Humanitarian and International Development NGOs

(I originally posted this on Tuesday 11/11/08 and it mysteriously disappeared, so I’m reposting.  Unless there’s been foul play from a new philanthropist acolyte, I can only chalk it up to a site glitch.  Apologies for the redundancy.)

It is a truth almost universally acknowledged, at least by NGO leaders and international development policy experts, that U.S. foreign assistance is badly in need of modernizing and restructuring.   One reason is  excessive fragmentation: aid is distributed by the federal government out of 20 different agencies and 50 different offices.  As critics like to point out, this does not make for policy coherence.

There are myriad factors for this jumble, chief among them the steady disinvestment in USAID over the past two decades.  But there’s another reason that deserves more attention, since it reflects a similar trend among major private foundations and donors: the desire to measure and demonstrate impact.

As three past administrators of USAID point out in a recent article in Foreign Affairs, the focus of many newer presidential initiatives or earmarks is narrowly defined on a particular issue, which is “politically appealing because they appear to have a direct, measurable impact on identifiable individuals.”  Here’s the problem: “… such a concentration on the short-term delivery of goods and services comes at the expense of building sustainable institutions that promote long-term development.”

It’s not enough to make drugs available to treat AIDS in a developing country.  To solve the problem requires a public infrastructure - education and training for clinicians, effective government agencies, appropriate public health education, sustained services - as well as a healthy civil society that will make the drugs less and less necessary by improving the overall health and stability of the affected community.

The current craze in philanthropy for assessing and quantifying impact presents a similar conundrum.   Focusing too closely on individual trees - because it’s easier to count the leaves - makes one run the risk of missing the forest altogether.  As Susan Berresford, former president of the Ford Foundation, remarked over a year ago, “Isn’t it possible that too much reliance on short-term plans can miniaturize ambition for justice and for progress on deeply entrenched problems such as racism, poverty and inequality?”

If the federal government were to develop a comprehensive U.S. development strategy, it could help - at least then the burden can shift to measuring progress on the broad aims of development in toto.  As most community organizers will tell you, rights-based development requires sustained, comprehensive investments in people and communities, and processes for developing local capacity and reforming social structures are messy and non-linear.  A commitment to improving human security - which a new Obama adminstration has put forward as an important element of its  approach to U.S. global engagement - requires a willingness to accept that some crucial elements of progress might be unquantifiable.  The political appeal of short-term results will have to give way to a more complicated, nuanced picture - and that would buck the prevailing winds in the sector.

A continuing theme on which I’ve commented several times (links here, here, and here) concerns the increasing share of private resources in development aid.  Sam Worthington, the president and CEO of InterAction, the leading coalition of 165 U.S. development and relief NGOs, was on campus this week to kick off the NGO Leaders in Humanitarian Aid and Development seminar series and discuss the shifting landscape for NGOs.  The subject of money - and private money in particular - kept coming up.

Sam’s statistics were stark.  In 2000, the revenues of the U.S. NGO community working to reduce global poverty were approximately $4 billion.  About 50% of that funding came from government, 50% from private contributors.  In 2006, revenues had grown to $8.8 billion - but $6 billion came from private resources.  The $800 million increase in government funding was dwarfed by a $4 billion increase in private funds, and the balance was suddenly close to 70% private and 30% public.

On the surface, such a trend might seem liberating to NGOs, offering the space to be more creative and take greater risks in their mission to serve the poorest people in developing countries.  Federal funding is intended to serve the national interest, and it carries constraints.  Early versions of the strategic realignment of U.S. foreign assistance, which brought the Director of Foreign Assistance under the auspices of the State Department, did not even include the word “poverty.” It is challenging for NGOs to stay true to a development mission using U.S. funds when all other interests appear to trump it.

Yet it matters just how that $6 billion in private money is comprised.  Major philanthropists and foundations, the kind that participate in the Global Philanthropy Forum or the Clinton Global Initiative, for example, often impose their own constraints in pursuit of strategic impact.  There have been too many times in the recent quest for innovation that donors have created large projects without taking advantage of the development expertise hard-earned by NGOs through three decades of trial and error.

