Value for Money Series: Part Two of Five
Safeguard Every Dollar: towards a framework linking goodwill and the value for money
The challenges wrought by today’s international humanitarian and development issues require a new strategic and systems thinking mindset. A worldview and a process, systems thinking can be used for both the development and understanding of a system, systems of systems and ecosystem as well as for approaching realized problems. The competency of systems thinking marks a dramatic shift from the linear or reductionist way of thinking currently used by social actors. However, we must first examine why and how funds are contributed.
In an ecosystem of war, famine, natural disaster, disease, poverty, illiteracy, slavery, and prejudice, realizing targeted needs presents unique challenges. “‘The humanitarian system was not designed to address the types of complex conflicts that are happening at present,’ wrote Spiegel [Paul Spiegel, a former senior official at the U.N. High Commissioner for Refugees (UNHCR)]. ‘It is not simply overstretched; it is no longer fit for purpose’” (qtd. In Gharib, 2017).
Part Two of Five
Why donors give
Contributions generally come from two sources. Individual donors give because they believe in the cause, and taxpayers contribute through their governments to fund aid packages. Their motives and mechanics differ.
- Individual donors contribute to organized fundraising, non-profits, and faith-based organizations for many reasons. Individuals generally donate within their means to organizations aligned with their personal interests, missions, and values. However, many factors affect the model. For instance, a 2012 study of Canadian donors found that 86 percent of women were likely to contribute compared to 82 percent of men (Turcotte, 2012). The study also found the size and frequency of cash donations are a function of higher education and income, age, volunteerism, and active religious practice.
The motive for giving may simply be the wish to increase an organization’s resources and services, usually in terms of felt, tangible, and at-hand verification. Donating to local and national causes helps realize that. For example, people will first contribute to their local library, women’s shelter, or animal refuge because they can see or locate the results.
It may explain the results of another study: “Charitable giving varied by sector, with arts, culture and social welfare receiving the most funding, followed by health, medical research, and education. Overseas development, environmental and religious organisations [sic] received the least support” (Lloyd, n.d.).
Features of family background and upbringing are major influences on giving. “For those who had inherited wealth, there had often been a history of family giving to their local community. A sense of community involvement was also expressed by some self- made entrepreneurs with strong local links. Others spoke about a parental influence which had brought a sense of responsibility to help ‘less fortunate’ or disadvantaged people within wider society” (Lloyd, n.d., p. 2).
Other evidence suggests there is a large personal indifference to outcomes. “The vast majority of the empirical research on this topic has found that private benefits are the primary motive for giving. As a result, most researchers agree that there is limited evidence to support the common belief that donors give because they care about the nonprofit’s output” (Vesterlund, 2006).
Later research addressed basic questions: “Many people are also aware that they should donate to the causes that have the highest impact, but facts and figures are less attractive than narratives. In a series of experiments, it was found that people are much more responsive to charitable pleas that feature a single, identifiable beneficiary, than they are to statistical information about the scale of the problem being faced. Further work also discovered that advertising which emphasizes [sic] the proven effectiveness of the charity does not increase giving. Other evidence suggests that the effect of this information can be the opposite. In short, when it comes to charitable giving, we are often ruled by our hearts and not our heads” (Sanders, 2015).
Individual donors show little interest in investigating or strengthening the delivery systems. This limited interest is foundational to verifying the intended benefits have been realized to the maximum. There are correlations with income, age, gender, location, and more. Figure 1 indicates how complex human motivations. In some cases, the generosity may be pragmatically driven. “The decision to donate to charity or to keep the money to yourself is essentially a choice between furthering your own self-interest and acting pro-socially” (Leliveld & Risselada, 2017).
Figure 1: Individual Donor Intentions.
Regardless of motive, donors require and deserve security for every donated dollar. Donors need confidence in a framework delivering their dollars to the intended place and people. They deserve the trust that recipient implementers have confirmed organizational resilience, are strengthened by enabling bureaucracy and empowered by agile thinking.
- Nation states and governments provide major funds at the national and international levels. Nation states are relatively homogenous in language, ethnicity, and culture. They may have been colonizers in the past but now find themselves tested by invasive forces — from competing imperious states to massive displacement relocation.
The threats to nation states have redirected their respective commitment to foreign aid. Many countries — from Turkey north throughout Europe to Scandinavian states — are struggling to underwrite waves of immigration. Others are facing costly and critical internal political and policy issues. Both pressures are draining their budgets.
