Philanthropy and U.S. Foreign Policy

Monday, April 27, 2009

TREVOR NEILSON: Well, thank you all so much for joining us on this sweaty Washington evening.

My name is Trevor Neilson. My day job is that I'm president of a company called the Global Philanthropy Group. And I'm joined by two distinguished panelists. I should note that this meeting is on the record, and we have some media in attendance.

Let me introduce my panelists here tonight, and then I think they will both give maybe a couple of minutes of overview of what they're up to, because I think it's relevant to our conversation tonight.

And then we'll just jump into the conversation, and be sure to leave a lot of time for the audience to ask questions and add comments. I see we have some pretty important people in the audience, including Congressman Colby and others who have been very active on these issues. So thank you all for coming.

Carol Adelman directs the Hudson Institute Center for Global Prosperity, and publishes the Index of Global Philanthropy and Remittances, which I think just came out -- the new version just came out today. It's the sole comprehensive guide to all private giving both philanthropic and remittances to the developing world.

She has done a host of very impressive things, and you can all read about them in her bio. But I will point out that she was the vice chair of the Health Commission, which is a very influential commission focused on -- on foreign aid, which I'm told something is happening right about now on foreign aid from Congressman Berman. And someone in the audience probably knows more about that than I do.

Jane Wales is vice president of philanthropy and society at the Aspen Institute. She is also director of the Institute's program on philanthropy and Cocial Innovation, founder and CEO of the Global Philanthropy Forum, which had a conference just last week and president and CEO of the World Affairs Council of Northern California.

She served as the acting CEO of the Elders, which was Archbishop Desmond Tutu and Nelson Mandela's organization which I think would be interesting to hear about tonight, and prior to that worked in the White House and did a number of other very impressive things.

So with that, maybe we could just open up -- both of you, Carol and Jane, talking a bit about what you're focused on right now and some of the emerging trends that you see in this intersection of philanthropy and foreign policy, and then we'll jump into it.

JANE WALES: Well, we thought what we'd do is, I would sort of start with talking about broad trends in philanthropy, and then Carol was going to get down into the details of what's happening right now.

The perspective -- the lens through which I look at philanthropy does tend to be through the Global Philanthropy Forum, that is to say, through the eyes of -- well, there's about 750 principals of family foundations that are committed to international causes. And they are pretty representative of the changes in philanthropy that we're seeing today.

The first trend I think that is most striking is that foundations that are led by living benefactors are matching the size and the scale and the scope and the potential impact of those more traditional foundations that were founded as a result of estates. And so you're seeing these pretty dynamic leaders that are very engaged, and they're very strategic, and they're very much shaped by their private sector experience, which I think is key to bear in mind. They're global in outlook, and like traditional foundations, they're very much about results.

The second key trend is that these philanthropists as well as others are willing to take on -- they're pretty bodacious. They're willing to take on very, very large problems like poverty, like climate change. And they treat -- or our educational system, and they treat these problems as systems that need to be replaced by new systems. And so they're looking for systemwide change.

The third, and you'll find that many of the kinds of priorities that you hear them articulate are aligned with the -- what are in the in-box of the Obama administration and in the in-box of government leaders around the world.

The third broad trend is that because of their emphasis on sustainability, because of their desire to bring their solutions to scale, they're always looking for leverage. And it doesn't matter how large the foundation is. So you'll hear this from Bill Gates, Sr., I'm sure you've heard it from Bill Gates, Sr., that the kinds of problems -- Bill Gates, Jr., I mean -- is the kinds of problems that he's taking on, the problems of global health, are so large that even a foundation the size of the Gates Foundation is not sufficient; that there is a need to -- for philanthropists to leverage one another, and they do so through various fora. There is a need to leverage government, and those public-private partnerships, which were something that were forged initially by Rockefeller and Ford and Macarthur and other foundations, very long ago -- I mean, this is a long tradition in our country. But this is the path that new philanthropists go down with tremendous ease.

And then finally, and I think this is something that is somewhat different, they leverage the private sector. And this will -- you know, this is the range from a desire to invest in such things as microfinance, but range from that to something as large as actually taking your whole company and putting it to the service of a social goal. And you will see increasingly that the whole, what they used to call corporate social responsibility, has been absolutely revolutionized, and in fact now the question is how do I make social change intrinsic to the value change. And this is something I should say that isn't just being pushed by CEOs who are philanthropic; it's being pushed by their employees. And the CEOs know darn well that it is in fact, it provides them a great comparative advantage in attracting really good employees to be able to say, we're about social change as well as about running a very good business.