Whereas before NGOs could voice their views to one entity - the U.S. government - and know that they were  attempting to influence a major segment of their market, suddenly they are faced with educating and negotiating with a multitude of actors, all with their own individual agendas.

As Sam Worthington noted in our discussion, unrestricted money best provides NGOs the freedom to act on their own knowledge and inclinations.  Paradoxically, those NGOs where countless small donors make up the largest slice of revenue are likely to feel freest to pursue their agendas on their own terms - and may result in more innovation and more empowering relationships with local communities than otherwise.  Foundations and philanthropists who believe that NGOs, left to their own devices, are effective at developing successful strategies to reduce poverty would do well to build a percentage of unrestricted funding into every grant.

This is important for a bottom-up approach to development.  Helping local communities and individuals find their own voice and build their own leadership often brings change at the deepest level, but it is not linear, and progress along the way is often hard to measure.  To be successful requires long-term commitments (from 10-20 years) with money that allows strategies to be flexible and priorities to be adaptable.

Some critics* contend that the ties between large Northern NGOs and their host countries have grown too close and diluted the NGOs’ ability to offer approaches that differ significantly from their country’s aid program.  It’s not clear that the increasing share of private funds within foreign aid, while significant, will offer much respite.

* From Can NGOs Make a Difference?  The Challenges of Development Alternatives: “There are serious doubts regarding how far NGOs in the North are able to do anything that is especially alternative to their host countries’ bilateral aid programmes.”

So, questions still remain about the ability of the U.S. disaster relief system to handle a large-scale catastrophe.  What can we do?

(1) Develop a national disaster relief fund

With such a fund, private contributions for relief and recovery would be collected and distributed by an independent entity, with independent oversight, whose sole purpose is to find and support the organizations - local or national, small or large - that are responding most effectively in a specific disaster.  My preference would be to have all response agencies, including the American Red Cross and the national VOAD agencies, commit to and benefit from such a fund.  This means that the national agencies would throw their support behind a collective fund raising effort after a disaster, similar to the joint appeals by international NGOs that are so successful in other countries, rather than undertaking their own individual campaigns.  This could:

• Improve response by allowing organizations during the height of the crisis to focus on providing services rather than raising funds
• Reduce administrative costs significantly within the field by streamlining fund raising
• Create a single, recognizable brand that simplifies donor decisions and offers an attractive partnership opportunity for media outlets, celebrities, and corporations while acknowledging that effective response requires supporting a diversity of nonprofits and faith-based groups.

Let’s be real - the bulk of the money from such a fund would likely still go to large, national organizations.  However, it would improve immeasurably the access that local organizations have to small private contributions, and if done correctly, should also significantly improve accountability.  If such a fund built a successful track record, I can envision it developing the reach and credibility to raise funds successfully between disasters to ensure an adequate reserve and fund preparedness programs (see #2…).

(2) Stimulate and support local, integrated disaster preparedness programs

Federal funding for disaster preparedness has been in steady decline at a time when we need it most.  Such programs should be expanded; should be focused at the local level; and should ensure that local nonprofits, faith-based groups, and the private sector are at the table when plans are created.

It’s time to resurrect  programs like Project Impact, which brought local nonprofits and businesses alongside government to develop and implement mitigation strategies.  Project Impact was widely credited with keeping damage and casualties to a minimum after the Seattle earthquake in 2001 that measured 6.8 on the Richter scale, yet was cut the same exact day by the president to save $25 million, a tiny percentage of FEMA’s base budget.

It’s time to perfect and take to scale programs like Operation Brother’s Keeper, a partnership between inner-city African-American churches and the New Orleans chapter of the American Red Cross meant to ensure that vulnerable community members were included in relief efforts during a major disaster.  Unfortunately the partnership  was in the early planning stages when Katrina hit.

We need hundreds of local, self-directed efforts like the promising multi-sector effort in San Francisco -  BayPrep - with the leadership of the mayor’s office behind it, and like the local VOADs - coalitions of local nonprofits and faith groups in dialogue with local emergency officials - that have sprung up in Louisiana through the leadership of the Louisiana Association of Nonprofit Organizations, the United Way, and others. Concerted funding and effort by FEMA and key national nonprofits could go a long way toward stimulating robust and essential disaster preparedness at the local level.