Several states are under restrictive sanctions by the United States and/or international agencies. Others are financially focused on their military forces. And, economies like those of China, India, Japan, and Russia are regrouping and redefining themselves. This global volatility has reduced the volume, reliability, and predictability of international aid.
Nation states are motivated to befriend needy nations. Often, that motive produces a paternalistic and exploitative alliance using financial aid to leverage political influence. This descends into aggressive geopolitical games that govern needs, delivery, and metrics.
Why organizations give —
International, church-based, faith-based, local, and other organizations contribute millions to help solve global problems. As organizations, they naturally proceed with practices consistent with their values and goals. It is also true of many organizations that they are satisfied when practices are followed, a success metric far removed from meeting the grounded goals.
Multilateral and bilateral organizations, NGOs and INGOs, private foundations and trusts, corporations, and other groups contribute significant sums to local, regional, and global needs. We cannot cover them all, but the following require notice:
· The World Bank (WB), for instance, is a multilateral organization created following the 1944 Breton Woods Conference to address post-WWII monetary issues, including failures in international markets, ending poverty with grants, low-interest loans, zero-interest credits, counseling, and training.
The International Finance Corporation (IFC) is a member of the World Bank Group focused on reducing extreme poverty and promoting shared prosperity across the globe. The IFC uses its financial resources, technical expertise, global connections, and innovate thinking to develop markets that create jobs. The IFC’s mandate is to leverage private sector capital in potential economies convincing investors to create jobs and opportunities.
The International Bank for Reconstruction and Development (IBRD), another branch of the WB, deals directly with individual and group needs. The IBRD is tasked with investing in and supporting growth in the middle- and low-income countries. It offers advisory services, risk management, and technical support with financing and economic policy advice to help navigate paths toward greater prosperity.
The International Monetary Fund (IMF) is directed by its 189 member countries with the most power belonging to those with the highest economic importance. The IMF brings training, technology, and policy advice in the form of capacity-building programs to promote financial stability and sustainability in member countries.
Overall, The World Bank has two main goals (The World Bank, 2019):
- To end extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%, and
- To promote shared prosperity by fostering the income growth of the bottom 40% for every country.
Of specific interest to this field guide is the World Bank’s intent to deliver measurable results. They understand this requires interaction with the project design, access to information, and connection to client governments and communities. And, they bank on the development of a wide variety of free, easy-to-access tools, and research and knowledge to address challenges.
Conservatives assail the WB with cynicism, “if you’re not running an organisation [sic], scheme or program, for profit then you don’t, in fact, know whether what you’re doing is any good. Not even whether it’s doing any good” (Worstall, 2011). Worstall’s pejorative equation of “program” with “scheme” reveals his bias.
But from an early 1980s perspective, “During the 1970s, it was World Bank policy to use its funds to raise the productivity and living standards of the poor. It has increased its lending for sectors and subsectors considered to offer the most direct benefits to the poor such as rural development, population, health, and nutrition. Projects with particular emphasis on poverty have benefitted large numbers of poor people and have had good economic rates of return” (Lipton & Shakow, 1982).
Today, The World Bank has had marked success in Southeast Asia and the Indian Sub-continent. Its brilliant 2019 report on The Nature of Work represents a significant contribution to international economic theory. The WB anticipates the changing nature of work requiring a new social contract: “elements of the social contract echo the three freedoms featured by Nobel Prize winner Amartya Sen in Development as Freedom: political freedoms and transparency in relations between people, freedom of opportunity, and economic protection from abject poverty” (The World Bank, 2019). It is aligned with our call for shifting towards Social Impact Paradigm 4.0.
The WB also notes, “By 2050, more than half of global population growth will have occurred in Sub-Saharan Africa, where the annual growth rates of the working-age population are projected to exceed 2.7 percent” (The World Bank, 2019, p. 127) (Canning, Raja, & Yazbeck, 2015). The report anticipates inevitable social changes resulting from economic volatility, and it does its best to frame a vision for the next fifty years. Some of its foreseen changes are underway, some are on track, and some will never see the light.
While the vision is bold, it does not address pragmatic needs. Solutions, processes, and tracks to resolve current needs are invariably and well overdue. Delivery systems and strategic partners are either weak, dysfunctional, or do not even exist to execute this ambitious vision. Organizations of this size and complexity lack adaptive flexibility. Survival, self-justification, and self-perpetuation consume much of their energy. This is not to criticize the purpose and influence of The World Bank, but it is an observation of the efficacy and inefficacy of mega-organizations. What is going on at WB and its affiliates is not an exception, most multilateral and unilateral organizations are suffering from the same diseases.