The fourth broad trend is that in the process of this, the process of leveraging, philanthropists have encouraged the convergence of the private and the social sectors. And this has been -- and for good or for real. I mean I think we should talk about that more as we get into detail. But social actors are talking on private sector methods; they are taking on private sector means of measuring success on the one hand; and on the other hand philanthropists themselves are thinking about how to apply business principles to achieving their social goals.

Fifth, and I think this is to tee up the issue we're going to talk about most tonight, despite this comfort with markets and desire to leverage markets, there is a recognition that markets don't solve all social ills. And in fact markets can be -- can exacerbate social problems. Take the problem of weapons proliferation. You don't want to leave that to an unfettered market.

So there are some social goals for which markets are not particularly relevant, and certainly the overarching objective of many philanthropists which is poverty alleviation is -- I think the best thing to say is that markets provide for the rational distribution of wealth but not necessarily for the equitable distribution of wealth. That is not the job of markets; that's the job of policy and that's the job of philanthropy, and thus a recognition of that.

And I'll just take you to the -- sort of the last broad point that I can make, and that is that there is a recognition that the opportunity, the big opportunity, is to inform individual decision. Not necessarily to inform government, but to inform individual decisions. So it's the sense that many of the problems we face and many of their solutions, will lie in the individual choices made by millions, hundreds of millions, of individuals; and that in informing those choices could be the most important thing that we do.

And here I will just pull out one example of one of our members -- two of our members are Larry Page and Sergey Brin, the co-founders of Google. And you might be able to argue, and I'd be curious if Jim Moody and others and Congressman Colby and others who have -- who have dedicated so much of their lives to economic development would agree that it may be that there is a point down the line that we will look back and say, the decision, the pure business decision to translate all the world's knowledge into the languages of the developing world, may turn out to have greater and more sustainable social impact than any philanthropic decision that we take. So that's just a for instance. But there are -- this is just one of many efforts to inform -- to inform individual choices.

NEILSON: Right. Carol, talk to us a little more about microtrends, I guess.

CAROL C. ADELMAN: Sure, thank you. And thanks to the Council for having us and to Jane and Trevor. And I have the honor of -- and pleasure -- of attending Jane's Global Philanthropy Forum last week. And it was just wonderful.

And we in our Index try to keep up with all the social entrepreneurs and organizations and trends, and we think we're on top of it, and then I go to Jane's conference and I met 100 new ones that we've never heard of before. So thanks; I had a wonderful time, and it's a great, great contribution to the field.

And I also want to thank -- then I will stop with all this preliminary -- since our Index has just come out today, and we're debuting the numbers, if my staff would just raise their hand, or stand up for just a minute, because they have been working all year on producing these numbers, and I just want to thank you for doing this. And they are here tonight, and they are not off on vacation on an island -- (applause) -- because we spend -- there's not many of us that produce this document where we're measuring all private giving going to the developing world. But thank you very much.

I started the Index of Global Philanthropy because no one was measuring private giving. The Foundation Center had been, but foundations were just one part of corporate giving, as the world was changing. And corporations were out there, and NGOs, what we call PVOs, private and voluntary organizations here in the States, universities and colleges were giving scholarships and all kinds of aid to students in developing countries. Churches were giving a lot. All religious organizations, and nobody was capturing that.

So we started doing that, and then we also started measuring remittances. And a big change in our index this year, it's now called the Index of Global Philanthropy and Remittances. Because I was spending too much time debating whether remittances were philanthropy or not. And I just decided that I really didn't care what we called it. The fact is that remittances are a huge financial flow that were just kind of lost by the economic development community. They only started really measuring them well in 2000 and 2002. The IUB (ph) had measured before that. But -- and here they are this year -- for the last for which data are available for comparing all these things in up to date years, 2007, but remittances from the developed donor countries are $145 billion going just to the developing world. And our official development aid, ODA, is 103 (billion dollars) or $104 billion only.

So remittances already exceed what our countries are actually sending back. And regardless of what you call them, the studies at the World Bank show that they're directly related to reducing poverty.

And we think about 80 percent of them go directly to families, and they're going for -- in the surveys -- food and medicine and education and sometimes starting small businesses. Twenty percent of them go into collective projects that are organized for an entire village. So -- and we think that is growing.

And that -- in that 20 percent is where a lot of creative foundations and governments have now started to think, hey, how can we help you leverage that money that is coming in? Western Union for ever dollar that goes into a hometown -- into a village project from U.S. migrants sending back to Mexico, Western Union will match every dollar of that. And the PanAmerican Development Foundation will match remittances.

