Aid, Nonprofit, Public: Who Defines the Rules of the Game?

I am a big supporter of the view that nonprofits should be run like businesses. Because aid has to be sustainable. In every sense of the word. However, through my experience in the field I have started to notice that some practices of many aid and international development organizations remind me of the corporate world. But not in a good way.

When nonprofit leaders are striving to streamline day-to-day communications and management within their organizations - it is excellent. When CEOs promote transparency and accountability within their companies, it is great. When nonprofits look for social investors instead of grant-makers to find their way to financial sustainability, it is superb! However, when nonprofits start paying more attention to their PR campaigns and fundraising, forgetting their original goals in the process, it is not aid anymore. A nonprofit is a business with mission. When mission is lost, nonprofit turns into a traditional business with a donate button on its homepage.

One of the articles that really inspired this post was tweeted by the mysterious @TalesFromthHood. AlertNews Can aid agencies afford to be honest? is talking about nonprofits' fundraising & PR practices that too often take general public (a.k.a. potential donors) for simplistic and narrow-minded people, pushing simple messages such as "a starving child" and forgetting to tell the not-so-pretty truth from the ground.

The article quotes OCHA's Mark Turner: "I still get the impression that the simple tale of 'give a pound save a life, here's a child with a begging bowl' is still by far and away the most effective fundraising exercise and I'd be interested see if there's any research to be done in terms of complicated messages and fundraising -- whether this public that supposedly wants a greater, more complex understanding of the situation gives money when you present it in that complicated way."

The question I want to ask is: Who started this myth that the public does not want the "messy truth"? Who defined the rules of the game that the nonprofit world is running by?

Correct me if I am wrong, but aren't the most educated people - traditionally the biggest donors? Then why do nonprofits need to simplify their messages so much? Why can't they afford to be honest? Since when fundraising and PR are more important than work on the ground? Since when is it acceptable for aid agencies to claim to "do good" without knowing their original mission or end results?

Is it because admitting failure is so hard in practice? Is it because we venerate success so much, but prefer to omit the "dirty details"? Or is it because monitoring & evaluation are legging behind, while PR machine is always on its high horse? When did nonprofit industry switched gears from need-based solutions to corporate-like, huge but unaccountable programs?

Now, I am not saying that fundraising and PR are not important. Many big nonprofits are able to receive grants namely because of the successes of their PR and fundraising departments. Working for more than 2 years for a nonprofit run by volunteers, I KNOW how important they are. However, I take comfort in that my organization is mission-driven, that it exists simply because it truly helps the people in need. THEY are our main focus, their needs is the base of our existence. Because aid is about helping others, not about my professional success, a CEO's self-promotion, or organization's ratings. Aid is about doing good, honestly, effectively, selflessly. A very idealistic view, I agree. But aid itself is by definition idealistic.

I look forward to your comments! Do you agree with me or not? Can nonprofits really combine idealistic and altruistic motives with business operations? Can aid agencies be grassroots-oriented and still financially sustainable?

Does Africa really need no more foreign aid?

Don't get me wrong. I am FOR sustainability, long-term solutions vs. short-term and do realize that foreign aid most of the time falls under the latter category... But hear me out here.

Not long ago I read a great article on Huffington Post Impact, where the author quotes Idris Bello, "a self-proclaimed 'Afropreneur'", who says that

"Africa does not need aid anymore."

Right when I was about to share the article on Twitter along with my own "Amen to this" I found myself thinking: "But what about thousands of Africans that are in desperate need of immediate help, right now, at this moment?" Will the meager needs of people who live in the Horn of Africa - that is experiencing yet another sever drought - be met or will hundreds die abandoned? Will women all around rural Africa have to see their kids die from water borne diseases, because their villages have no source of clean drinking water? Will an African child have to sleep without a malaria net tonight? Because simply giving a net/bottle of water/bag of grain to people in need is not sustainable. Yet this does save lives.

To begin with, let's just say not all aid programs are created equal. Compare TOMS shoes - check out Saundra Schimmelpfennig's article on why it is bad aid - and Water Credit that I consider an example of smart aid. Another thing we shouldn't forget is that Africa is not a country, but a continent of 53 very different countries.