· International Service Organizations (ISOs) like Rotary International, Optimist International, Kiwanis International, and more are NGOs with membership cells throughout the world. These “clubs” contribute money and volunteers locally and globally.
A case in focus: The not-for-profit Rotary Foundation is funded solely by voluntary contributions from members and friends who support its mission to advance world understanding, goodwill, and peace. Rotary’s 34,000 clubs across the globe develop and carry out sustainable humanitarian projects to promote peace, fight disease, provide clean water, sustain mothers and children, improve education, and strengthen local economies.
The Rotary Foundation is “a worldwide leader in the efforts to eradicate polio through its partnership with the World Health Organization, UNICEF, the U.S. Centers for Disease Control and Prevention, and the Bill & Melinda Gates Foundation” immunizing “over 2.5 billion children, reducing the incidence of polio by 99 percent and eradicating it from all but three countries” since 1998. In 2018, for instance, 89.4% of its funds went towards impact programs, with only 3.2% spent on administration (The Rotary Foundation of Rotary International, 2019).
· Faith-based Organizations (FBO) have been inspiringly successful in delivering beneficiary impacts. Prominent FBOs are Anglican Overseas Aid, Catholic Mission, and The Salvation Army, organizations that are independent or affiliated with a congregation; and local and regional interfaith coalitions” (Goldsmith, Eimike, & Pineda, 2006).
“Among the strengths and resources that FBOs bring to the task of community development: (1) they are generally trusted by their communities, particularly in distressed areas; (2) they create and provide community leadership; (3) they can access human and financial capital in the form of volunteers and donations; (4) they are community and cultural anchors in areas where they have long been located; (5) they are typically more readily holistic in nature; and (6) they are driven by a higher calling” (Goldsmith, Eimike, & Pineda, 2006, p. 4).
Faith-based and charity-based organizations consistently and positively impact needy targets. Despite predictions that globalization would impose a homogenized and secular culture upon minimal-income nations, religiosity has increased. Faith-based organizations appear to have a closer ear to the ground for signals of specific needs as well as delivery systems that somehow fly under the radar. In many “underdeveloped” economies, “levels of religiosity remain high, new religious movements have proliferated, and religion has had a continuing and sometimes increased influence on politics at both the domestic and international levels” (Rakodi, 2015).
· Organized religions across the world have traditions and obligations to donate alms or pay tithes intended to relieve the poor and otherwise needy. For instance, “Zakat is a mandatory form of alms” (Stirk, 2015) for all Muslims. Muslims with wealth above a threshold or nisab are “required to give a proportion — traditionally defined as one-fortieth, or 2.5%– of their accumulated wealth after it has been in their possession for a lunar year” (Stirk, 2015, p. 7).
“Rather than being seen purely as a charitable donation, Zakat is, in fact, the spiritual duty of the Muslim, as a means of redistributing wealth in order to restore social equality and promote a more just society” (Stirk, 2015, p. 7). The monies are collected by nation states, mosques, agencies, and individuals. Unfortunately, these multiple channels present confusion as to collected and potential volume.
This presents a lack of experience, delivery systems, and clarity regarding how the funds are invested. Zakat collected and distributed by a formal agency has some level of reporting and transparency on transactions in some countries. The recent launch of the UNCHR Zakat Program for refuges has made great strides towards transparency (Shikah, Chahine, Grawl, & others, 2019).
But sometimes Zakat is misused. It can be used to buy political support and loyalty. On some occasions, it has fallen into the wrong hands and used to fund extremist agendas. Although the Zakat has existed since the 14th century, its concepts of self-reliance and sustainability are not mature or not mature enough. Most Zakat agencies are staffed mainly by clerks who graduated from traditional religious education systems. The concept of targeting communities rather than individuals does not exist. Islamic Zakat agencies are lagging in due diligence and reporting practices and learning if compared to Christian aid organizations.
For instance, there are Zakat agencies with missions but lack the necessary vision. Many payers contribute twice: once to fulfill legal and administrative regulations and second to pay directly through nonformal social networks to the needy people. Given the global stretch of Muslim populations, data is not available in the same currencies or same parameters. For example, in countries where Muslims are minority populations, one percent to 57 percent of Zakat funds may go toward international assistance (Stirk, 2015, p. 5). At the same time, in low-income economies, Zakat focuses on domestic emergencies.