(3) Develop a high-tech, quick-strike coordination capability to take in and report out essential information in real time to responding agencies

Current systems of organizing and presenting information are not accessible nor usable by the multitude of nonprofits that might be involved in a large scale response.  The system currently in place does not easily allow a wide array of nonprofits to feed in information about their needs assessments and services, so it’s difficult for other organizations to understand where they may be best used to fill the gaps.  We need to create a system that assumes that many diverse organizations will be involved, and can systematically organize information gathering and sharing of a decentralized response. Responding organizations should be able to get real-time answers to the fundamental question “What is needed by whom where?”

For FEMA to play the primary role in developing and implementing such a system, it will have to radically improve its understanding of the broad nonprofit sector and elevate its senior nonprofit liaisons to a much higher level of authority.

(4) Review and reform the Stafford Act

We need to make sure that our legislation works well to cover and handle the increased amount of emergency events that we are sure to face; that we have a clear sense of the extent of our government’s commitment to supporting people in their relief and recovery; and that budgeting processes are structured in a way that minimizes politicization.

To undertake any or all of these will require the leadership of the dominant players - FEMA, the American Red Cross, and the national VOAD agencies - and the input of local organizations and governments that have experienced some of our recent major disasters.  It will require a shift away from promoting their individual organizations and “becoming fund raising machines” to thinking about what is best for the field and what would make U.S. disaster relief as effective as possible.  Then perhaps we’ll truly learn the lessons that Katrina, Ike, and Gustav have so harshly offered.

As Hurricane Gustav approached this weekend, the president and both would-be presidents engaged in a bit of fund raising, mostly for the American Red Cross (ARC).  Barack Obama directly asked all those in his fund raising network to send funds to the ARC; John McCain made mention of the ARC in his remarks and the RNC made a direct plea for delegates at the convention to make a donation; and President Bush asked for support for both the ARC and the Salvation Army.

Does it strike anyone else as odd that our political leaders now style themselves as philanthropic advisers when disaster hits?

(1) Instead of telling me where to make my charitable contributions, I would have hoped to hear more about what we can expect from the government’s response. FEMA still does not have a thoroughly vetted strategy for housing after an emergency (and why FEMA was ultimately given this responsibility rather than HUD still mystifies me).  I’m also unclear as to how FEMA has increased their capacity to coordinate all the local nonprofits that might respond, a role to which they agreed after both the agency and the ARC said it was the other’s responsibility during Katrina - so neither did it.

OK, perhaps these are too technical for a general audience.  But I also haven’t heard any present or future president articulate a vision for government’s role in disaster response.  President Bush, in his remarks, noted that it’s the job of the federal government to assist the states.  To what level?  What will public funds - both state and federal - pay for?

Are citizens expecting one thing and the government set up to deliver another?   My sense is that there is a  mismatch between what the Stafford Act offers (that’s the law that gives structure to FEMA and disaster funds), and what disaster survivors - and perhaps even the unaffected general public - expect.  To hear about the role of our government after disaster and how legal structures, public budgets, and leading agencies will successfully meet those obligations - that’s what I expect from political leaders.

(2) I expect a charitable adviser to have done some vetting.  I’m making an assumption here, but my guess is that there was not a great deal of analysis or comparison of the ARC and other responding organizations done by the administration or either campaign.

Even if there was, it’s a poor use of the bully pulpit.  The American Red Cross is one of the most recognizable brands in the sector (though technically it’s not a nonprofit, but a government-chartered institution).  The Salvation Army regularly ranks among the top three of nonprofits receiving the most revenue annually.  People don’t need a great deal of direction for them to come to mind.

Immediate response to a disaster is inherently local. Grassroots organizations have significant trouble accessing the funds they need, since they don’t have a national profile.  Local foundations like the Louisiana Disaster Recovery Foundation* (which was formed after hurricane Katrina to support relief efforts), the Greater New Orleans Foundation, the Baton Rouge Area Foundation, and the Community Foundation of Acadiana (which covers southwest Louisiana) all created Gustav funds and know how to identify local groups doing excellent work.  It would not have taken much to find and mention such organizations in addition to the ARC and other national organizations.

