Jan Martin Witte: Gates, Buffett are foreign-aid giants

The writer is a policy analyst with the Global Public Policy Institute, a think tank with offices in Berlin and Geneva. This essay was written exclusively for The World-Herald at its request.

European and American foundations today spend between an estimated $6 billion and $8 billion a year on programs in developing countries. From fighting diseases such as HIV/AIDS, tuberculosis and malaria to supporting basic education, private foundations are set to become a permanent fixture in the foreign aid architecture.

The largest foundations, such as the Bill and Melinda Gates Foundation, will be especially powerful players.

The ongoing global economic crisis will without a doubt put a dent into this development, but there are no signs that it will reverse the overall trend. Indeed, a recent report by the U.S. Foundation Center suggests that despite heavy market losses, the near-term outlook for foundation giving remains positive.

Foundations have approached their new calling with a healthy dose of optimism and, quite frequently, a significant degree of self-confidence.

Many of the new philanthropists — not the least Bill Gates and Omaha’s Warren Buffett — are especially ambitious. They say that they seek nothing less than a transformation of international aid. Achieving that transformation, they say, will be made possible through fresh money, a strong focus on investments in new technologies and — as Gates puts it — the application of “business common sense.”

This commitment is commendable and promising. After more than four decades of official development assistance, there is a growing sense that a new approach is needed to transform the realities on the ground.

Nowhere is this sense more palpable than in sub-Saharan Africa. After many decades and billions of dollars’ worth of foreign assistance, many countries there are locked into a spiral of political, economic and social stagnation.

Indeed, traditional donor assistance, delivered by Western aid agencies, is increasingly seen as part of the problem rather than part of the solution.

But can foundations be part of the solution? That will depend on whether they are able and willing to learn the hard lessons of foreign assistance in the developing world.

Four lessons stand out:

— Technology is only part of the answer. Many foundations have emphasized their financial support for the development of new technologies such as new drugs. That applies in particular to the Gates Foundation, which has taken a number of significant “bets” in its attempt to foster treatment options for diseases such as HIV or malaria.

While important accomplishments have been reached, there is a need to recognize that developing new drugs is only one part of the solution, and it may not even be the hardest. In many developing countries, health systems are so weak that rolling out treatment becomes a logistical nightmare.

For many of the most damaging illnesses (examples include worms, respiratory infections or diarrheal diseases), cheap and effective treatment options already exist. What is missing are reliable delivery and access.

Some foundations, such as the Rockefeller Foundation, have recognized the challenge and started to make investments in strengthening health systems, focusing in particular on building capacity in local health infrastructures to improve service delivery. This requires patience, commitment and lots of money.

— Local presence matters. Thus far, most decisions on foundation giving are made in Seattle, New York or London. Implementation is done primarily by grantees and implementing partners, many of which are nongovernmental organizations from industrialized countries that pursue their own interests.

Foundations need to get closer to their clients, i.e., the poor. As of now, foundations have few networks on the ground in developing countries. While the key battlefield is sub-Saharan Africa, for example, few foundations maintain offices there. Managing by remote control won’t work.

— Stay away from development fads. Foundations often claim that they can be more flexible and innovative because they are not required to toe a political line. In many cases, however, flexibility and the ability to be innovative have simply been excuses to follow new development fads and to maximize public relations impact rather than development impact.

Smaller foundations are especially prone to scatter their inherently small investment capacity around a large number of projects that may be in vogue and attract significant public attention but have little positive impact on the ground.

— Accountability counts. Foundations are powered by private money. However, they still must be publicly accountable for their work. Their increasing political influence and, more significantly, their expanding local footprint in developing countries put the onus on philanthropists to become more open and transparent about their work — and, in particular, to allow their own “beneficiaries” to have a say in how programs are designed and evaluated.

Yet so far, foundations are not exactly the paragons of transparency or accountability that one might expect. Ultimately, foundations are accountable only to their benefactors and boards of trustees. Recent public criticism of the work of the Gates Foundation indicates that these concerns over accountability are becoming increasingly pertinent.

Does this mean that if foundations accept these lessons, they will have a transformative impact? That is impossible to say. The realities on the ground suggest that effecting real change usually requires the fighting of long and tough battles, with many often unforeseeable twists and turns. If anything, the history of foreign assistance indicates that achieving progress is neither quick nor cheap.

« Columns

Share