the Administration for the next 5-year AIDS relief program.

The Democrats (and most of the NGOs and HIV policy community) wanted to drop two PEPFAR requirements: that 1/3 of all the program’s prevention funds be spent on abstinence-only messges and that PEPFAR recipients pledge opposition to prostitution. They also wanted to be allowed to use PEPFAR money to support general reproductive health services.

Congress got some of what it was after. The 1/3 abstinence requirement is gone (although PEPFAR will have to report if non-abstinence or fidelity programming acounts for more than 1/2 of prevention funds.) That rule was always too cumbersome and illogical to use, and I’m personally glad that it is gone. What I’m worried about is that from what I can tell the ABC (Abstinence, Being Faithful, Condom use as appropriate) policy seems to have been further entrenched in US policy.

The PEPFAR policies have to be followed by all US-funded HIV projects (PEPFAR itself only goes to a small number of focus countries, USAID and other sources work to address the pandemic in a lot of other places). ABC sounds fine, and probably would be fine if it was used as a guidline within the US government reporting and project planning system.

But fear of getting on the wrong side of the more conservative members of congress makes the assistance managers responsible for HIV programming overly cautious, and too often the prevention materials our government pays for go to ridiculous lengths to push ABC. I don’t think anybody wants a copy of a condom use promotion leaflet to find its way to Washington without the protective words “Abstinence” and “Faithfulness”. That leads to sloppy prevention activities, and undermines the point of our assistance. We would all be better off if people on both sides of this issue could just take a deep breath and trust each other to be reasonable.

As for the other issues:

PEPFAR will now be able to take an approach to prevention that is tailored to each country. The funds can also now be used for “HIV testing and education in family planning clinics but not for contraception or abortion services“.

The prostitution rule will stay as is.
The final bill fund PEPFAR at $50 billion over 5 years (the President asked for $30 billion, and the first PEPFAR package was for  $15 billion).

The President’s trip to Africa has put US HIV/AIDS assistance in the papers quite a bit. Last week the LA Times wrote this article praising the program and describing the experience before and after PEPFAR (the President’s Emergency Plan for AIDS Relief) in one Kenyan village. It’s a nice article, even if it is editorially inconsistent with the paper’s coverage of the Gates Foundation.

As this Op/Ed points out, the article failed to mention the many controversies surrounding PEPFAR. Those mentioned in the Op/Ed are that in the early years PEPFAR would only pay for brand name drugs, and that a signficant percentage of the prevention funds are still dedicated to abstinence programs. I’m personally not a fan of these requirements either. There are surely times to use abstinence messaging, or to at least delay sexual debut, but it would be preferable to let these decisions be made on a case by case basis.

I do sometimes wonder, however, how much of this controversy is just that a lot of people really don’t like the President or his faith-derived policies. If hypothetical President Gore had done the exact same thing, would people be this angry, or see it for what it is: a compromise to policy makers (and a lot of US voters) who are uncomfortable with HIV programming because they believe it implicitly accepts sex outside of marriage. Policies like the abstinence requirement got PEPFAR through a Repbulican administration and a Republican Congress.  There aren’t a lot of passing bills that don’t include some sort of compromise.

This video is funny, and funny foreign aid jokes don’t come up very often. Just for that it would be worth posting.

At risk of taking the joke too seriously, I would like to point out that the US government does not give foreign aid in the way described here (random amount of money sent for whatever the recipient country wants to do). Well, not in the vast majority of cases, anyway. A few years ago, Slate wrote a good, general guide to how the system works.