Beyond ODA: Integrating Philanthropy into the Post-2015 Development Agenda

Last month, representatives at the United Nations Third International Conference on Financing for Development agreed to a number of proposals to fund the upcoming Sustainable Development Goals. Collectively known as the Addis Ababa Action Agenda, these proposals cover a range of financing sources, from domestic tax revenues and official development assistance to private sector financing and philanthropy. The Agenda also included measures to support international trade and capacity building. World leaders now hope that the financing mechanisms laid out in the AAAA will encourage countries to adopt both the SDGs and a climate change accord scheduled for negotiation in Paris this December.

 

Secretary General Ban Ki-Moon congratulates delegates on adopting the Addis Ababa Action Agenda. Source: UN Economic Commission on Africa
Secretary General Ban Ki-Moon congratulates delegates on adopting the Addis Ababa Action Agenda. Source: UN Economic Commission on Africa

 

The SDGs are a proposed set of 17 goals that are meant to provide benchmarks for a variety of development issues over the next 15 years. The goals cover poverty, hunger, health, education, gender equality, energy, the environment, and a host of other global challenges. Each goal is accompanied by a number of targets that serve as tangible metrics of a country’s progress towards the SDGs. These new goals are a follow up to the Millennium Development Goals, a 15-year set of eight benchmarks that world leaders agreed to back in 2000. To improve their drafting process for the new goals, the UN organized the largest consultation program in its history that combined government input with surveys of the general public.

 

The Addis Ababa Action Agenda, a vital part of the new development goal drafting process, is a step towards recognizing the role of international philanthropy and the private sector in supporting global development. The agreement makes several references to the importance of the private sector in economic growth, particularly the role of the financial sector in enabling small businesses. Furthermore, Article 10 of the agreement explicitly lists philanthropies and foundations as vital members of the “global partnerships” that are required to meet the SDGs. This is a substantial improvement over the funding section of the MDGs, which overwhelmingly relied on official development assistance and did not reference to international philanthropy.

 

However, there is still a lot more that the Addis Ababa Action Agenda and the SDGs could do to support philanthropy’s vital role in development. In June, the CGP cohosted the Conference on Policy Coherence for Mobilizing Private Financial Flows for Sustainable Development with the OECD Development Center. The purpose of this conference was to discuss how to best utilize private funding for the SDGs in the lead up to the Third International Conference on Financing for Development. Dr. Carol Adelman, director of the CGP, provided a number of recommendations, summarized below:

 

  • Efforts to measure private financial flows and to publicize philanthropic best practices should be increased
  • Private and philanthropic actors should be included in drafting the SDGs
  • Innovation should be the primary criteria for creating public-private partnerships as part of the SDG targets for global partnerships
  • Philanthropy should be recognized as a unique source of development practices rather just an additional funding source for official development goals
  • Countries should strive to improve their legal environments for investing in both for-profits and not-for-profits
  • Intergovernmental organizations should facilitate the distribution of private resources to developing countries by evaluating best practices and identifying successful ventures

 

Though these suggestions were not explicitly included in the Addis Ababa Action Agenda, countries looking for ways to finance their SDG efforts should still consider them. Many of these suggestions simply entail engaging with the private and philanthropic sectors, and collecting new data. However, some countries may balk at evaluating their legal environments. A major finding of the CGP’s new Index of Philanthropic Freedom is that laws created to serve the legitimate interests of the state, such as capital controls and illicit financial flows legislation, often hinder philanthropic efforts as well. Examining their legal requirements will require states to evaluate the benefits of combating illicit finance or managing volatile financial flows against the benefits that come from international philanthropy.

 

As Dr. Adelman noted in her comments, 80% of the developed world’s economic engagement with the developing world comes from the private sector, philanthropy, and remittances. The Addis Ababa Action Agenda is an important first step in acknowledging these essential flows and how they can help meet the SDGs. But the international community needs to go further in developing a more holistic funding plan for the SDGs, and the recommendations made at the Conference on Policy Coherence are an excellent place to start.

