Image: World Economic Forum via Flickr
The UN held a summit on the Millennium Development Goals at the end of September to review the progress on eradicating poverty and hunger, combatting HIV/AIDS, achieving universal education, environmental sustainability, and gender equity.
There's certainly merit to these goals and to the many international relief efforts seeking to lift people out of poverty. But there are also a number of flaws: How the MDGs are prioritized, publicized and funded, how aid is funded and distributed, and the overriding issue of transparency and accountability. Where's the Accountability?
As Bill Easterly, economist and one of the most outspoken critics of aid, has pointed out time and again, aid money is doled out with little to no accountability for how well it works. Organizations frequently tout how much money they raised more than quantify how they were able to improve lives.
A common response to this lack of accountability is that some help is better than no help, while many argue that is not true—for many reasons, the most basic being that it encourages a culture of dependency. In her book, "Dead Aid," former World Bank economist Dambisa Moyo calls aid "an unmitigated political, economic, and humanitarian disaster." A Washington Times review of Moyo's book sums up her point: "The open aid spigot encourages the worst governmental irresponsibility."
The Center for Global Development frames another criticism this way: "Unpredictable aid further complicates management and coordination of fiscal and monetary policy, and reduces whatever fragile confidence of small private investors in future relative prices responsible governments are trying to achieve." Ugandan journalist Andrew Mwenda has said, "foreign aid is an ineffective instrument that distorts recipients' incentives for the worse."
Distributed through a frequently top-down approach, people's well-intentioned dollars are often spent on ineffective programs or efforts that are never even accepted or welcome at the local level. In a debate about aid for Africa a few years ago, economist and president of the Free Africa Foundation George Ayittey, pleaded for a change in this pattern: "if you want to help Africa, folks, please, for Pete's sake, ask the Africans what they want. Don't assume that you know better than the Africans."
The top-down approach to mobilization and development, according to the World Resources Institute, "rests on the assumption that people need to be told how to "participate" in centrally planned development activities." There is little room to ask for, or integrate, feedback from the populations who will be affected by aid programs.
Easterly wrote in a Council on Foreign Relations debate, "Top-down planning by experts remains a favorite approach, as embodied in the World Bank/International Monetary Fund Poverty Reduction Strategy Papers... despite years of experience that shows planners at the top don't have enough feedback from the poor, incentives for implementation, or accountability for results to make the plans work."
Cultural sensitivity is not a priority for many international aid groups—but ignoring the needs, desires, and know-how of local populations is not only inefficient, it is often counterproductive to both the group's mission and to the community's well-being.
Local skills, industries, and infrastructure are also, in many cases, undermined—secondhand clothes donations to Africa have wiped out local textile industries. And by sending millions of dollars to foreign governments with no check on how well it funnels through government officials to the people it is intended for, economic disparity often increases.
The Millennium Development villages, for example, have made some progress in certain areas, but without a control against which to compare this progress, it's hard to say exactly what is attributable to the UN program and what change is occurring organically. Cell phones are a good example of this: Their use has increased exponentially in Sauri Village in Kenya, but it's also increased in Kenya as a whole.
In the same CFR debate, Easterly wrote:
The United Nations and the World Bank have already admitted the MDGs exercise will fail in Africa, the most aid-intensive region... All such exercises are seemingly oblivious to the much documented weak link between spending and results, such as the 30 percent to 70 percent of government-provided medicines that disappeared before reaching patients in surveys of low-income aid recipients.
Enter, Celebrity Aid...
Bono, through various initiatives like One.org and Product (Red), and Bill Gates, through the Gates Foundation, are two of the most recognized cheerleaders for international aid.
One.org works to fight "extreme poverty and preventable disease, particularly in Africa, by raising public awareness and pressuring political leaders to support smart and effective policies." Product (Red) raises money through sales of various products at popular stores like Starbucks and Gap, and funds grants for HIV/AIDS programs in sub-Saharan Africa. The Gates Foundation works to fight poverty and funds various health and agricultural programs around the world.
Suspicious Corporate Money
The Gates Foundation, Grist points out, promotes health- and environmentally-questionable GMO technology. Some are skeptical of the motives for that, and the relationship the foundation has with GMO technology. Questions arose, for example, over the Gates Foundation's purchase of $23 million worth of shares in Monsanto last year, and a South African group has charged the Foundation with "teaming up with Cargill in a $10m project to 'develop the soya value chain' in Mozambique and elsewhere."
There is no clear answer for why the Foundation so heavily supports GMOs as a way to solve hunger. The technology has failed in the field to produce significantly increased crop yields and has cost African farmers entire seasons' worth of crops.