So this is a whole new world of financial flow that is hugely important to developing countries, and having a big impact. And there is no disagreement on that; everybody understands it. But the openings for that, so what we might be able to do, and help leverage successful projects that I think are very exciting. So we are definitely not -- you can call it whatever you want, but you can read about it here in our latest edition.

Then after we started measuring numbers, we soon realized that it was more than just some numbers. It was the phenomenal new way that Jane was seeing, too, when you started the GPS I'm sure, in how foreign aid, even through the private sector, we'll call it foreign aid, was being delivered. And it was being delivered more people to people, more peer to peer, using less of the expensive consultants which high overheads. It was more demand driven, working more with local organizations who decided what they wanted to do and what they were going to put in. So it was never just -- the donors' dollar was never the only dollar on the table, which in the past has been a big problem with government foreign aid part of the program. So that's -- it's getting better.

There is also a better sense of wanting to, needing to show results and transparency. Because when you have private boards and donors that people are giving their volunteer time, they want to see what's happening a little bit more. Now I'm in no way saying that private organizations have better impact evaluation than government agencies, because there are challenges in measuring. But certainly private organizations, they are doing a much better job I think at measuring outputs, how many people have been trained, and you know, what certain achievements in projects are.

So we started then writing about -- in every Index that we produce we cover about 30 projects that meet those criteria and we think are success stories. And the purpose of that is to get these success stories and best practices out there.

Now we also cover public-private partnerships. Because one of the wonderful trends that is -- that Jane mentioned that's going on is how governments -- and it's not just our government; it's other bilateral governments, it's the U.N. -- are working now with private foundations, corporations, churches and leveraging these private successes to greater heights, scaling them up. Gates Foundation has done this a lot.

And so these are -- this gets into what we're going to discuss later, okay, what's the new business model for foreign aid given this changed world? And we're going to be talking about that because I have definite -- I just think the data sort of reveal it all.

The -- did any of you pick up this executive summary out there? How many of you have it? Because I'll -- okay, good. Well, if some of you can just turn to page three on this. And I'm going to walk you through if you don't have a copy of it.

The traditional way that country generosity had been measured was by looking at whatever a country's official development aid was to the developing world. So we used data from the OECD, the DAC Donor Committee. And if you use just that figure, that first figure one, shows that by -- in absolute amounts the U.S. gives the most. But if you go down to the graph below that, if you look at our government aid as a percent of our gross national income, we fall -- we tie with Greece for the bottom. And this led to the charges that America was stingy. And there were a bunch of us out there saying, wait a minute, I don't think America is stingy. I know what all -- I know what PVOs are doing and I know what private giving is going on out there, although I don't know the numbers.

And so it led us to start this measurement, and the table that you see, Table 1 that's up on the upper right-hand corner, for the U.S. kind of puts this in perspective. And we decided, look, if we want to see, for our foreign policy's sake, what the U.S. -- how the U.S. is engaging with the developing world, yes, we want to see government aid, but we also want to see what our private philanthropy is doing, what remittances are doing, and what our private investment is doing.

So that's what this table does. And if you take a look at that, our U.S. official development assistance is 21.8 billion (dollars), this is for 2007, and our total for U.S. private philanthropy is 36.9 billion (dollars), which is more than our government aid. And that consists of corporations, foundations, PVOs, churches and universities.

And then remittances are a whopper there, 79 billion (dollars). But they're separate, as you see, from philanthropy. And then private capital flows were 97 billion (dollars).

And so we feel that looking at this complete picture is more holistic.

NEILSON: Let me butt in there, because I want to be sure we save enough time for questions. Let me ask a question that we were talking about before the panel began, which is -- I was talking to Lisa Shields, the head of communications here at the Council, and said that to her recollection there had not been an event on philanthropy at the Council in recent memory.

And it's ironic given the fact that the Council comes from philanthropy, or at least continues to exist thanks to philanthropy. And my question would be does the foreign policy community view philanthropy or philanthropists as important sort of non-state actors in the same way we view a bin Laden as a non-state actor? Are philanthropists to be considered -- (laughter) -- well, are philanthropists to be considered as important forces that can dramatically alter foreign policy?

And by the way bin Laden has funded plenty of his efforts through charitable organizations. So it's not that far off.

WALES: You're not really giving a good name to philanthropy. (Laughter.)

NEILSON: But you see what I'm saying. Does the foreign policy community take philanthropy seriously? And if not, why not? And does it matter?

WALES: I think you're seeing a very dramatic change going on. First of all, I think there was great overlap between organized philanthropy and the foreign policy community to begin with. I mean, often they were one and the same. And so -- and --

NEILSON: Meaning that the --

WALES: The elites, within and out government that also were philanthropists. There is a sort of, I don't know --

NEILSON: Revolving door?