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Deep Impact: Impact Investment in Pakistan

On Thursday, April 17, the Center for Global Prosperity had the pleasure of hosting an event, “Philanthropy for Civil Society in Pakistan”, with CEO of the Aga Khan Foundation, Dr. Mirza Jahani, Chairman of the Pakistan Centre for Philanthropy, Shamsh Kassim-Lakha, and CGP’s Director Carol Adelman. The panelists spoke on topics ranging from the recent growth of civil society in Pakistan to the impact of economic development on future philanthropy.

imgres-1One very interesting point Lakha made was the pervasiveness of a giving culture in Pakistan and the importance of leveraging that community giving to strengthen civil society. He spoke about how Muslim culture has an ethos of giving that Pakistanis take very seriously. According to Lakha, approximately 80% of Pakistanis participate in some form of philanthropy, whether it be through monetary donations, volunteering, or both. These are levels equal to the US, one of the most philanthropic populations in the world. To further illustrate his point, he spoke of how 28% of those participating in philanthropy live on $2 a day.

Throughout the discussion, Lakha placed special emphasis on the growing role of civil society. He claimed that as Pakistani civil society develops, citizens would increasingly rely on it to fill the government gap in providing social services. Because of this, Pakistan must find a way to leverage the philanthropic culture to promote civil society growth. It is not enough to just participate philanthropy, Pakistan must find a way to develop and apply this philanthropic culture in a systematic and effective way.

Dr. Jahani made an intriguing comment on the current organization of philanthropy in Pakistan. He claimed that it fell into two camps: pure philanthropy and pure investment. He argued that in order to leverage the philanthropic culture, Pakistan must find a way to fill the gap between these two approaches. Both philanthropy and investment are needed in the development of civil society but often seem to be at odds. Philanthropy has the perception of being perfectly altruistic while investment is about the investor’s monetary returns. How can these two approaches that seem at complete odds work in conjunction with one another?

imgresSome argue that impact investment could be the connection between pure philanthropy and pure investment. Simply stated, impact investment is strategic investments companies make for financial gain that also have a social or environmental improvement goal. Impact investment gained popularity last year when it became a focus at the G8 Social Impact Investing Conference and the Aga Khan Foundation has had an impact investment initiative since 2011. In 2012 alone, companies donated more than $8 billion to impact investment. It is a way for companies to increase profits while also earning public goodwill.

Because impact investment primarily occurs through private corporations, the concept connects strongly to the economic development of Pakistan. During the discussion, Lakha pointed out that the economies of developing nations are growing at a faster rate than those in high-income countries. This means an increase in overall philanthropy and investment in Pakistan. He argued that corporate philanthropy is becoming increasingly important and will be critical to the development of a strong civil society. While an increase in philanthropy is a desirable trend, through impact investment Pakistani corporations could scale up the impact and returns of its investments through a single action. If Pakistani corporations catch on to the impact investment trend, Pakistan might see a large increase on its returns on investment, both on the economic and social ends. Now the country must figure out the best approach to encouraging impact investment.

If you would like to listen to the entire discussion on “Philanthropy for Civil Society”, please click here.

Rocking the Vote: Challenges in Election Monitoring

Counting votes in the 2009 presidential elections in Herat, Afghanistan.
(BEHROUZ MEHRI/AFP/Getty Images)
http://blogs.sun-sentinel.com/click/2009/08/off-the-wires-afghanistans-election-day.html

Election monitoring is commonplace in the world of democracy promotion today. The men and women who observe elections – hailing from NGOs such as the National Democratic Institute (NDI) as well as international organizations like the Organization for Security and Co-operation in Europe (OSCE) – aim to prevent election manipulation, fraud, and corruption. Short-term election observers arrive in the country under observation a few days before the election is set to begin. They meet with party members, police, election officials, and members of the general population to try to get a sense of what policies are at stake in the coming election and who the front-runners appear to be. On the day of the election, observers visit polling stations to make sure that the legitimacy of the election is not jeopardized in any way by government intimidation, closed polling centers, corrupt vote counters, and suspiciously low (or high) voter turnout. The team of election observers will report any unusual findings. If all is well, the election observers will watch the tallying of the votes, concluding that the citizens freely and fairly elected the winner.

