Reflections from Ethiopia: Is Philanthropy Killing Africa?

I found this article fascinating.  It spotlights a very tough but necessary discussion.  When does "charity" stifle entrepreneurial effort and economic growth?  Is it that saying "Give a man a fish, he eats for a day.  Teach a man to fish, he eats for a lifetime"?  Todd Johnson seems to suggest that too much NGO involvement can stifle an economy.  It feels counter-intuitive, after all, NGO's are often at the front of the battle line against disease and despair.  Although it also reminds me of the "micro-lending" that I have taken part in where you put up a small amount of money to loan to an enterprise in a developing country and the business pays back the loan with a small amount of interest, meanwhile allowing the business to flourish and grow.  This is one that will be thought provoking and like Todd, I welcome your comments.  Bunnie.

Reflections from Ethiopia: Is Philanthropy Killing Africa?

by R. Todd Johnson*, Partner, Jones Day

I just returned from my seventh trip to Ethiopia. After only 120 days spent in Africa, I'm hardly an expert on anything that is happening or has happened there. And yet, I have a few impressions that seem worth sharing, particularly around how business can assist in the elimination of extreme poverty.

While there, I saw some incredibly encouraging relationships and budding opportunities for sustainable business models.  For example, products from Stanford's Extreme Affordability course are selling and creating business opportunities for local entrepreneurs. These include the d.light, the Mighty Mitad and, most recently, a budding joint relationship for the production of manual well drilling equipment for rural well drilling businesses targeted for vocational school graduates.

Unfortunately, these are small and isolated examples of business opportunities (outside of the rural staple of subsistence farming and the urban staple of selling retail necessities). More often, instead, I bump into those places where well-intentioned philanthropy produces a long-term, unintended negative consequence. The following are a few examples.

BOGO Should Be A NoGo!

The "Buy-One, Give-One" (or "BOGO") model has become increasingly popular for companies here in the United States, particularly for places like Africa which, over the past decade, has become the "cause du jour." Whether it's shoes, flashlights or computers, you can find many retail products that are produced by U.S. companies (often in Asia) where the purchase price paid by a U.S. consumer includes the cost of sending a second such product to Africa.

"What's wrong with that," you might ask?

On the surface, nothing.

Take shoes, for example. Africans need shoes. In fact, shoes are critical to issues of health, nutrition, education, healthy pregnancies and much more. Take the critical issue of child malnutrition in Ethiopia. Most children there take in too few calories for healthy growth and for healthy education. And when women are malnourished, their under-developed bodies often lead to complicated pregnancies and, in the worst cases, to still-born deliveries after three days of labor and fistulas that leave them incontinent.

So how does that have anything to do with shoes?

Well, let's assume that you could provide the approximately 60 million rural Ethiopians who are living on less than $2 per day with the appropriate levels of nutrition for healthy development, but not shoes. Well, in all likelihood, those Ethiopians would still be under-developed due to the prevalence of worms and other parasites, all of which could be treated with medications, but that would continue to recur if they walk around barefoot through rural areas stepping in animal droppings.

So it's clear -- shoes are important in rural Africa.

Now comes the real issue: Should shoes be donated by Western companies, or should they be produced in country and sold?

This is where the BOGO model, while well-intentioned, appears to me to be hurting a long-term, sustainable solution for Africa.

First, as long as rural Africans have an opportunity to potentially receive free shoes donated by a U.S. shoe company, why would they want to pay for shoes? Second, as long as rural Africans are unwilling to pay for shoes, how can local African shoemakers hope to have a flourishing local business?

The NGO Economy Is Killing Entrepreneurship

Let's face it, we've drifted far afield from the original concept of “charity.” Rather, as a matter of public policy, we instead seem fixated on the idea of tax subsidies for the rich with our tax deductibility system. The result shouldn't surprise us: over time, while philanthropy increases (measured as total aggregate of dollars donated in the form of tax deductible contributions), the world's gap between the rich and the extremely poor grows.