WALES: Yeah. I mean, Governor Harriman, later Ambassador Harriman, I mean, he was a great philanthropist, but also a public servant. This was not unusual for the foreign policy elites to be people who came from that same -- that same group of individuals. But philanthropy has been very much democratized, and philanthropy as measured by Carol is truly democratized. And so --

NEILSON: Right. These are people working for minimum wages in essence providing capital to people that depend upon --

WALES: The poor are the most generous.


WALES: The poor are the most generous givers in our country. I think -- but I think that you are seeing a shift. If you define -- philanthropy as defined in its current form, I think you're starting to see a real shift in attitudes, on the part of the U.S. government, both in Congress which is very much aware of philanthropic activities. They do bring in the Bill Gates and the George Soroses of the world --

NEILSON: But be aware -- being aware and taking testimony is certainly different than seeing philanthropists as strategic partners. When Ambassador Holbrooke is struggling with what's happening in the Swat Valley of Pakistan, does he think he can call on America's philanthropists to help him somehow address the need to placate a tribal chief or somebody in a village somewhere?

WALES: I believe he even talked about that at a Council on Foreign Relations meeting recently --

NEILSON: Calling on philanthropists.

WALES: -- that perhaps was not off the record. (Laughter.) But yes, and I just spent three hours this afternoon at the State Department being -- and the conversation was about, you know, here are our strategic objectives that we want to pursue, who is doing what who might represent a good partner to us?

So I think there's a real understanding that public-private partnerships are a real opportunity for leverage. You don't -- this administration faces a series of crises, and simultaneously. It's extraordinary. And President Obama was the first to acknowledge that these were problems that would not be solved by government alone; he said that publicly during his acceptance.

And so I think they've been very forward-leaning about reaching out to philanthropists.

NEILSON: Right, but what about the other direction? Should philanthropists, and are philanthropists, able to pro-actively on their own shape agendas -- pick a place. But let's stay away from the touchy-feely stuff, we send them food, send them, you know, vaccines, no one can argue with that. But -- but should philanthropists and are philanthropists driving their own little foreign policies? And if so is that appropriate?

ADELMAN: Well, I'll make a comment on that. And just comment -- I think Jane and I will agree on that. But --

NEILSON: What's your agreement, yes?


NEILSON: No matter who they are?

WALES: Well, I think they're doing it.

NEILSON: Oh, not that they should.

ADELMAN: Yeah, they're doing it, right. And it depends on who they are whether they should or not. (Laughter.) If they're our guys --

(Cross talk.)

WALES: Carol and I may have a different list.

ADELMAN: Not from whom I met at your conference. They were fabulous. But I just wanted to get back to your point on why -- the recognition of this. There was a big shift, and 1990 was the first time that all private flows to the developing world became larger than government flows.

It was different from the 1950s and '60s. In the 1950s, 80 percent of the developed world's resources were going into -- were government flows; 20 percent were private. We didn't have -- I mean, CARE was started after World War II because the Marshall Plan wasn't dealing with social issues in Europe. So -- and churches weren't giving that much overseas.

Then as the years came in 1990, and that's when we started -- I started looking at this data -- we discovered that with -- if you looked at remittances, philanthropy and private investment, that was growing. To -- the most recent figures show that over 80 percent of all developed countries' private financial flows to the developing world, that the investment capital, remittances and philanthropy are private, and only 13 percent of that are public.

So that's a dramatic shift. And I think it's --

NEILSON: And a recent one.

ADELMAN: -- and a more recent one, yeah. It was started, and now it's really picked up steam because it's gotten so huge.


ADELMAN: And now it's like $104 billion compared to $519 billion on the private side.

WALES: But I might just say, the one -- the only -- Carol and I always agree on everything, and I'm going to try to offer some controversy -- and that is, the one thing that always worries me about saying, gee, we ought to look at the whole, and -- rather than foreign assistance, official assistance, is that the big difference between government aid and all other sources of money is that it is transparent and accountable.

And it seems to me we ought to want the right amount of money to be going in ways that are transparent and accountable, and we should not want to privatize aid flows.

So it's something to think very, very hard about. I'm not opposed to international philanthropy, obviously, since I try to promote it.


WALES: I'm just saying I am --

NEILSON: In one sense you can't argue that it's transparent or accountable.

WALES: It's not the same as democratic government.

NEILSON: Well, with that, let's turn to the audience. I think it's about that time. I think we have a couple of microphones, and would ask that you just speak clearly and frame your question as a question. Sure.

