By Paul Spray

I come from a particular context. I have worked all my life in international development – for developing country governments, for international NGOs, for the British government Department for International Development, and (albeit only for 18 months) for a philanthropic foundation. I am currently a Board member of Christian Aid.

1. What’s going on: Philanthropy and development

There has been a rapid increase in the money given by Foundations for international development. In 2011 philanthropic North-South flows from OECD countries were at least US$59 billion, and probably a lot more. That’s already half of governments’ official aid.

Interestingly, there are an increasing number of southern philanthropists :

• There are 50-100 grant-giving foundations in China.
• In India in 2012 philanthropists gave US$5-6 billion per annum. An additional flow – $3bn pa perhaps – will come from Indian companies, because a 2013 Act requires all Indian corporations to spend 2% of net profits on corporate social responsibility.
• There are more than 25 African billionaires, many with philanthropic foundations

But foundations are not just important for the money: they also have voice and influence. Bill Gates is on front cover of the Economist’s The World in 2015, talking about development. Philanthropists have been invited into the global UN discussions about what should be the world’s Sustainable Development Goals.

2. What is development? 

2a. What are we trying to achieve?

Bill Gates’s mantra in The World in 2015 was “Set goals, save lives”

And there have been remarkable achievements in recent decades:

• Infant mortality has halved since the 1980s. [It fell from 63 deaths per 1000 live births in 1990, to 34 deaths in 2013. ]
• The number of children per mother dropped in Latin America from 5.5 in 1975 to 2.2 in 2013; and in Bangladesh from 7 to 2.2.
• The percentage of people with extremely low incomes halved between 1990 to 2010 [though if you leave out China, the absolute number is actually still the same.]

But if you ask people what is essential to them, they have a broader set of goals than these. People commonly make mention of personal security, living a life free of fear, and being able to participate freely in decisions about their lives and their families. Additionally, they raise broader issues, such as ethnic and religious identity.

And in fact, the idea that development is multi-dimensional, and not just limited to saving lives, is rather broadly accepted. Both Sarkozy and Cameron have launched initiatives looking at well-being – even happiness – rather than national income.

2b. How does development actually come about?

Here there is more difference of view. Some – even Britain’s Department for International Development – think that the essence is economic growth. Seek ye first economic growth, and all other things shall be given unto you. But that is actually very implausible. Instead:

i) Development needs power shifts – even for the global economic model as is.

Most poor people now live not in the poorest countries, but in middle-income countries. As Roger Riddell has summarised “one of the most important reasons why large numbers of people continue to live in extreme poverty in such countries is because their economies’ patterns of growth is influenced by the public finance and expenditure choices their governments make. Poverty eradication will never be solved solely by outsiders: it requires domestically driven political processes to address widening inequalities in wealth and power within poor countries”.

ii) And actually I would argue that we need a new economic model.  We have an economic model that is likely to hit the buffers, with environmental problems looming, declining social cohesion, and rising inequality. (The top 67 people in the world have the same wealth as the bottom 3.5 billion).

3. So what approach do philanthropists take?

Theoretically, philanthropists can be anywhere on the spectrum, because they have no constraints on them – no accountability to shareholders or voters – and can take risks. So they could look long or short term; they could be promoting commercial banks, or organising amongst the poor; and so on.

And there are some surprising examples: for example the Charles Stewart Mott Foundation funded a lot of the global agitation against the World Bank’s Structural Adjustment Programmes in the 1990s. And just this month, the Gates and Bloomberg Foundations announced $4m for governments to use to defend themselves against multinational tobacco companies taking them to court.

In practice, however, most philanthropists interested in development have a quite narrow focus. It is wrong to generalize, but big foundations, especially the newer ones, tend to think:

• The existing economic model is OK.
• What is most needed are technical fixes – bednets, vaccines against neglected diseases, new seeds appropriate for small farmers, and so on. This should not be sneezed at – there are problems for which technical fixes like this are needed, and organisations like GiveWell focus on them. But they are a small subset of development problems.
• The context does not matter too much. They look for ”answers” that are true everywhere in the world – whereas in fact country A, or slum A, can be very different from country B, or village B, and need different approaches.
• Quick returns are desirable and feasible – reflecting the massive entry into the sector of entrepreneurs and investors who rapidly increased their own wealth, and are impatient for results with their philanthropy.
• It is best to go it alone, with little contact with governments or with other aid donors – though this is emphatically not true of Gates, or other foundations who focus on influencing.
• Increasingly, they expect an economic return for their money – so-called “impact investing.” As a UNDP paper put it, many philanthropists think it is relatively easy to “do good and do well (financially).”

And often foundations follow themes that the founder likes or (for corporate foundations) that fit with their business interests – eg China’s Paichou Foundation provides foundation funding in North Africa to countries where their parent state-owned enterprise has oil drilling operations.

4. Conclusions:

(a) There is a role for philanthropy

Technical fixes are needed: bednets make a huge difference against malaria; polio eradication has been a great success; off-grid solar power helps; and so on. 

(b) Given the lack of any accountability to the public, shareholders or voters, it is very important that foundations are transparent

In practice, this varies widely: Gates is part of the International Aid Transparency Initiative that most government aid donors, and many international NGOs, subscribe to. But other foundations are invisible.

 

(c) But if (as I argue) power shifts are needed, philanthropists in practice often don’t help. 

(d) And when they do take seriously the need for a shift in power, there is serious question about legitimacy

Who is a philanthropist to interfere in a country’s politics, or a government’s sovereignty?

This is not just a problem for philanthropists, of course. It is an issue too for NGOs like Christian Aid or Oxfam, or for any aid donor who thinks that power lies at the heart of development.

The answer comes down to your own political position, I think. If a country’s elite rules in a country in their own interests, then (i) the poor need all the help they can get to strengthen their position, and (ii) the elite don’t. National boundaries shouldn’t prevent political support.

But likewise, your own political position will inform your view of the activities of philanthropists – depending on who in-country benefits from their interventions.

Paul Spray has worked within a variety of development agencies and organisations including DFID and Traidcraft.  He is currently on the Board of Trustees of Christian Aid.