"So what," you might ask? I mean, after all, wouldn't the gap just be much, much worse if there weren't philanthropic dollars flowing to Africa, encouraged by tax deductibility? Just because some people save their charitable giving for museums or building naming rights, doesn't mean that African AIDS orphans would receive more funding if we drew the tax deductibility line closer to charity.

And you would be right, as far as that argument goes. But arguing that we shouldn't be using our tax policy to encourage wealth redistribution doesn't deal with the real learning to be gained from a look at our tax policy, namely that it creates incredible dysfunction of unintended consequences in the developing world by encouraging too much money to Africa in the form of charity and not enough in the form of investment dollars for the creation of businesses.

Outside of direct relief aid and some of the amazing health and education research and development, much (perhaps most) of what is done in the developing world through non-profits and NGO's, could actually be accomplished through a business model, even if it would be harder to raise investment funding. Instead, someone begins selling tax subsidized and donor subsidized water pumps in Africa, because it is easier to raise the funding through tax deductible donations rather than through the rigors of proving out the business model for investment dollars, with the great result of increased deployment of inexpensive water moving technology in the developing world to aid rural farmers, but the negative results of (1) killing the market for future indigenous entrepreneurs attempting to sell water pumps at a profit and (2) locking a potentially valuable distribution channel in a non-profit, making it difficult for other for-profits to use.

And that’s before we ever get to the biggest issue facing the African entrepreneur.

Last year, while in Addis Ababa, I visited with my friend Sammy, an Ethiopian entrepreneur. Interested in how his new venture was going, I've long since learned that if you want the straight scoop from an entrepreneur, you don't ask "how are you doing." They are simply too optimistic to ever provide a meaningful answer. Instead, I asked Sammy about his greatest challenge in his new SMS content platform business. His two word answer? The "NGO economy."

Sammy noted what should have been intuitive to me after so many trips to Africa, that Africans are naturally entrepreneurial -- many have been making something from nothing all their lives, just to stay alive. But what Sammy said next rocked my world.

"Africans don't see a reward system in place for being entrepreneurial. In fact, they view it as a matter of survival, not an opportunity to lift themselves out of poverty. Rather, what they learn at a very early age, is that in order to make good money, they should learn to speak English incredibly well and then maybe, just maybe, they can get a job driving for an NGO. In a few years, if they play their cards right, they might be able to land an NGO job as a project manager and even advance further."

Sammy's point was simply this. As a struggling businessman creating new start-ups, he could not compete with what NGO's were paying for some of the best and brightest. And even worse, he said, "by the time the NGO's are done with them, there isn't an ounce of entrepreneur left."

Add to that, the typical underpaying of talent in the developed world, creating non-sustainable NGO economies in the developing world, and the brain drain that NGO’s create by attracting the best and the brightest away from business to work for NGO’s, you can begin to see some of the dysfunctions that arise from our philanthropic dollars.

And so, it seems right to ask the question:

Is philanthropy killing Africa?

I'd love to know your thoughts.

*Todd is a partner at the law firm of Jones Day, where he founded their Silicon Valley Office and runs their Renewable Energy and Sustainability Practice. The views expressed in this column are solely Todd’s personal views, not the views of Jones Day or its clients, and the information provided as to his affiliation with Jones Day is solely for purposes of identification and may not and should not be construed to imply endorsement or even support by Jones Day of the views expressed herein. © R. Todd Johnson, 2011. The thoughts, ideas and words expressed in this column were originally posted on Todd's Business for Good (sm) blog at www.businessforgood.blogspot.com, and are the property of R. Todd Johnson and may not be otherwise used or reprinted without express permission from Todd.