Maybe each made his plea on behalf of the ARC because its current financial position is precarious and they want to keep it healthy.  The organization does play a role in the National Response Plan, after all.  But any donor will tell you: that’s usually the wrong reason to ask for her money.

In a report for the Aspen Institute about the nonprofit response to Katrina, I recommended mandating that the American Red Cross give 5% of its disaster fund raising to local funders after an exceptional catastrophe. With the American Red Cross such a strong and recognizable brand, I didn’t think it wise to try to create a national fund (with all the risk and start-up costs) that would support grassroots organizations on the local level.  But if would-be presidents are going to give their personal imprimatur, perhaps a private national fund that distributes funds on a competitive basis to the American Red Cross AND local groups - i.e., to whichever organizations are doing the best work - is the next great innovation.

Let’s keep in mind: Private, voluntary action is both necessary and welcome after emergencies hit, but it is not sufficient nor fully capable of doing all that’s needed.**  Rather than try to score political points and look caring by asking people to donate time and money, I call on President Bush and Senators Obama and McCain to make clear what government will do.  And then make it work.

* Disclaimer: I am a founder of the Louisiana Disaster Recovery Foundation and continue to provide strategic advice to the foundation.

**In all the media frenzy over Gustav, they missed a huge opportunity to highlight the incomplete nature of the recovery from Katrina.  Local folks, faith-based groups, and nonprofits have done heroic things in the past three years - yet all of it amounts to a small percentage of what’s needed.  This recent report by Oxfam does an excellent job of laying that out.

While working through a backlog of reading I came across this post by Lucy Bernholz* on Philanthropy 2173, in which she characterizes “foreign aid” as “international philanthropy” while referencing Reinventing Foreign Aid, a new volume edited by William Easterly.

Private philanthropy is part of “foreign aid,” and as I’ve mentioned in previous posts, arguably its fastest growing segment.  Yet for folks in the NGO field, the term generally connotes funding made available to developing countries by Western governments and multi-lateral institutions like the World Bank and UN (and, from a cursory skim, this is the general sense in which the book uses it).  They have traditionally set the intellectual framework for how and where aid is deployed.

That one of our leading commentators on philanthropy uses the two terms interchangeably might be another example of the growing influence of private dollars within aid.  Yet most of us would not equate government funds and philanthropy and would be careful to draw a distinction between the two when examining domestic nonprofit and public services.  However innocent Lucy’s characterization (the point of her post was something else entirely), it surfaced for me the challenges of perception faced by the international NGO community.

No matter how strong the humanitarian values of the U.S. general public, they misunderstand or are uncertain about our government’s role and aspirations in providing development assistance.  According to data collected by Public Agenda, half of the country believes that we spend more on international aid than Social Security and Medicare.

They also remain pretty skeptical about its value.  As Joe Lockhart (the former White House press secretary) said at InterAction’s 2008 National Forum, “foreign assistance” are two words sure to create strong negative reactions in the American public.  Most view U.S. foreign aid as “charity” — i.e., something based on a moral impulse rather than a strategic imperative — and worry that the money is being wasted.

Major U.S. NGOs are part of a push to modernize and reform U.S. foreign assistance, an issue that they hope will get serious attention from the next presidential administration.  Convincing the public that this should be a priority will be a challenge.  And helping them understand that focusing on the reduction of global poverty as an important goal in and of itself, rather than making it subordinate to our national security or foreign policy strategies - helping them realize that this focus may ultimately have the most benefit for our security will require significant education.

“Foreign aid” may not be the same as “international philanthropy,” but it should aim to be “philanthropic” - strategically invested, with a focus on maximizing its impact on poverty.  Doing so successfully will increase human security worldwide - and increase our national security at home.

Full disclosure: I have taught seminars with Lucy Bernholz and consider her a personal friend, as well as one of the field’s leading thinkers about the future of private philanthropy.