For example, the home country of Mr. Bello, Nigeria, thanks to its rich oil reserves is doing much better economically than some other African states. With all the oil money coming into the country (even though most of them do settle in the pockets of corrupt government officials) standard of living in Nigeria has risen significantly. However, what is even more important for Nigeria is that the country has just had its first truly democratic presidential election. That will ensure even a better investment environment in the country. However, not all the countries in Africa are blessed with oil or a somehow stable political situation. On the other end of spectrum are Somalia, DRC, Swaziland, Zimbabwe, Malawi and such. These are some of the poorest states in the world, with a very extensive list of development problems, where populations live in truly despicable conditions. The truth is that governments of these countries are not even just not up for the task, but the bureaucrats there genuinely don't care about their people. From Mobutu Sese Seko and Idi Amin to Omar Al-Bashir and Robert Mugabe, this pattern seems to be unbreakable.

The question is: who will provide all these resources and help people in dire need if not foreign aid agencies?

How Can We Raise Awareness In Darfur Of How Much We're Doing For Them?

How Can We Raise Awareness In Darfur Of How Much We're Doing For Them?

Idealist: To be or not to be

"Idealists...foolish enough to throw caution to the winds...have advanced mankind and have enriched the world," Emma Goldman

I wasn't sure which career path to choose for a rather long time. My first choice, of course, was to be an actress. Unfortunately for Hollywood, it didn't happen as I gave up the idea of becoming second Julia Roberts early in my life (around 10 or 12.) My next choice was journalism; I still carry passion for writing and expressing my own opinion wherever I go.

The big change happened in 10th grade when I did a report on the problems of the third-world countries for my geography class. Suddenly I was exposed to the world of hunger, poverty, and diseases on a scale I never knew before. Mind you, I am from Russia, which despite all of its political bravado has rather low standards of living.

However, one of the biggest things that enraged me was not poverty and omnipresence of AIDS in itself, but long history of colonialism and economic exploitation of the developing nations by the West that continues even now. From then on, my career goal was decided: to help people, especially the ones that are in dire need of it. What an unoriginal career goal, I thought. Doesn't everybody want to help other people? Isn't every job's ultimate goal is to help people? Not particularly, I learnt later.

As I studied International Relations at the university my illusions about the UN quickly evaporated. Yet somehow, I still didn't loose hope for a good-hearted and effective global government. During political theory classes I found myself somewhere in between Hobbes' and Locke's camps, my mind telling me that humans are rather corrupt and self-destructive, my heart, however, always believing in the good nature of fellow Homo sapiens.

Even now I haven't quite decided which camp I belong to. On Twitter I got a chance to connect with many "development skeptics" (who are this way only for the sake of progress and effectiveness in the the field of foreign aid and economic development.) On the other hand, I recently read a book by 2006 Nobel Peace Laureate, Muhammad Yunus, who simply infects you with his optimism and belief in the good of humans' hearts!

So who am I, you wonder? An Idealist or a skeptic, Lockean or Hobbesian? If you look at my Twitter profile, you will learn that I am an idealist...with a skeptical side, which helps me focus on effectiveness and always keeps my feet on the ground.

"An idealist believes the short run doesn't count. A cynic believes the long run doesn't matter. A realist believes that what is done or left undone in the short run determines the long run," Sydney J. Harris

Which side are you on? Do you think it is worth being an idealist? Or do you think they always have their heads in the clouds? Maybe realism is the golden mean for you? Are you an aid skeptic or admire aid and philanthropic agencies simply for the attempt to help people? Please let me know your thoughts in the comments sections below.

Microfinance: Propoor Nonprofits

There ARE ways of making microfinance work even without raising interest rates and truly serving the needs of the poor. One such example is EARN, a nonprofit putting microfinance to work for low-income Americans in the Bay Area. 100% of donors’ money go towards changing someone’s life and are matched twice, by federal grant and Earn Savers program.