QUESTIONER: Jim Moody. I was with CARE in Yugoslavia and Iran, and I really want to congratulate you for where we all are, and your effort being very important in that, to bring nonprofits and philanthropies into the foreign assistance field much more notably.

I'll just make a comment. Well, two comments quickly. I was just at lunch with the head of the Catholic Relief Service in Afghanistan; gave the most inspiring talk I have heard in a long time, on how he and his team are able to relate to the people in those communities where he is in, and do things that no government, anyone wearing a U.S. government hat, could ever do.

And I think that's impressive. Even though they are a religiously-based group, that is not the issue. They are there on the basis of respect, helping people. And the fact that in countries like Pakistan where I've also been where there is so much assumed graft and corruption with respect to public funds, having private funds come in give it an extra moral dimension which people at the village really do appreciate.

NEILSON: Yes, right here.

WALES: While he's getting a microphone, can I make just a comment on that?


WALES: I couldn't agree with you more. And I think that there is a democracy element in private philanthropy and its role. Because to the extent that our local institutions here, the wonderful CAREs of the world, and the Catholic Relief Services, and our Rotary Clubs, to the extent that they are creating local institutions that then become counterpoints of central government control is very important to democracy.

And there are also organizations, which has been our American tradition, which de Tocqueville called intermediary institutions, and we work our social problems out more through them. But they become -- a Rotary Club is a place where people from different faiths and different ethnic groups can get together.

So these intermediary institutions allow people to organize their activities without -- with less regard to the ethnicities and gender and religious strife. It's very important. There's huge dimensions here.

NEILSON: I think we are going to go the gentlemen in the black tie here. Afterwards, you can add a point with each other.

QUESTIONER: Thank you and good evening. P.D. Glenn with Citizens Development Corps. I guess my question stems from -- I'm feeling a little bit convoluted with this conversation on what is philanthropy in the sense of, I work for an organization that focused on corporate citizenship, strong -- (inaudible) -- and corporate citizenship and international volunteerism. I've been a Peace Corps volunteer. I had the pleasure of serving on the Obama bipartisan team and lead the agency review for the Peace Corps. And when we sort of talked about Peace Corps volunteers and people-to-people centered development, is that measured as philanthropy, people giving of themselves, does that fall into philanthropy? People giving from their wallets, does that fall into philanthropy? And where does volunteerism and philanthropy and development--

NEILSON: Good point, because if you can't define it, how do you know how to really use it.

QUESTIONER: How do you measure it?

NEILSON: Yeah, I'd love to hear from you guys on that. You know the question of remittances as philanthropy, if I give my sister a check--

ADELMAN: I told you, we are not calling it philanthropy.

I understand. But the two are brought together because you are studying capital flows --


NEILSON: -- and that's the rationale for bringing the two together.

ADELMAN: Yes, absolutely. Well, just on the volunteerism, we met -- we found $3.5 billion of Americans who donate their time to U.S. organizations that work in developing countries and directly overseas. And it's Bureau of Labor Statistics which give us the hours and it's the independent sector which gives us the $19.40 per hour that your time is valued as a volunteer.

NEILSON: I'd love to hear from Congressman -- (inaudible) -- not to put you on the spot, but as somebody who worked -- I remember your role in the creation of the vaccine fund, and some of the big mega projects designed by philanthropists to leverage government funding. And you had states but also other donors. And I'd just love to hear your perspective on this question of what is philanthropy, and how should it work in tandem with foreign aid, or should it not?

QUESTIONER: Well, I came to hear the experts tell us.

NEILSON: You're waiting to find out.

QUESTIONER: I did have a question but -- and -- which I'll ask. But I think my response to that would I think philanthropy certainly has to include the time that people give. And I don't know exactly how the Bureau of Labor Statistics measures it, whether they take what could be the income of an individual and deducts from that the stipend that the Peace Corps pays. I don't know exactly how they measure it; it's got to be pretty imperfect measurement that they are using for that.

But I certainly think that those kinds of things have got to be considered, and all the kinds of programs that we have going, with the PEPVARs (ph) and MZC (ph) for example of course are government funded and sponsored programs. But there's a lot of things out there like that.

I think that is one of the things that I would question is whether we are measuring correctly the amount of volunteers that's being given there.

My question to you, and both of you but I guess maybe particularly to Carol, you seem to be fairly optimistic about remittances going down less than a lot of others in the economy, trade, et cetera, dropping. Do you think maybe events are overwhelming stuff that might have been written a few days or weeks ago here? In other words are remittances really that immune from dropping?