While I have some qualms about the methodology behind the data, it seems clear that private resources for international development are growing rapidly, and are beginning to rival official development aid (ODA).

This could portend a shift in the relationships between NGOs and the governments and key multi-lateral institutions that traditionally set the framework for how development aid works. As I mentioned in the previous post, increased scale means power to influence an agenda.

These private resources are dispersed among different sets of groups. There are private grantmaking foundations, NGOs, church missions, and faith-based organizations. The Gates Foundation alone is responsible for a significant portion of the growth, and the interests of other mega-philanthropists in reducing extreme poverty could quickly add up.

Whether there exists enough of a common perspective and agenda among these groups to put them in the driver’s seat of development remains to be seen. Is there a day coming when governments will see themselves as trying to leverage the money being made available through private sources, rather than the other way around?

Complicating matters is the entry of new players.  While historically ODA has been the domain of the 22 OECD countries, middle-income countries are increasing the amount of development assistance they are making available.

China, for instance, is investing significant sums in Africa.  What does this mean for the western philanthropic dollars and NGOs at work there?  Especially when China’s money has fewer strings attached (theirs is not an anti-corruption or strengthening local governance agenda) and they’re happy to invest in basic public infrastructure that is sorely needed.

Development aid is becoming an increasingly fragmented, competitive marketplace while more money enters the system.  The interests of a wide array of donors and influential actors are jockeying for position.  Harnessing this and using it to improve the impact on people’s lives in developing countries will be a challenge indeed.  NGOs should seek to play a leadership role as these shifts occur, but to be a positive force will require collaboration as well as taking risks that give voice to the aspirations of the people they are serving in the poorest communities around the world.

Eugene Tempel and Una Osili have an article in the recent Nonprofit Times that examines how recent trends in immigration might affect the U.S. nonprofit sector.  

Their analysis provides additional nuance to the previous postings on remittances.  They too highlight the $200 billion worth of private transfers for 2005, as estimated by the World Bank, from immigrants to family members or hometown projects in developing countries. Yet they point out that, according to a report authored by Jessica Chao for the Council on Foundations, “immigrants often might not recognize informal giving as philanthropy, but rather consider it to be part of an individual’s social obligation to family and community networks.”

They point out that such informal giving among immigrants seems to persist over time. Interestingly, this occurs while immigrants are also just as likely to give to U.S. charitable organizations, and in similar amounts, as native-born Americans.   

I wonder if there’s been any analysis about what this means for U.S.-based international development and humanitarian NGOs.  When making their charitable contributions, are immigrants more likely to support international causes than native-born Americans?  If supporting international causes, do they choose to support U.S.-based international NGOs at higher rates than others, or do they prefer to develop their own organizations and projects that utilize their social networks and knowledge of their home communities, and give to organizations based there?  

Or do they tend to give to nonprofits focused on domestic issues, like native-born Americans?  (Private contributions toward international causes has held pretty steadily at 2% over time.)

If anybody knows of research that might apply, please let me know.  If such a division between remittances and charitable contributions does exist in immigrants’ minds, organizations could be missing an opportunity to have the two enhance each other.  

Some of the indexes mentioned in my recent posts group NGOs together with private philanthropy (i.e., grantmaking foundations) when creating their classifications, since both derive support from private contributions and are independent organizations with private oversight.  Yet I believe the similarities go much deeper.

Because many international development and relief NGOs are operational - that is, directly involved in the design and implementation of development projects or in delivering humanitarian aid - we tend to think of them as a global version of the nonprofits we encounter daily in our communities in the United States, raising money to provide services.  Even when their activities grow to include advocacy, leadership development, technical assistance, or re-granting, they are generally viewed less as a funder than as an ally or an intermediary.

Yet the context for a Northern-based NGO promoting human development and social change in developing countries seems to be quite similar to a private grantmaking foundation.  There exists a similar imbalance between the resources of NGOs and the communities where they work, though like foundations, NGOs do not have unlimited capacity and must deploy their resources strategically to ensure maximum impact.  Even when delivering services, they identify local staff and work through local partners to achieve their goals, in a manner meant to empower individuals and local institutions, rather than create dependence on NGO support.  

