Philanthropy

The proliferation of social networking websites is accompanied by a lot of excitement. The possibilities of the format seem limitless. Many people (OK, maybe it is just me, but I don’t think I’m all alone) find that after taking the work to put together a Facebook profile they are left with a a big, sad question “What do I do now?” For everyone who has ever struggled to find the entertainment in sending their friends imaginary cupcakes, there is now Unltdworld.com, a social networking website that aims to bring together socially conscious people and help them benefit their own communities. I found the site through Jemima Kiss’s Digital Content Blog at the Guardian. Her interview with Unltdworld’s manager gives a good, brief rundown of what they are all about. I have a couple of thoughts, some of which are more serious than others:

1. Unltdworld? Typing four additional letters would have been too arduous? I know that complaining about SMS-language is a horrible cliche, but so is self consciously abbreviating spellings.

2. I’ve only had time to go through the short tour, but it looks like a well designed site that offers the full range of standard social networking services, plus some useful additions. One is the research section, that allows users to access data on other projects. Another allows users to share resources, like documents and funding information.

3. I usually try to avoid commenting on sites that are specifically domestic philanthropy-oriented (this is a FOREIGN policy blog), and this seems to be aimed at people working in their own communities. Because the site wants to make money off selling premium services, I would guess a primarily European/North American membership for a while. But there is no reason that the same forum couldn’t be used for foreign assistance projects, or by people in the developing world.

The global prices of staple foods have risen 75% since 2005 - driven largely by rising oil prices. Unsurprisingly, this is a problem for poor. Among the other obvious problems, food aid agencies are also having trouble providing the necessary quantities of food. This will be a problem to watch over the next few years.

Like a lot of non-democratic governments (and some democratic ones as well), the junta that rules Burma likes to keep track of the international NGOs operating in its country. You never know when they’re going to be stirring up an insurrection. This article gives a brief description of the policies they have put in place to make sure the NGOs stay in line.

Dogooder.tv is a good place to learn about the range of philanthropy going on in the world. It is also pretty entertaining, and a worthy replacement for YouTube when you feel a need to be unproductive on the Internet. onPhilanthropy wrote a complete article on them last week.

Here’s a pro-Gates perspective in the Herald Sun, an Australian morning tabloid owned by News Corp.

PepsiCo has donated $6 million to the Earth Institute and will partner with H20 Africa, an NGO trying to increase access to clean water in rural Africa. The press release wasn’t terribly specific, but I think that the $6 million donation will be supporting the Earth Institute in several sectors - water, climate, and agriculture - not just water as the release title implies. It also isn’t clear what form their partnership with H20 Africa will take.

A fun thing about the press release is the number of times it mentions that Professor Jeffrey Sachs is the director of the Earth Institute and Matt Damon started H20 Africa. A cynic would say that this press release had more to do with providing PR for Pepsi, Sachs, and Damon, than with providing useful information on an important initiative. Pepsi in particular may be trying to correct a publicity problem. Their chief rival got into the clean water game last year.

But I’m just being grumpy. All press releases are about getting good PR, and I think charitable foundations are entitled to it. Also, clean water is a big deal. As the release points out, there are over a billion people without access to safe water, which makes them more susceptible to disease and hobbles their efforts towards economic advancement. Its an issue that needs a lot of banging drums, even if the drummers do have a number of side motivations.

But I’d still like the press release to tell me more about what they plan to actually do with the money.

The Guardian reports that many multibillionaires choose to give their money to charity for the sake of their children. They feel that to inherit such vast fortunes would ruin their children’s lives in a Hilton-esque way. This feeling is behind William Barron Hilton’s recent donations as well as Warren Buffet’s. Buffet gave a great quote: “A very rich man might leave his children enough money to make it possible for them to do almost anything they want, but he would be a fool to leave them so much money that they ended up doing nothing at all.”

This touches on my last few posts on private giving. I’m forced to wonder if Chinese billionaires feel the same way - and I assume that they don’t. Li Yuan suggests that for them the point of having a fortune is to provide it to your family. If our super rich are realizing that sustaining their wealth for many generations is not even in their children’s best interests, why do they continue to raise such fortunes?

Li Yuan writes an interesting column in the Wall Street Journal about the Chinese perspective on American business.

Yesterday’s column tried to answer the question, “What is US-style philanthropy, anyway?” She comes up with a mixed bag, and some of the reasons she finds for why Americans give their time and money for others are quite funny. She also points out that although Americans surely are a charitable lot, we are often more willing to send it to unnamed “poor people” abroad than to our own families.

This weekend the FT wrote a nice article (registration required, but free) about Kiva.org. Kiva is an exciting tool that allows regular people to make micro-loans (generally under $500) to entrpreneurs in developing countries. In minutes you can go online, find the entrepreneur you want to work with, and make your loan. Then you can use Kiva to track your loan portfolio and the entrepreneur’s success. Kiva works through pre-existing microfinance institutions, which is another nice touch and is much preferable to them setting up their own field offices everywhere.

These are loans, and lenders are paid back (unless something goes wrong. They currently have a 0.2% default rate).  One thing that may bother some lenders is the interest charged by microfinance institutions.

People receiving microloans usually pay much higher interest than Americans have seen in a long time - 15% or higher seems to be pretty common. The reason for this is that every loan carries administrative costs for the lending institution. These costs aren’t directly related to the size of loan. A $100 loan may require as much administrative time as a $1,000 loan, for example.

High interest is just part of making microfinance services available to poor communities. But some lenders may be uncomfortable that their philanthropy is being given out with such a heavy interest burden, and may want to consider giving to a more traditional charity.

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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