And secondly, for both of you, is it really realistic to think that you are going to get much more than the percentage we have now of remittances going into kind of semi-official -- not official but semi-organized flows -- to work on projects rather than what I call survival remittances where it goes to the family to support them.

ADELMAN: Well, quickly, and then Jane can comment too. Actually we did get data from Gillup Roth (ph) at the World Bank. We worked -- he's our partner on remittances. And as late as the end of March that remittances for 2008 were still growing at a smaller rate than 2007. But they had gone into negative at the beginning of January.

But his projections are that they are only going to decline by 5 to 8 percent, which is, you know, less than 10 percent. And considering what we know is going to happen with private capital flows and other flows, we think that is probably -- that's a good news story.

So -- and I think as far as the other question, I think it's up to the development agencies to go out and find the organizations that are doing these remittances, and say, okay, is it working? And if it is how can we help put money into that?

So I think the onus is on the government.


WALES: That less than 10 percent, though, can mean the devastation of a family and even a village. And the problem is that there are whole segments of the world that are being more affected than others. So it's not an across-the-board figure. So a more refined analysis will answer that question.

You are -- (inaudible) -- absolutely right, though, we are seeing these organized efforts, particularly by village, to pool remittances. Is it a large phenomenon? No, and is it likely to shrink in the face of a recession? Yes. But it's still worth following and encouraging.

NEILSON: The gentleman in the crimson.

QUESTIONER: Andrew Pierre (ph), Georgetown University. I think it's fair to say that maybe 25 years or so ago that private philanthropy -- not ODA and not remittances -- what some thought of as an American specialty, European foundations have developed over the years. Even if you look at the chart provided here, chart -- Figure 5, the United States is by far the largest proportion of philanthropy.

So my question is, is the American willingness to give or perhaps our tax structure or reluctance on the part of non-Americans to get into this game comparatively, is that changing? Are we seeing private philanthropy becoming much more local?

WALES: Particularly as wealth becomes more global. Globalization has brought these great new sources of wealth. And those new sources of wealth are particularly interested in philanthropy, and they are particularly interested in learning from American philanthropists what works, and in partnering with American philanthropists to find ways to make a difference together.

This is very attractive to American philanthropists because they are dealing with somebody who comes from on the ground who knows -- (inaudible) -- than that American philanthropist might do.

So yeah, I think it's got a lot to do with our tax structure. Our tax structure has got a lot to do with the fact that we want a small government, a small government -- (inaudible) -- and therefore the tradeoff is that we do expect -- (inaudible).

NEILSON: Back to bin Laden, if he -- if he transfers money through a charitable organization, why is he not a philanthropist?

WALES: Does he contribute to the social growth?

NEILSON: As he sees it, certainly.

WALES: I mean I think that is how you end up defining it. You don't define it by the nature of the transfer. You define it--

NEILSON: By the intent. But if the intent is Wahabi fundamentalist, 13th century Wahabi fundamentalism, and he thinks that is--

WALES: You're the head of global philanthropy.

NEILSON: Other? Oh, right here.

QUESTIONER: Kevin Quigley (ph) with the National Peace Corps Association. I wanted to pick up, Jane, on your last--

WALES: And -- (inaudible) -- the Pew Foundation.

QUESTIONER: That's right. Just your last comments just before we went to questions about transparency and accountable. I think, Carol, your data has begun to let us understand what the picture is, the size and scope of the flow of philanthropy. But the mechanisms are pretty imperfect out there to capture. And would you just share some thoughts about how to get greater accountability and transparency to track these significant flows of resources. Because there is a public subsidy involved, and therefore some kind of public trust, the 990s down to the annual reports, the grant list, all those other things. So what's the latest thinking about mechanisms for transparency --

WALES: Actually I would argue that the 990s would be enormously helpful if they could be gotten in real time by the public.

NEILSON: As opposed to, what is it, two years or something?

WALES: Two years, it's two years. And so that a serious -- something for government agencies to think about is whether that incremental expense of making this available in--

NEILSON: Is that what it's come down to, it would just cost more?

WALES: It would cost more to do it faster. And so something to think hard about.

But yes, the answer to your question is yes. I think a lot about this. Because the private foundations are extremely transparent. You know what the Ford Foundation is doing. You know what the Gates Foundation is doing. You know what the large private foundations are up to. It is the family foundations that are less transparent, and their reasoning is not that they don't -- that they're trying to hide something. The reasoning is that often foundations with very large assets don't have any staff. And so they cannot afford a lot of attention because they cannot afford to receive a thousand proposals tomorrow, because there's no one to open the mail.