Another nonprofit that I can personally ( as I am interning with them) recommend is Color Me In!, organization combining microfinance and tree-planting. Rural Zambian enterprise groups receive microloans for small business development that can be partly repaid by planting trees, 1 tree per 1USD borrowed. As a result, CMI not only empowers the poor, but also helps counter deforestation that has been plaguing the country for many years. CMI is currently raising $6000 to fund two enterprise groups in Zambia. One loan will help fish farmers expand their business, while another will go towards building a community school for 30 orphans. 90% of donations will go straight to support these loans, while 10% will be spent on communications and reporting over the next year. Finally, Color Me In! does not charge any interest rate on its loans in most cases, while in others lets the recipients define the interest rate themselves (which is usually 5-10%.)That is just one example of how smaller nonprofits without much publicity can have much more effective and transparent programs than their big media-loved counterparts.

Heifer International is an example of a different kind of microfinance organization. It gives microcredit loans in the form of domestic animals, such as cows, chickens, and goats. This way famers are not only able to feed themselves, but can also achieve stable income by selling surplus and breeding domestic animals for sale.

Another great nonprofit is Women For Women International that ultimately connects women-donors from the developed world with the women in need in conflict and post-conflict countries. Their Sponsorship Program has truly changed lives on both sides of the world, because as women in Africa, Asia, and Latin America benefit financially and become empowered, women in the US become inspired and happy that they are contributing to a greater cause. Not only a donor knows a recipient’s name, but can exchange letters with her that truly creates life-long relationships.

I was planning to include Kiva.org in my list of microfinance organizations, but, first of all, it doesn’t need much introduction as a top peer-to-peer microfinance organization and, second, I was not satisfied with the interest-rate they charge their recipients: average interest rate among Kiva's partners is 38%. Kiva, no doubt, does create change, yet it could have been much more effective and less bureaucratic.

In the end, the hardest part in identifying effective and transparent microfinance nonprofits is that most of them do not openly state their interest rates and, thus, you have to do an in-depth research. Doing and donating to charity work is not enough, effectiveness is the key if you want to create the most change for your money.

My next post will cover social business as coined and defined by Muhammad Yunus and that may be the long-awaited answer to aid effectiveness.

Microfinance: Helping the Poor or Making Profits?

As I noted in the previous post, there are virtually thousands of microfinance organizations out there nowadays, yet they are not equally transparent and effective. Even more so, some so-called microfinance organizations have trailed-off from the original mission to help alleviate poverty and became regular profit-maximizing businesses that exploit the poor. That is exactly why microfinance movement was started by Muhammad Yunus in 1976: to give people an opportunity to lift themselves out of poverty and break their unhealthy dependence on money-lenders who were living off them.

Mr. Yunus divides all microfinance organizations into 2 categories:

1. Poverty-Focused Microcredit Programs, ex. The Grameen Bank.
These programs charge loan recipients interest rate starting at the market price of the cost of funds up until additional 15% to that price.

2. Profit-Maximizing Microcredit Programs.
These businesses charge more than 15% on top of the market price of the loan and, thus, in Yunus’ words, operate in moneylenders’ territory.

To the defense of the latter, Kiva.org, one of the most famous microfinance organizations, explains why microloans have to have high interest rates. It all makes sense, but in a nutshell, the poor have to pay for the bureaucracy of NGOs, i.e. transactions costs, staff meetings, monitoring, etc. While it is an undoubtedly reasonable argument, for me, low interest rates define an effective microfinance organization, such as Grameen Bank that somehow managed to do so. Another explanation of high interest rates, as Muhammad Yunus notes, is that it helps microfinance organizations become self-sustaining in a shorter period of time. Again a very logical reason, however, the poor should not have to pay for that. Intensify your fundraising outreach, write more grants, what have you. The poor should be nothing but the beneficiaries of the program! Besides, there are other ways of reaching self-sustainability, such as establishing savings accounts for the poor or giving the loans for all the upper classes with regular high-interest rates.

The list of exemplary (and not-so much) organizations based on the criteria I outlined above is right in the next post.