Figure, for instance, displays the 2013 estimate of Zakat distribution of donations in percentages.
Figure 2: A 2013 estimate of Zakat distribution of donated $USD (Stirk, 2015, p. 14).
The foundation received US$7.6 million in contributions and US$2.1 million in in-kind donations in 2013. Of the total expenditure, 57% (US$4.5 million) was spent on emergency relief in the same year. This includes projects in the Philippines, Pakistan, Bangladesh, Syria (and surrounding affected countries), Mali, and within the United States.
However, Catholic Relief Services (CRS) reports paying 94 percent of every donated dollar to recipients, touching “the lives of more than 127 million poor and vulnerable people in more than 100 countries around the world” (Witness What Together We Can Do, 2018). Charity Watch extends CRS an “A+” rating for its delivery of $USD0.92 on every dollar. *
And, World Vision (WV) “Joined with 881,000 individual donors and 15,000 organizational donors in the U.S. to care for our world’s poor…Partnered with 16,192 U.S. churches to bridge the gap between their communities and communities in need around the globe” for a total $USD907-million distributed in funds, goods-in-kind, and food (World Vision U.S.: 2018 Annual Review, 2019). Charity Watch ranks WV “A- “with note of its 23 percent overhead releasing $US0.77 on every dollar. *
*These ratings are offered for descriptive comparison only. We do not recommend anyone organization over others because their evaluators’ metrics can vary widely.
· Bilateral government agencies like USAID and the U.K.’s Department of International Development (DFID) contribute taxpayer funds with limited power over graft and corruption by intermediaries. “Corruption is a covert and collusive activity that may involve different layers of government — from the top of the hierarchy at the policy and decision-making level to the lower layer of the government at the implementation level — both political as well bureaucratic” (Quibria, 2017). It includes misuses of resources, rigged bidding, abuse of entrusted power for private gains, attempted bribes, bribes, phantom companies, altered documents, and more.
Debate continues regarding the size of corruption’s impact on taxpayer dollars and beneficiary expectations. One side argues the impact is not what it is purported to be. Between 2007 and 2012, The World Bank’s Sanctions Evaluation and Suspension Office “found sanctionable fraud or corruption in 157 contracts worth $245 million” (Kenny, 2017). Admitting uninvestigated events, “Given the $161 billion global aid business, an average of (say) five percent being lost to corruption adds up to around $8 billion — a real loss” (Kenny, 2017) but not significant given the volume of funds presented.
Others, along with the International Monetary Fund (IMF), Asian Development Bank, and others, corruption remains “macro-critical” to efforts to achieve macroeconomic stability noting how “corruption impedes the conduct of efficient budgetary and monetary policy and weakens financial oversight, thereby hurting inclusive growth” (Quibria, 2017).
International aid consistently fails to solve problems in minimal-income nations. The failure does not reflect a scarcity of motivation or resources. Rather, it appears taxpayers and contributors are unaware of targeted needs and/or distribution mechanisms. Non-governmental organizations are staffed by people of goodwill who often do great good, but they first must deal with obsolete social impact practices, dogmatism, change-resistant, dysfunctional systems, unhealthy culture, shady, and self-interested hierarchies.
· Private foundations contribute billions to world suffering. And, the most notable are highly transparent and accountable. Their respective constitutions determine their missions and mandates, and their sustainability allows predictability and budget forecasting.
The Bill and Melinda Gates Foundation focuses on health issues with a budget more substantial than the World Health Organization (WHO). See Figure 3.
Figure 3: Bill & Melinda Gates Foundation 2018 Funding Areas
(Bill & Melinda Gates Foundation Annual 2018 Report)
The historic Ford Foundation promotes science, freedom, and democracy with grants and funding for people and programs from its USD$12.5 billion trust. The William and Flora Hewlett Foundation seeks to solve social and environmental problems awarding USD$304-thousands plus from an endowment of USD$7-bilion. There are many more, and while some may not deliver significant impacts, their integrity is ensured by their respective constitutions and tax governance.
Figure 4: Organization Donor Intentions.
Finally, corporations contribute directly and indirectly (often as part of employee dollar matching campaigns). “On the revenue side, profit-maximizing managers may use corporate contributions tactically as part of an overall advertising strategy designed to promote a product directly or, alternatively, to promote the firm’s image” (Navarro, 1988).