A new report discussed at the Seventh Annual New York University Center for Experimental Social Sciences Conference on Experimental Political Science brings to light some interesting findings on the effectiveness of election monitoring. The authors set out to investigate whether or not election observation actually reduces various types of electoral manipulation. Their case study is the 2012 presidential election in Ghana. Specifically the authors examine “overvoting,” a phenomenon that occurs when more votes are cast in an election than there are registered voters. Secondly, the authors assessed “unnaturally high levels of turnout.” It is well known that even in nations under compulsory voting laws, such as Australia, voting rates rarely venture into the 90 per cent range.

Actors seeking to influence election results impose many complicated strategies for doing so. The authors list a number of methods by which voters can be turned away from the polls. Manipulators can do this by voter intimidation via government forces like the police or military. Political parties can have their own, separate, security forces that scare civilians away from the polls. Even worse, these strongmen can coerce civilians to vote for a candidate they do not support. A vote for the opposition candidate would put the lives and property of the voter’s family in danger. Fearing retribution, the average voter will not risk the lives of his loved ones for the sake of democracy.

The Kenyan presidential elections in December 2007 triggered a wave of violence.
The Kenyan presidential elections in December 2007 triggered a wave of violence.

In the opposite scenario, electoral manipulators seek to add “ghost voters” to the election, running up the vote count for a selected candidate. Ballot stuffing is a common tactic. Sometimes the final results are simply changed to suit a politician’s demands. High voter turnouts increase the victor’s claim to legitimate power, although most citizens recognize it as a sham. Thus, with this two-sided approach, the manipulation of elections can do a great deal of damage to democracy and liberty within a nation.

The results of the case study, the authors write, were positive, though they exposed some new problems that the election monitoring community must address. In sum, while election monitors did reduce electoral manipulation at the polling place at which they were stationed, those seeking to manipulate the election simply moved to unobserved polling places: displaced but not disrupted. The authors explain:

We find that observers reduce fraud at the stations where they are deployed by about 60 percent. We also find evidence that observers displace fraud to nearby but unobserved polling stations. This displacement is concentrated in the historical strongholds of Ghana’s two major political parties. This suggests that parties are better able to relocate fraud in single-party dominant areas where the dominant party enjoys social penetration and where political competition is low. (Asunka et al., pg.3)

Moving forward, placing election monitors at polling stations at which fraud is more likely to occur (rather than randomly selected polling stations) would be a more effective way to prevent fraud. Working from strategic districts around a nation, election monitors can better combat the intimidation and ballot-stuffing that is all too common in today’s emerging democracies.

AidData 3.0 Makes Development Data Easily Accessible

For those of us still enthralled by a very notoriously dysfunctional website, the recent release of AidData 3.0 should restore your faith in the power of the Internet and web developers. AidData is an online database that seeks to improve international development outcomes by making aid data accessible and actionable through crowdsourcing and an interactive user interface. The data portal allows any global development stakeholder to analyze over $40 trillion dollars in integrated remittances, FDI, foreign aid, private foundation grants, and domestic public expenditures across countries from 90+ donor agencies. AidData facilitates comparability between incoming financial flows and their subsequent real world outcomes and has the potential to be a valuable tool in the areas of development finance most readily amenable to policy changes.

malawi_slider
A GIS map from AidData showing all the development projects in Malawi. (Source: AidData)

The remarkable thing about AidData is that you do not have to work at the World Bank or even the Hudson Institute’s Center for Global Prosperity to effectively engage the interactive database. The portal provides enhanced visualization tools that make online data analysis easy and intuitive, even on a granular level. Users can run search queries for a specific project, donor, or country and generate state-of-the-art visual dashboards and geographic information system (GIS) maps instead of cumbersome data tables; all the food security projects in the northern Antsiranana region of Madagascar are just clicks away for a finance minister managing a large aid portfolio, an NGO volunteer working in a local field office, or a researcher conducting an in-depth study.