Meanwhile, Gates has singled out environmentalists concerned about GM technology as a stumbling block to eradicating hunger in Africa. Reuters reports: "Some people insist on an ideal vision of the environment," Gates said. "They have tried to restrict the spread of biotechnology into sub-Saharan Africa without regard to how much hunger and poverty might be reduced by it, or what the farmers themselves might want."
Even more suspicious is that some foundation staff are veterans of agricultural and pharmaceutical giants, such as current Senior Program Officer of the Gates Agricultural Development Program Rob Horsch, who took the position after serving as Vice President of International Development Partnerships for Monsanto.
Fashion (and Bottom Line) Before Mission
When finances started to look grim for Edun, the organic clothing company founded by Bono's wife, Alison Hewson, to provide jobs in Africa, instead of persisting to save the company's founding mission or just closing shop, Edun decided to outsource to factories in Asia, primarily China.
After putting around $20 million of their own money into the still-unprofitable brand, Bono and Ms. Hewson sold 49% of the company last year to LVMH Moët Hennessy Louis Vuitton for about $7.8 million. LVMH, the world's largest luxury conglomerate, helped the company recruit new management and a new designer (Mr. Gregory left in 2007), and then tried to convince the founders to expand their sourcing horizons.
Ms. Hewson and Bono initially resisted the idea of manufacturing in China, feeling that doing so would run contrary to the brand's mission...
Today, Africa primarily produces the T-shirts for the Edun Live initiative, a division started in 2007, as well as some basic denim and tops for the fashion line. African produced-products only account for about 15% of the fashion line's sales. The vast majority of the fashion collection, accounting for about 70% of overall production, is now made in Asia, with the remainder coming from Peru. Ms. Hewson says the company's goal is to produce more of its fashion line in Africa over time.
It's a complex issue: One that, if nothing else, illustrates that Africa's problems can't be solved through sales of high-end clothing. Bono and Hewson tried to salvage Edun's mission, but ended up having to essentially abandon at least part of its helping Africa's economy raison d'etre, and instead now manufactures in a region that is not known for upholding the labor and quality-of-life standards to which Edun and anti-poverty campaigners are supposed to be striving.
Too Much Hype?
Product Red, also co-founded by Bono, might be the most well-known effort to brand charity and turn it into a business model. While millions of people have felt better about a purchase they've made because a portion of it goes to help people in Africa, few people know what that percentage actually is, and many argue that products are marked up by even more than what the amount donated might be--so the Gap, for example, might be making extra profit off the $40 (Red) shirt that someone who bought it thought was going to save a child's life.
More to the point, people don't know where the funds are going. The lack of transparency has been highly criticized, and as some have pointed out, the money often goes to medicines or disease research, which actually means it can go to pharmaceutical companies that will not provide drugs for free, or often even at a reduced cost, to people who need them.
To break that down into simpler terms with one of the more popular (Red) items: If you spend $249 on a (Red) iPod Nano, $10 of that was donated, potentially to Pfizer in the name of fighting HIV/AIDS in Africa.
A blog devoted to charity made up a quote by Bono to mock this cycle and the lack of real results it produces:
The Product RED line successfully mobilized Western consumers to go out and buy things they either already had or only moderately desired under the guise of social responsibility. With out these compassionate consumers, or the compassionate Starbucks marketing directors who decided to give up razor-thin amounts of their profit margin to the Global Fund in exchange for the Product Red partnership, this debilitating disease [AIDS] would still be destroying Africa.
Then there's the amount of money ONE actually donates versus what is consumed by overhead and salaries.
Figures published by the NY Post and in the Daily Mail about ONE took a lot of people by surprise: "The non-profit organisation set up by the U2 frontman received almost £9.6million in donations in 2008 but handed out only £118,000 to good causes (1.2 per cent)." And £5.1million went to pay salaries.
Is More Oversight Needed, or a Fundamental Change in Approach?
Organizations exist to track NGOs on numbers like this and to measure how much nonprofits spend on overhead compared with how much of a person's donation will reach the intended recipients. The INGO Accountability Charter and the American Institute of Philanthropy, with its Charity Watch rating guide, are two such initiatives.
And some organizations are certainly doing a world of good for the regions in which they work. But all the oversight that exists can only do so much to maximize efficiency and effectiveness. And the gauge that's often used is a comparison of the amount of overhead against the amount of money that reaches the destination region or country—with no question of how effective those funds are, who decides how to spend that money, and what impact it has on local economies and capacity for self-sufficiency.
The question is not necessarily which charities are better than One.org or the Gates Foundation, but is the model of aid the one we should be relying on in the first place?
More on Aid & Developing Countries
Rich Nations' Aid Fails to Help Poor Adapt to Climate Change
Food Policy Meeting in Africa: We Need Home-Grown Solutions
UN FAO Says Invest More in Agriculture, Not Food Aid, in Africa