And so I think the real challenge here is to make it in their interest to share information, to actually have a website, to get their information out in real time, given that the U.S. government is not releasing this data in real time.

The best way I can think of is to -- is to demonstrate that by doing so they will increase co-funding opportunity. They will attract more dollars to the causes they care about.

So I have been very interested in, and have talked to the World Bank and talked to other intergovernmental agencies, about their sharing all their data on projects that they find in the developing world, talking to the private foundations that are already sharing that data, but coming to a standard format for sharing that data; and then turning to the family foundations, which is so much a part of the constituency with which I work, and saying, if you were to do the same, and we were to put all of this on a website, and make this open source, there would be a much better opportunity to find co-funding opportunities.

I think if you can find a positive incentive for being transparent, they would do so.

NEILSON: Yes. With the scarf (ph).

QUESTIONER: Hi, thanks, it's Holly Wise (ph) with Corporate Social Responsibility Initiative at Harvard University, and I'm a founder of USA Business Model for Partnerships called the Global Development Alliance.

Carol, I think you made a reference to an idea about a new business model that you thought about for foreign assistance, which presumably would have something to do with harnessing more philanthropy or helping to encourage its direction. And so I wondered if you could comment on that?

And Jane, when we talk about partnerships, often we talk about corporate voice, or philanthropic leaders' voices being the most powerful assets beyond the cash which everybody tends to focus on more. Do you have an idea about collectivizing that voice? There are plenty of little conversations, areas, but there doesn't seem to be a real structure for bringing that forward in an organized way. Is that a good thing or bad thing?

ADELMAN: Well, I'll just comment first on the role on what I think the new business model is. The new business model, Holly, you know some of it because you heard me talk about this, is really what your group did at AID, the Global Development Alliance would seek out successful private partnerships, or just a private foundation, and something that was working, and then would put some of its government money into that project. So it would help that philanthropic project expand its funds and to scale up and do better.

And I guess what I see from the numbers, since such a huge percent, the vast majority now of our interaction with the developing world is private, whether it's investments or remittances or philanthropy, but I feel that foreign aid is -- government foreign aid is really like a fly caught in amber. In other words it just needs to change now. Because back in the '50s, '60s and early '70s, it was the major flow. So it could go in and do these -- you know, take over a whole sector, and think it was doing well.

But we now -- we now have a lot of experience in the failures of government aid, too. We are seeing so much through African writers now, and other writers. And we have to learn from that. And I was real pleased to see Secretary Clinton acknowledging those failures.

And -- so -- but the fact is, I don't think we have much to say about it. I think the world has changed so much that that is the way it's going to be, that government aid now is the minority shareholder. There's still important role for government in disasters, in humanitarian projects, in policy guidance to countries. But as far as the economic development part, let's leave that to the private sector, since that isn't government's forte anyway. And let's let government fund the successful projects and leverage those into things that work .

And government should be more of a, if you will, a convener of resources, a facilitator, find out what's going on, put people together, choose where they want to put their little bit of money, and then let successful projects bloom.

WALES: That's a really interesting that you directed to me about creating collective corporate voice, private sector voice. And I'll have to reflect on that a bit because of the level of cynicism and suspicion that exists out there, that sometimes perhaps what is a first step is to better leverage not so much the voice but leverage the action of corporations.

And here you've got private companies operating overseas that are raising labor standards, raising environmental standards, simply by adhering to the standards set within the United States, doing a better job of leveraging that impact would be a good first step before leveraging a collective set of opinions, because they play a profound normative role.

NEILSON: They play in the world -- in the AIDS world, the business coalition model which I ran was very effective because of peer pressure and competition, and pointing -- pointing to one guy saying, boy, he's doing a lot better than you are. You really need to step it up. Here in the red tie back here. Yeah. Maroon, maybe.

QUESTIONER: Ben Wootency (ph) with U.S. -- (inaudible) -- Peace. I want to highlight what seems to be a tension between ODA and philanthropy. In one foreign policy area, fragile states and states coming out of conflict, the kind of current thinking is to try to build up the capacity of the states and make it an effective institution particularly in health. And there have been some wonderful models in Liberia and elsewhere, where the government and the ministers are really trying to beautiful plans. They are going to have basic health services to reduce maternal mortality. And infant mortality and infectious diseases. And it's really a government's function. And it seems it's only successful if it's done in a coordinated systematic way. We talk about health systems. And so what private philanthropy comes in with projects as opposed to support for the ministry, you have a tension. And I think we need to acknowledge that tension. And I'd like to ask both of you to tell us how we resolve that tension.

WALES: You are really talking about bypassing the ministry of health.