Civil societies are being increasingly seen as “arenas” of evolving mass participation and information exchanges with entering and exiting NGOs, social movements, and private investors that advance the common interest over pursuing private goals rather than as a static term with rigid contours.The spirit of AidData in rooted in the recognition that a nation with the most wealthiest of donors or a developing country with the most pressing of needs cannot successfully partner unless they both operate in vibrant civil societies and have adequate access to information.  The poor in any given country may think that a routinely absent teacher or doctor must be just an accepted feature of the poor and may not realize that this may be due to unaccountable and opaque political institutions. This is where not only AidData but mediums like radio broadcasts, mobile telecommunications,  and SMS messages can supply vital information, triggering a demand for accountability from institutions and even reciprocally nudge individual behavior. For example, a community-level information project in Uganda utilized community monitoring of health workers and service providers to dramatically improve health outcomes. Health facilities began to use suggestion boxes and numbered waiting cards and the reductions in wait time and absenteeism were dramatic. Similarly, when individuals in Peru, Bolivia, and the Philippines received monthly SMS message reminders to make a monthly deposit into their savings account, the gross amount saved by the reminded individuals increased by 6%.

Those on the opposite side of the equation that are administering aid and spearheading various development projects benefit from AidData to an even greater degree. Looking toward the future, natural disasters—which have doubled since 1980—will present a real danger to international peace and security and augment displacement, business shocks, and enormous material damage in the most vulnerable of communities as they. When a disaster strikes, first response usually comes from NGOs and their volunteers and then big governments and organizations follow, resulting in inefficient and uncoordinated relief responses; one community may receive triples rations of food but no water with another community not receiving any aid at all. The GIS maps of AidData can be a less costly tool to coordinate humanitarian and disaster relief projects as those working on the ground can see in real time which areas have yet to receive help.

An NGO worker assesses the impact of an agricultural project in Nepal (Source: Alena Stern)

Individuals have a right to be informed in order to hold governments accountable. Information is needed to actively participate in decision-making and is increasingly needed to access government services. Nevertheless, information is useless if individuals in civil society are not enabled to act on it. Appraisals of civil society should reflect this fluid component and open data portals like AidData should continue to seize opportunities to enhance transparency and improve efficiency by providing accessible and utile data to all development stakeholders.

Sustainable Urban Development: A Global Challenge Requiring Innovative Solutions

The global human population is increasing rapidly, especially in urban areas.  With 180,000 people moving to cities every day around the world, it is predicted that the number of people living in urban areas will double by 2030.  By 2050, 70% of the global population will live in urban areas.

Urbanization in Asia
Urbanization in Asia

This rapid urbanization presents major development challenges for the international community.  As more and more people move to urban areas, governments around the world are confronted with the problem of providing adequate housing, transportation, and services for these growing communities.  For example, China’s urban population grew from 200 million to 700 million in just the past 30 years, and China plans to have 60% of its population living in urban areas by 2020.  Jim Young Kim, President of the World Bank, recently urged China to give more attention to the development of these urban areas, saying: “China now needs to find new ways to make cities more energy efficient, promote clean energy, and reduce traffic congestion and air pollution.”

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Pay for Quality Development Programs – Development Impact Bonds (DIBs)

As the world cheers for halving its population living under $1.25 per day, it has already put “eradicating extreme poverty for good by 2030” at the top of its post-2015 agenda. However, accomplishing another global victory in the next 15 years doesn’t seem easy. While foreign aid played a role in alleviating global suffering in past decades, criticism has mounted over aid effectiveness, poor governance and transparency in aid recipient countries, and rising inequalities in the developing world.

Furthermore, traditional aid donors now confront challenges from emerging economies such as BRICS, which do not necessarily follow the conventional rules of aid distribution. The shrinking international development budget in some developed countries also restricts their continued engagement with the developing world.

Despite these difficulties, the development community has found an alternative approach: Development Impact Bonds (DIBs).

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Doing What? The Impact of State-Led Humanitarian Action

cover for Doing Bad by Doing Good
Christopher Coyne’s new book, Doing Bad by Doing Good, which addresses the failures of state-led humanitarian action

State-led humanitarian aid has long acted as a tool for the United States to engage with foreign countries and the developing world. However, while humanitarian aid has several short term goals, such as disaster relief, it has blended with long term development projects and even counterterrorism strategies.

The global financial crisis has considerably altered American support for foreign aid, as domestic issues consume the political environment. Furthermore, reports of U.S. aid projects abroad have revealed a glaring lack of oversight and the wasteful spending of millions of dollars. While calls for reform have arisen in the past year to reduce inefficiencies, tight budget constraints and special interest groups remain an obstacle to reform. Whether aid fulfills sustainable development goals or even has any meaningful impact remains a constant point of contention. As more careful studies are produced, the results appear grim.

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