Effectively Involving Your Members in Your Organization's PR and Advocacy

Nonprofit Conversation is now being read in 27 countries! I have been concerned that our content is U.S. centric and have been doing some outreach to nonprofit/NGO leadership in other countries. It doesn't matter where you live, if you are engaged in nonprofit activities, the challenges are often quite the same. Below, Mark Buzan of Action Strategies (Canada) provides advice on effective public relations (PR) and advocacy. Mark is our first international contributor! Thanks Mark! Bunnie

Effectively Involving Your Members in Your Organization’s PR and Advocacy

by Mark Buzan, Principal, Action Strategies

The success of any nonprofit plan is hugely dependent on how it treats its public affairs. It comes in a variety of shapes and sizes, and has to get creative as sources for revenue are obviously different and harder to come by than traditional profit-making businesses. This said, knowing that your current and prospective members can help you get your message, mission, and needs out to the world at large, is absolutely crucial to the sustainability and future success of your nonprofit. So how do you go about treating your members and your key audiences so as to engage them in advancing your cause – particularly in public relations campaigns? This is important because the “holy grail” of grassroots campaigns occurs when other organizations and individuals become “evangelists” for the message you are promoting.

The same can be said of government relations campaigns and the benefit of utilizing tools that support grassroots campaigns that involve members and rally stakeholders to your cause. Increasingly, it is not enough to bring your issues to government. You have to demonstrate public support for your position. Your organization may be under public attack and need to publicly defend your practices and positions. You may want to shape the governments' policy agenda. To do that, supporters, members, employees, your industry’s customers and/or suppliers need to be mobilized!

More and more, the Internet can be used as a tool to rally support and advance your cause. In a networked society, organizations have no choice but to establish their positions in the online political marketplace. You go on-line to educate, motivate and organize citizens, opinion leaders and government decision-makers to take meaningful off line action. It's a new dimension for advocacy.

But, Internet advocacy and other outreach efforts are still a complement to traditional government relations activities. Communicating your views directly and personally to decision-makers should always be part of any on-going strategy. Below, is a list of some good ideas on how exactly to get your members involved in your nonprofit’s communications and advocacy.

1. Fundraising: One of the most basic and fundamental ways to get your members involved in public relations is creating interactive and mutually beneficial fundraising opportunities and programs. Host an informational walk for a cause. People undoubtedly invite their non-member friends to join them for company. It all starts with one or two more people knowing about your cause, and if the fundraising event is one that they enjoy, they tell others, and so on and so on.

2. Internet: Though this may seem an overused topic in pr these days, it is one of the most effective means of getting your name and cause out there, quicker and to more people than you could ever do with non-internet advertising or pr. Start with an interesting and interactive website and draw members and non-members alike to your site by all means you can think of. Start a blog, involve yourself in relate topic forums, write articles online, and get your current members to do the same.

3. Keep Contact and Hold Attention: By valuing the network you may already have with your current members and clients, you can maximize their individual networks to voice your goals, initiatives, and needs more loudly and far-reaching. Send your members e-newsletters, postcards, and invite them to special events to keep them abreast of all of the exciting things you are doing with your nonprofit. By doing this, you not only keep them constantly engaged with your nonprofit’s presence, but also put yourself at the front of their thoughts when it comes to their casual and professional efforts for the pr and marketing of your nonprofit.

4. Coordinate how you & your members make their presentation to MPs: Last week, I attended an interesting panel discussion held by the CSAE. Three MPs from the Conservatives, Liberals, and NDP were present offering input that I have long advised NGO executives. First, have a steady balance between emotion and logic. As I alluded to in a previous post, Tough Economic Times and the Federal Budget, often non-profits come to legislators with a healthy dose of an argument that comes from the heart. The trouble is that is often not enough. There needs to be a solid reason as to why a proposal makes sense and fits into the the agenda of the government.

Also, when considering how to involve members into an advocacy campaign, the options also include sending them to meet various MPs. When doing so, often under a "On the Hill" campaign, make sure they are well prepared with briefing papers that have first been sent to the MPs in advance. Ask the attending member(s) to also bring a copy. Finally and above all, don't assume what an MP knows or doesn't know. Acting as if you know more on a given subject than an MP that may have come from a professional background in that field will only put them off. Assuming they know a given subject when in fact they don't will only frustrate both parties - your volunteer representative and the legislator.

