International Influences on Development

Catalytic Philanthropy

It's a fairly safe bet that you've heard of one of these people:

Bill Gates and Warren Buffett are numbers 1 and 3 on the world's richest person list. Mark Zuckerberg, the founder of Facebook, trails in at a measly 22nd. But it's not just their wealth that unites them - each of them has also committed to giving away a significant amount of their fortunes during their lifetimes to development programmes.

The Giving Pledge

In 2010, Bill Gates and Warren Buffett announced the Giving Pledge, which called on the top wealthiest people in the world to donate half of their fortunes to philanthropy. Since then over 100 of the world's richest people have signed up to pledge at least 50% of their wealth over their lifetime or in their wills. The Gates' have pledged 95%. Warren Buffett has pledged 99%. These are staggering amounts of money and they cannot fail to have an impact on the lives of many, many people in dire need of that support.

The question is: are there any problems with this obviously well-intentioned giving?

There is an interesting site called Eye on the Giving Pledge, which tracks those people who have signed up to the pledge. A quick scan of the demographics of those involved is extremely revealing. 105 of the current 122 pledgers are based in the USA. 78 of them are aged 65 or over. The vast majority are male.

Demographics of the Giving Pledgers

The fact that it's focussed on the USA is actually intentional. The Pledge was only "opened up" to international benefactors in the last year (Gates recently tried to put pressure on the wealthy Chinese to sign up). But is it a problem? Well it could be.....that's not exactly a demographically mixed group! Are they able to see past their institutional biases to be able to ensure that their fortunes are given to the "right" causes. The concern here is that ultimately, there are no safeguards on how this money is used and no way to ensure that it is used to its maximum potential.

For example, it would be perfectly acceptable for one of the pledgers to donate all of their fortune to providing computers for universities in cities across Africa, giving the students there access to state of the art facilities. There is little doubt that this would benefit a large number of people and might have significant long-term benefits for the economies of these countries by stimulating technological advancement and investment. However, it would be a project that benefits those already completing education, a tiny subset of the population, alienating those who cannot afford education, girls in particular, who statistically are less likely to complete their education and those in rural areas who do not have access to these institutions.

I have chosen an extreme (and completely hypothetical) example, but the point is still valid. Philanthropists, by their very nature, choose where they want their money to be spent. Their choices may be based on good reasons, personal preferences or other factors, but this may have unforeseen consequences. Or worse - there could be very political, religious or other extremist views that they can promote. The point is - there is no control of what or how they donate their money. They are not held to account and there is nothing to ensure they do the "right" thing.

Stand and Deliver

Even if you exclude motivations behind the choice of area to donate to, the structure of projects run by philanthrocapitalists can also be sub-optimal. Donors naturally have a desire to witness the impact of their giving. In combination with the fact that the majority of these donors are in the later years of their lives, there can be a tendency to focus on short-term projects that show quicker results. Infrastructure projects are frequently prioritised over improving governance and participation.

Another interesting trend is that a large number of the pledgers are self-made and frequently (like Gates and Zuckerberg) from a technology back-ground. Their natural inclination is to see development as a technology problem where the right thinking simply hasn't been applied yet. The "technology plus science plus the market brings the right results" approach is one that is common among these groups. These projects are often extremely delivery focussed. This means that they can be addressing the symptom of the issue, rather than the fundamental underlying problem. The general feeling is that philanthropy is now beginning to learn these lessons, but the lack of institutional memory means that each institution ends up re-learning them.

I think that like many people I had a natural inclination to assume that projects run by these institutions are automatically better than those run by governments and NGOs. There's a kind of implied wastage when we think about government programmes and that privatisation is always better. It's a strange position to be in, coming from the UK where the privatisation of the telecomms, rail and energy markets seems to be consistently criticised by everyone you talk to!

In all seriousness though, it was good to reassess my beliefs in this area and I can understand the concerns that 100 people, with no accountability, can be responsible for such a large proportion of the aid delivered to some of the most needy people. For one thing, that aid becomes extremely dependent on altruistic individuals. Gates won't be around forever and neither will his foundation - who will pick up the baton then?

Room for everyone?

Gates himself is extremely eloquent on this topic. He explains about how he sees a potential hole in the development ecosystem that only philanthropists can fill - they are unencumbered by politics and can more easily attempt new approaches and methods. I have a lot of sympathy with this position, but my concern is that there are no market forces at work here to ensure that the right steps are being taken. Without the ability to benchmark projects and properly gauge their effectiveness, it is almost impossible to prove that one project is better than another and therefore comparing "traditional" aid best practice to philanthrocapitalism is impossible - neither side can "prove" their argument and therefore it is difficult to hold these projects to account.

The flip side to this is that the "best practice" of international development has changed a lot over the years - and there is still no consensus that we've reached the end of the development journey. Those lessons have been hard learned and there is nothing to say that philanthrocapitalism won't uncover the new best practice. In fact, I would argue that experimentation and new ideas can only help the sector overall. These foundations are in the best position to trial these new methods and then can pass their learnings down to the their colleagues in the traditional development agencies.

One of my big passions is openness - I feel that the more open a process is to examination, the better for all parties involved. One of the ways that the philanthropic institutions can answer some of their critics is to open their internal workings up to examination. Much like the current All Trials  campaign, all development work should be opened up to inspection. Only by understanding exactly what has been tried, by whom and where can we hope to learn more about the most effective approaches to development. Given the business (and often technology) background of many of these philanthropists I would hope that this is a principle that they would be open to - and could provide leadership to the rest of the development community on.

United we stand?

It is clear to me that a joined up approach to development is required. Regardless of whether programmes are funded by bilateral, multi-lateral or private transfers, having multiple different agencies working in isolation will result in inefficiencies and overlap. There are already steps to address this (warning: pdf) in multi-lateral and bi-lateral aid, but we need to go further. Aid agencies need to bring philanthropy organisations to the discussions about how to address this and ensure that wherever possible, development aid is delivered in a co-ordinated and planned way. Only by engaging the foundations in this way can they also influence their approaches to ensure that the best practices that the traditional organisations have learned over the years are not re-learnt by philanthrocapitalist institutions.

This discussion is a particularly interesting area of debate for me, as shortly I will be travelling to Rwanda to visit a friend who is working with the Clinton Global Initiative and Hunter Foundation. I don't currently have many details of the work that she is doing in Kigali, but I look forward to hearing about how some of the concerns raised in this blog are mitigated against (if at all) and whether the fears of the development industry are well-founded. I hope to be able to provide a "part 2" to this blog post once I get back from Rwanda. 

This discussion also has long-term implications for myself. Coming from a consultancy background I have to confess that the technology + professionalism approach was one that I subscribed to previously and where I felt that my skills may be best suited in the long-term. I.e. I expected that I would be more likely to find employment in organisations that took a more delivery focussed approach to projects, seeing as that was my background. Now I will have to assess whether that is the right approach for me - if I believe these organisations are "doing development wrong", can I attempt to change them from the inside, or do I look for other routes into the industry?