Looking Forward
Forces contribute billions every year, some on a continuing basis. Where there are delivery systems secure from individual, organizational, and political damage, they still fail to serve the needs felt by recipients. Even where they succeed, they often fail to optimize the intent because the objectives of the originators do not align with the targeted requirements. Part 3 will review how and why organizations fail to ensure the VfM for originating donor and recipient beneficiary.
Author’s Bio: Asaad Taha, Ph.D., is a social entrepreneur and thought leader with multisectoral expertise across the continuum of delivery from the strategic level to frontline field experience. Asaad has a rich professional background in UN agencies, UK DFID, U.S. Department of State and USAID, The Global Fund to Fight AIDS, Tuberculosis and Malaria, International Non-Governmental Organizations, Non-Governmental Organizations, and Community-based Organizations, and more. He is Co-founder and Principal Adviser at S4F.Solutions™.
Works Cited
(2019). Retrieved from The World Bank: https://www.worldbank.org/en/about/what-we-do
Canning, D., Raja, S., & Yazbeck, A. (Eds.). (2015). Africa’s Demographic Transition: Dividend or Disaster? The World Bank.
Desmond-Hellmann, S. (2018, Dec. 31). Annual Report 2018. Retrieved from Bill & Melinda Gates Foundation: https://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Reports/Annual-Report-2018
Goldsmith, S., Eimike, W., & Pineda, C. (2006, Spring). Faith-based Organizations Versus Their Secular Counterparts: a primer for local officials. Cambridge, MA, USA: Ash Institute for Democratic Governance and Innovation: John F. Kennedy School of Government: Harvard University. Retrieved May 25, 2019, from https://www.innovations.harvard.edu/sites/default/files/11120.pdf
Kenny, C. (2017, Jan. 23). How Much Aid is Really Lost to Corruption? Retrieved from Center for Global Development: https://www.cgdev.org/blog/how-much-aid-really-lost-corruption
Leliveld, M., & Risselada, H. (2017, Sept. 20). Dynamics in charity donation decisions: Insights from a large longitudinal data set. Science Advances, 3(9). Retrieved from AAAS: American Association for Advanced Sciences: https://advances.sciencemag.org/content/3/9/e1700077
Lipton, M., & Shakow, A. (1982, June). The World Bank and poverty. Finance & Development, 19(2), 16–19.
Quibria, M. (2017, Summer/Fall). Foreign Aid and Corruption: Anti-Corruption Strategies Need Greater Alignment with the Objective of Aid Effectiveness. Georgetown Journal of International Affairs, 18(2). Retrieved from https://www.georgetownjournalofinternationalaffairs.org/online-edition/2017/12/22/foreign-aid-and-corruption-anti-corruption-strategies-need-greater-alignment-with-the-objective-of-aid-effectiveness
Sanders, M. T. (2015, March 23). The science behind why people give money to charity. Retrieved from The Guardian: https://www.theguardian.com/voluntary-sector-network/2015/mar/23/the-science-behind-why-people-give-money-to-charity
Shikah, R., Chahine, H., Grawl, S., & others. (2019). Refugees: The Most in Need of Zakat Funds. UNHCR. Dubai, UAE: Refugee Zakat Fund. Retrieved from https://zakat.unhcr.org/hk/wp-content/uploads/2019/04/UNHCR-Annual-Zakat-Report-2019-En.pdf
Stirk, C. (2015). An Act if Faith: Humanitarian financing and Zakat. Bristol, UK: Global Humanitarian Assitance. Retrieved from http://devinit.org/wp-content/uploads/2015/03/ONLINE-Zakat_report_V9a.pdf
The Rotary Foundation of Rotary International. (2019). Retrieved from Charity Navigator: https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4553
(2018). Witness What Together We Can Do. Baltimore, MD: Catholic Relief Services. Retrieved from https://www.crs.org/sites/default/files/2018-annualreport.pdf
(2019). World Vision U.S.: 2018 Annual Review. Federal Way, WA. Retrieved from https://www.worldvision.org/wp-content/uploads/2019/01/annual-report.pdf
Worstall, T. (2011, Aug. 13). Success at the World Bank: They’re Only Wasting 70% of the Money. Retrieved from Forbes: https://www.forbes.com/sites/timworstall/2011/08/19/success-at-the-world-bank-theyre-only-wasting-70-of-the-money/#64f0eebf3f29