Mark Buzan is Principal of Action Strategies, a Public Relations and Canadian Government Relations Consultancy for non-profits. Subscribe now to his Lobbying and PR tips newsletters at www.actionstrategies.ca/Action_Strategies/Newsletter.html

Green Building for Nonprofits

Jeff Carroll is conducting workshops in Maryland on green building for nonprofits. Often, nonprofits feel compelled to be good natural resouce stewards. Many social mission driven organizations are assessing their operations and writing green policy. Jeff gives us food for thought, not just for the how, but for the why of going green. Bunnie

Green Building for Nonprofits

by Jeff Carroll
Business Development Officer/Preconstruction Project Manager
Gardiner & Gardiner, General Contractors LLC

Finally, it’s cool to be an environmentalist. What was once relegated to the “nut and berry” crowd is finally moving into the mainstream. While it may be in to be green, there remains a significant level of mystery and misunderstanding around the popular subject. I’d like to spend a little virtual paper and ink and provide a definition for green thinking, especially as it pertains to capital improvements and why NPO’s should care…maybe even more than most.

Taking a lead from the US Green Building Coucil, being green is not just about the environment. There is a triple bottom line to green: social responsibility, financial responsibility and environmental responsibility. The Baltimore Sustainability Commission captures it as People, Planet and Prosperity in their vision for a sustainable city. When you think about it, nothing is truly sustainable if it is not simultaneously socially, financially and environmentally sustainable.

If our practice is socially undermining then that practice cannot continue unchecked. Government, or market forces or social hostility will ultimately discontinue the practice. Look at the general abuse of labor through the industrial age. It was not sustainable.

The same argument can be made for financial sustainability. My perspective may be decidedly American, but the basic premise is transferable. If it cannot be profitable, the venture cannot be sustained. One of the great myths shrouding the green building industry concerns the economic feasibility of green practice. The fact is, if it is not financially sustainable, it won’t be around for long.

The final output is environmental. If you spend more than you make, eventually you will run out of money. The same is true of our environment. If we render useless or consume resources faster than they can be renewed, we will eventually run out of resources. If we become dependent on resources that are not renewable then eventually we will exhaust that resource and cripple our operational capacity. That’s not rocket science, but it does require an honest level of concern for our own and future generations to take purposeful action.

For some of you, a commitment to green practice is a given. The tough part comes when NPO’s on limited budget (and that is almost always the case) have to pay a premium to be green. In another blog I could make the case for green based on economics, but is there an equally if not more compelling reason? Why should every NPO care about green practices as it impacts their next capital project? Here’s what makes sense to me.

Why do NPO’s exist? They exist to fulfill a mission. Why would an NPO build a building or engage is a major capital improvement? To advance the mission of the organization in a way that requires a building. If the NPO could execute its program without the expense of a building it would do it and put the money into program. So, the building is for the advancement of the mission. A building can fulfill that demand functionally but it can also fulfill it intrinsically.

The very nature of an NPO is to achieve efficiencies beyond the reach of government. The NPO’s maintain social responsibility beyond the scope of private industry. Perhaps most important, the nonprofit sector is the active conscience of society. Within the ranks of NPO’s we find people committed to human services, the environment, the arts, education, economic development, and religous programs. Each is to some degree inclusive of the other and committed to bringing good to the society it inhabits. How can organizations committed to social, economic, and environmental responsibility, build buildings that are counter productive to that message and vision?

Making sure that the NPO’s next capital improvement is green is consistent with efficiency and social responsibility. It will strengthen the NPO’s message, and add to the NPO’s credibility. Maybe one for the nicest side benefits in the current atmosphere is a green capital project creates opportunity for additional funding. A green building intrinsically advances the mission of the organization.There’s a lot more to say, but maybe this is a good place to begin the discussion.

Contact Jeff at jcarroll@gardinerandgardiner.com