I sense a cultural divide here that is analogous to the dynamics that organized philanthropy encounters, and I don’t only mean the difference in Western customs and perspectives in relation to local traditions, though that plays a meaningful role.   In the NGO context, we have an organization with significant financial and intellectual resources, coming from the outside, with defined goals for itself and concrete ideas about the strategies and implementation necessary to reach them, attempting to facilitate the growth and self-sufficiency of impoverished communities and institutions. Sound familiar?

Why does this matter?  On a practical level, greater and more regular communication between organized philanthropy and the NGO community about their experiences in promoting and measuring social impact could enhance our understanding of what works and how we know, especially when deploying resources through others to achieve our own goals. It also shades questions of accountability, representativeness, the niche that international NGOs occupy and the enterprise in which they’re engaged. I don’t mean to fully equate the two fields, but I think it would be fruitful to explore the similarities further.

The Index of Global Philanthropy 2008 (mentioned in my previous post) tries to take a comprehensive approach to tracking funding flows and has developed a measure called “U.S. economic engagement.”  It includes official development assistance (ODA); private giving through foundations, NGO/private voluntary organizations, universities and colleges, and faith-based groups; private capital flows; and remittances from immigrants back to their home country.

While remittances undeniably have developmental impact, and are philanthropic in nature, I think it’s wrong to include them in a philanthropic index focused on development.  Most remittances go from family member to family member, while the other categories track flows between unrelated entities.  I don’t think we’d consider it development assistance (or “economic engagement”) from France to the U.S. if I were living and working in Paris and sending money home to support my parents or siblings.   The fact that the U.S. does not consider many of those sending the money to be “legal” gives the U.S. credit for stimulating development in other countries where little is due.  

Some remittances are for specific community purposes, such as the building of a local church or school.  These seem more analagous to the other types of funding measured by the Index, but would be very difficult to separate out.  The Index could include the funds that flow through hometown associations (organizations of immigrants based in the U.S. that raise funds for their hometown)  but I wonder if this would be significant. 

While it might be argued that remittances are more efficient at improving human development than aid, this demonstrates that development could occur more rapidly and effectively if labor were able to cross borders more freely.  I don’t think it counts as an increase in U.S. economic engagement supporting development. 

CORRECTION:  In my last post, I incorrectly stated that the Index did not provide its methodology for avoiding the double-counting of private foundation grants within NGO budgets.  It’s on page 69.  Basically they looked at grants listed by the Foundation Center that went to the 200 largest NGOs, and subtracted out those grants meant to be used in developing countries. 

The private giving numbers cited in the Brookings report of the last post come from an essay by Homi Kharas, The New Reality of Aid.  Kharas sifts through the published data to estimate just how much money given as “development assistance” is actually reaching the poor.

By his estimation, once debt relief (which is really a transfer between one branch of a donor government to another), emergency and technical assistance, and administrative overhead are discounted, only about 37% of the total aid given by the 22 traditional Western government donors can be considered “net development aid.”  Thus, out of the more than $100 billion that these governments publicized as aid in 2005, only about $38 billion was left over to be put to use in poor communities. 

In similiar fashion, Kharas tries to assess how much in private contributions is reaching the ground.  He groups together private foundations like Gates and Rockefeller with international development NGOs like Oxfam and CARE.  While in doing so, he admits to trying to avoid double-counting grants from the private foundations that go to the NGOs in question, but doesn’t elaborate on the methods used.   It’s also unclear if his analysis subtracts out the government support that NGOs receive (government funds made up 61% of CARE USA’s budget for FY 2005-2006, for example).  And where is embedded giving - i.e., funds collected by (Product) RED and other point-of-sale fund raisers - which is notoriously hard to track?

The Index of Global Philanthropy 2008, published by the Center for Global Prosperity at the Hudson Institute, arrives at similar figures, at least for U.S. private philanthropy (though no hint either how they avoid double-counting among foundations, NGOs, and faith-based groups).   It’s probably safe to say that the trend is unmistakable: private giving is gaining on and maybe even outstripping official government assistance.   How much of either is really reaching the poor is still a guess at best.