QUESTIONER: Well, I'm talking about the thinking is -- the thinking now is to support the ministry, to develop it.

WALES: Right.

QUESTIONER: And to pool funds in multi-donor trusts and to have direct budget support, all kinds of mechanisms so that you are supporting the state, not having individual philanthropic development projects run by private philanthropists or institutions. So it's that tension that I'd like you to comment on.

WALES: But the trends you are seeing is the trend toward supporting the -- (inaudible)--

QUESTIONER: Absolutely.

WALES: --when that is an option.

QUESTIONER: Yes, when it's an option. It's not always an option. I cited Liberia because they are doing quite well. They've eliminated user fees, and they have a plan, and they are reducing infant mortality and maternal mortality, a whole lot of things. But it's through the state, and it requires -- it appears to require government assistance to that--

WALES: Liberia is an interesting case because it is not only a model of good governance post-conflict, but it's also a model of good philanthropy, in so far as the philanthropists have chosen not to be a burden in the process of pursuing their objective. So you've got OSI, you've got George Soros, you've got McFane (ph), you've got Humanity -- Peter -- (inaudible) -- of NOVO (ph). You've got Humanity United. You've got a series of foundations that have come together and decided to coordinate what they do, and to coordinate that with the government of Liberia. They are also helping to pay the salaries of civil servants within the government of Liberia, which is important, which is significant. So they are strengthening the institution so they can turn around and work with those institutions.

The Carter Center which has also been very much focused on health system strengthening, has also always chosen, whenever it can, to work with local ministries of health. That is not always the opportunity that is there, and sometimes you are facing an emergency situation in which an intervention is needed nonetheless.

But this is a big debate within the Gates Foundation of course.

NEILSON: There's time for a couple of more questions in the back. Yes.

QUESTIONER: Hi -- (inaudible) -- State Department. I'd like to go back to a point that Carol made about it's time for the government to move out of development, and for the private sector to step in. And then another comment that was made earlier about sometimes foundations have their own agendas or foreign policy ideas.

Under Secretary Rice aid and State were pulled closer together because there was a thought that our development assistance was critical to our foreign policy, and that also Secretary Clinton talks about the three Ds, defense, diplomacy and development.

So how would you balance that, if there are agendas, if you do some kind of shift as you are speaking of, how do you keep foreign policy I guess aligned.

ADELMAN: Well, I think I wouldn't say that it would get out of it; it would just have a completely different role. It wouldn't be the major funder of development activity. It would be a convener of resources. It would be a matchmaker. It would be aware of what's going on, and then taking its limited resources, which are now in terms of a percent of all the funds going in, taking those and seeing where they can have the best impact working with successful philanthropic projects. And that is the public-private partnership model.

So I think it's role in development is a public-private partnership role. So it's still there, but it isn't going to be the major funder of development aid. Because it isn't now already, and it's -- nor does it do that most effectively. You know we just haven't seen government aid be that effective in economic development.

NEILSON: I think we have time for maybe one more, and I better go over here, because I've turned my back. In the red.

QUESTIONER: Hi, I'm Amy Wilkinson (ph), I'm with the Woodrow Wilson Center. I've got a question about generational differences in philanthropy. And I ask because I am writing a book on next generation leaders, and I keep bumping into a lot of the Silicon Valley technology guys who now are funding social entrepreneurs. And so I'm curious how you all kind of think about that, whether it's Omidyar (ph) Network, the Scole (ph) Foundation, Google dot org, and if you think that -- my perception is they are working outside of government. And if now maybe the Scole Urgent Threats Fund hiring Larry Brilliant will bring them more into the policy realm.

WALES: I think it will bring them more into the policy realm. I'm not sure. I mean I think a decision -- there are those funders who both support professional entrepreneurs and try to influence and inform policy; do both. But I think those that have decided that strengthening social entrepreneurs is their sole mandate, and so just as you say, operate outside of the government realm, it's a very libertarian view of the world.

I do think though that by the fact that they are out there helping people start businesses and giving loans, and they are -- they are putting that pressure on the government system to reform in terms of creating a rule of law that's going to be open to investment and business. So I would -- I think that -- and I'm moving now from -- (inaudible) -- over to Google, where those who would invest in small and growing businesses are doing something that is extraordinarily important. They are helping to build economy from the ground up, and I don't think anybody who is involved in official aid would -- would not think that this was a good complement.

NEILSON: Well, with that I think unfortunately we are out of time. Thanks to Carol and Jane for your thoughts. (Applause)

And thanks to the Council, and thanks to all of you. Have a good evening. Stay cool.







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